Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as
Administrator of the Philippine Overseas Employment Administration, respondents.
Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J .:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the
recruitment of Filipino workers, male and female, for overseas placement,"
1
challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of "GUIDELINES
GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD
WORKERS," in this petition for certiorari and prohibition. Specifically, the measure is assailed for "discrimination against
males or females;"
2
that it "does not apply to all Filipino workers but only to domestic helpers and females with similar
skills;"
3
and that it is violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking power,
police power being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker
participation "in policy and decision-making processes affecting their rights and benefits as may be provided by
law."
4
Department Order No. 1, it is contended, was passed in the absence of prior consultations. It is claimed, finally, to
be in violation of the Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI
members face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the
Philippine Overseas Employment Administration, filed a Comment informing the Court that on March 8, 1988, the
respondent Labor Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United
States, Italy, Norway, Austria, and Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor
General invokes the police power of the Philippine State.
It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question is whether or not
it is valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact
legislation that may interfere with personal liberty or property in order to promote the general welfare."
5
As defined, it
consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done,
provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest
benefits."
6

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter. Along with the
taxing power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of
government that has enabled it to perform the most vital functions of governance. Marshall, to whom the expression has
been credited,
7
refers to it succinctly as te plenary power of the State "to govern its citizens."
8

"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly termed the "law of
overwhelming necessity." It may be said to be that inherent and plenary power in the State which enables it to prohibit all
things hurtful to the comfort, safety, and welfare of society."
9

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the conception that men in
organizing the state and imposing upon its government limitations to safeguard constitutional rights did not intend thereby
to enable an individual citizen or a group of citizens to obstruct unreasonably the enactment of such salutary measures
calculated to ensure communal peace, safety, good order, and welfare."
10
Significantly, the Bill of Rights itself does not
purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the greatest of all rights, is not
unrestricted license to act according to one's will."
11
It is subject to the far more overriding demands and requirements of
the greater number.
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it
may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the purpose for which it is
exercised, that is, to advance the public good. Thus, when the power is used to further private interests at the expense of
the citizenry, there is a clear misuse of the power.
12

In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity.
13
In the absence of clear and convincing evidence to the
contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that
Department Order No. 1 applies only to "female contract workers,"
14
but it does not thereby make an undue
discrimination between the sexes. It is well-settled that "equality before the law" under the Constitution
15
does not import
a perfect Identity of rights among all men and women. It admits of classifications, provided that (1) such classifications
rest on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing
conditions; and (4) they apply equally to all members of the same class.
16

The Court is satisfied that the classification made-the preference for female workers rests on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force
abroad, especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical and
personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of
torture, confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely
the caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In fulfilling that duty, the
Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for
isolated instances, our men abroad have been afflicted with an Identical predicament. The petitioner has proffered no
argument that the Government should act similarly with respect to male workers. The Court, of course, is not impressing
some male chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter of
evidence (that women domestic workers are being ill-treated abroad in massive instances) and not upon some fanciful or
arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable demonstration
and evidence this Court accepts. The Court cannot, however, say the same thing as far as men are concerned. There is
simply no evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are concerned, this
Court is content that distinctions are borne by the evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican regime, it
is the executive branch that enforces policy. For their part, the courts decide, in the proper cases, whether that policy, or
the manner by which it is implemented, agrees with the Constitution or the laws, but it is not for them to question its
wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief Executive or his subalterns,
especially when the legislature itself has specifically given them enough room on how the law should be effectively
enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with this at greater length shortly, that
Department Order No. 1 implements the rule-making powers granted by the Labor Code. But what should be noted
is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions indeed call
for a deployment ban.
There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is
the avowed objective of Department Order No. 1 to "enhance the protection for Filipino female overseas workers"
17
this
Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on
deployment will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those
conditions exist. This is clear from the Order itself ("Pending review of the administrative and legal measures, in the
Philippines and in the host countries . . ."
18
), meaning to say that should the authorities arrive at a means impressed with
a greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of
Filipino workers.
19

The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it does
not apply to "all Filipina workers"
20
is not an argument for unconstitutionality. Had the ban been given universal
applicability, then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly
circumstanced. What the Constitution prohibits is the singling out of a select person or group of persons within an existing
class, to the prejudice of such a person or group or resulting in an unfair advantage to another person or group of
persons. To apply the ban, say exclusively to workers deployed by A, but not to those recruited by B, would obviously
clash with the equal protection clause of the Charter. It would be a classic case of what Chase refers to as a law that
"takes property from A and gives it to B."
21
It would be an unlawful invasion of property rights and freedom of contract and
needless to state, an invalid act.
22
(Fernando says: "Where the classification is based on such distinctions that make a
real difference as infancy, sex, and stage of civilization of minority groups, the better rule, it would seem, is to recognize
its validity only if the young, the women, and the cultural minorities are singled out for favorable treatment. There would be
an element of unreasonableness if on the contrary their status that calls for the law ministering to their needs is made the
basis of discriminatory legislation against them. If such be the case, it would be difficult to refute the assertion of denial of
equal protection."
23
In the case at bar, the assailed Order clearly accords protection to certain women workers, and not
the contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered
provisions of the Order, it is evident that such a total ban has hot been contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar
skills defined herein to the following [sic] are authorized under these guidelines and are exempted
from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and
Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government
officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited
international organizations.
5.4 Hirings by employers in countries with whom the Philippines have [sic]
bilateral labor agreements or understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--Vacationing
domestic helpers and/or workers of similar skills shall be allowed to process with the POEA and
leave for worksite only if they are returning to the same employer to finish an existing or partially
served employment contract. Those workers returning to worksite to serve a new employer shall
be covered by the suspension and the provision of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare
and protection of Filipino workers.
24

xxx xxx xxx
The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is subject,
among other things, to the requirements of "public safety," "as may be provided by law."
25
Department Order No. 1 is a
valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor,"
26
pursuant to
the respondent Department of Labor's rule-making authority vested in it by the Labor Code.
27
The petitioner
assumes that it is unreasonable simply because of its impact on the right to travel, but as we have stated, the right itself is
not absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It
is true that police power is the domain of the legislature, but it does not mean that such an authority may not be lawfully
delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and Employment with
rulemaking powers in the enforcement whereof.
28

The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes
affecting their rights and benefits"
29
is not well-taken. The right granted by this provision, again, must submit to the
demands and necessities of the State's power of regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
30

"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more
paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to
send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally
and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot
seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite
ban on deployment.
The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that
it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General.
The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by
the Government.
31
Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in
this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life.
This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of
the Government, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of events, it is
profits that suffer as a result of Government regulation. The interest of the State is to provide a decent living to its citizens.
The Government has convinced the Court in this case that this is its intent. We do not find the impugned Order to be
tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.
Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes and Grio-
Aquino, JJ., concur.
Gutierrez, Jr. and Medialdea, JJ., are on leave.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 77875 February 4, 1993
PHILIPPINE AIRLINES, INC., petitioner,
vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN, PHILIPPINE AIRLINES
EMPLOYE33ES ASSOCIATION, and THE NATIONAL LABOR RELATIONS COMMISSION, respondents.
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D. Ungos, Jr. for
petitioner.
Adolpho M. Guerzon for private respondents.

REGALADO, J .:
The instant petition for certiorari seeks to set aside the decision of The National Labor Relations Commission (NLRC) in
NLRC Case No. 4-1206-85, promulgated on December 11, 1986,
1
containing the following disposition:
WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and
another one entered, declaring the suspension of complainants to be illegal and consequently,
respondent PAL is directed to pay complainants their salaries corresponding to the respective period(s) of
their suspension, and to delete the disciplinary action from complainants' service records.
2

These material facts recited in the basic petition are virtually undisputed and we reproduce the same hereunder:
1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services
Department of petitioner. Their duties and responsibilities, among others, are:
Prepares meal orders and checklists, setting up standard equipment in accordance with
the requirements of the type of service for each flight; skiing, binning, and inventorying of
Commissary supplies and equipment.
2. On various occasions, several deductions were made from their salary. The deductions represented
losses of inventoried items charged to them for mishandling of company properties . . . which
respondents resented. Such that on August 21, 1984, individual respondents, represented by the union,
made a formal notice regarding the deductions to petitioner thru Mr. Reynaldo Abad, Manager for
Catering. . . .
As there was no action taken on said representation, private respondents filed a formal grievance on
November 4, 1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining Agreement
between petitioner and the union. . . . The topics which the union wanted to be discussed in the said
grievance were the illegal/questionable salary deductions and inventory of bonded goods and
merchandise being done by catering service personnel which they believed should not be their duty.
4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad, Manager
for Catering, who at the time was on vacation leave. . . .
5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on December
5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that inasmuch as no reply
was made to their grievance which "was duly received by your secretary" and considering that petitioner
had only five days to resolve the grievance as provided for in the CBA, said grievance as believed by
them (private respondents) was deemed resolved in their favor. . . .
6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and scheduled a
meeting on December 12, 1984. . . .
7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did not
conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp inventory on
December 10. In like manner, Regino Duran and Houdiel Magadia did not conduct the same on
December 10 and 12.
8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved the
grievance by denying the petition of individual respondents and adopted the position that inventory of
bonded goods is part of their duty as catering service personnel, and as for the salary deductions for
losses, he rationalized:
1. It was only proper that employees are charged for the amount due to mishandling of
company property which resulted to losses. However, loss may be cost price 1/10 selling
price.
9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3, 1985
wrote by an inter-office memorandum addressed to the grievants, individual respondents herein, for them
to explain on (sic) why no disciplinary action should be taken against them for not conducting ramp
inventory. . . .
10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth as:
4. Since the grievance step 1 was not decided and no action was done by your office
within 5 days from November 21, 1984, per provision of the PAL-PALEA CBA, Art. IV,
Sec. 2, the grievance is deemed resolved in PALEA's favor.
11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension
ranging from 7 days to 30 days were (sic) imposed depending on the number of infractions committed. *
12. After the penalty of suspension was meted down, PALEA filed another grievance asking for lifting of,
or at least, holding in abeyance the execution of said penalty. The said grievance was forthwith denied
but the penalty of suspension with respect to respondent Ramos was modified, such that his suspension
which was originally from January 15, 1985 to April 5, 1985 was shortened by one month and was lifted
on March 5, 1985. The union, however, made a demand for the reimbursement of the salaries of
individual respondents during the period of their suspension.
13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspension was
filed before the
Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March 17, 1986, ruled in
favor of petitioner by dismissing the complaint. . . .
3

Private respondents appealed the decision of the labor arbiter to respondent commission which rendered the aforequoted
decision setting aside the labor arbiter's order of dismissal. Petitioner's motion for reconsideration having been denied, it
interposed the present petition.
The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC acted with grave
abuse of discretion amounting to lack of jurisdiction in rendering the aforementioned decision.
Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not go so far as
to evaluate the sufficiency of the evidence upon which the labor officer or office based his or its determination,
but is limited to issues of jurisdiction and grave abuse of discretion.
4
It has not been shown that respondent NLRC
has unlawfully neglected the performance of an act which the law specifically enjoins it to perform as a duty or has
otherwise unlawfully excluded petitioner from the exercise of a right to which it is entitled.
The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective Bargaining Agreement,
(hereinafter, CBA), to wit:
Sec. 2 Processing of Grievances
xxx xxx xxx
STEP 1 Any employee who believes that he has a justifiable grievance shall take the matter up with
his shop steward. If the shop steward feels there is justification for taking the matter up with the
Company, he shall record the grievance on the grievance form heretofore agreed upon by the parties.
Two (2) copies of the grievance form properly filled, accepted, and signed shall then be presented to and
discussed by the shop steward with the division head. The division head shall answer the grievance
within five (5) days from the date of presentation by inserting his decision on the grievance form, signing
and dating same, and returning one copy to the shop steward. If the division head fails to act within the
five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party. If the
division head's decision is not appealed to Step II, the grievance shall be considered settled on the basis
of the decision made, and shall not be eligible for further appeal.
5
(Emphasis ours.)
Petitioner submits that since the grievance machinery was established for both labor and management as a vehicle to
thresh out whatever problems may arise in the course of their relationship, every employee is duty bound to present the
matter before management and give the latter an opportunity to impose whatever corrective measure is possible. Under
normal circumstances, an employee should not preempt the resolution of his grievance; rather, he has the duty to observe
the status quo.
6

Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the obligation, just as
management has, to settle all labor disputes through friendly negotiations. Thus, Section 2 of the CBA should not be
narrowly interpreted.
7
Before the prescriptive period of five days begins to run, two concurrent requirements must be
met, i.e., presentment of the grievance and its discussion between the shop steward and the division head who in this
case is Mr. Abad. Section 2 is not self-executing; the mere filing of the grievance does not trigger the tolling of the
prescriptive period.
8

Petitioner has sorely missed the point.
It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes
such sympathy, but because of the one-sided relation between labor and capital.
9
The constitutional mandate for the
promotion of labor is as explicit as it is demanding. The purpose is to place the workingman on an equal plane
with management with all its power and influence in negotiating for the advancement of his interests and
the defense of his rights.
10
Under the policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less privileges in life should have more
privileges in law.
11

It is clear that the grievance was filed with Mr. Abad's secretary during his absence.
12
Under Section 2 of the CBA
aforequoted, the division head shall act on the grievance within five (5) days from the date of presentation thereof,
otherwise "the grievance must be resolved in favor of the aggrieved party." It is not disputed that the grievants knew that
division head Reynaldo Abad was then "on leave" when they filed their grievance which was received by Abad's
secretary.
13
This knowledge, however, should not prevent the application of the CBA.
On this score, respondent NLRC aptly ruled:
. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of
complainants within five days from 21 November 1984. Therefore, when Reynaldo Abad, failed to act
within the reglementary period, complainants, believing in good faith that the effect of the CBA had
already set in, cannot be blamed if they did not conduct ramp inventory for the days thereafter. In this
regard, respondent PAL argued that Reynaldo Abad was on leave at the time the grievance was
presented. This, however, is of no moment, for it is hard to believe that everything under Abad's authority
would have to stand still during his absence from office. To be sure, it is to be expected that someone has
to be left to attend to Abad's duties. Of course, this may be a product of inadvertence on the part of PAL
management, but certainly, complainants should not be made to suffer the consequences.
14

Contrary to petitioner's submission,
15
the grievance of employees is not a matter which requires the personal act of Mr.
Abad and thus could not be delegated. Petitioner could at least have assigned an officer-in-charge to look into the
grievance and possibly make his recommendation to Mr. Abad. It is of no moment that Mr. Abad immediately looked into
the grievance upon returning to work, for it must be remembered that the grievants are workingmen who suffered salary
deductions and who rely so much on their meager income for their daily subsistence and survival. Besides, it is
noteworthy that when these employees first presented their complaint on August 21, 1984, petitioner failed to act on it. It
was only after a formal grievance was filed and after Mr. Abad returned to work on December 7, 1984 that petitioner
decided to turn an ear to their plaints.
As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to petitioner's
inadvertence,
16
but it is clearly too much of an injustice if the employees be made to bear the dire effects thereof. Much as
the latter were willing to discuss their grievance with their employer, the latter closed the door to this possibility by not
assigning someone else to look into the matter during Abad's absence. Thus, private respondents should not be faulted
for believing that the effects of the CBA in their favor had already stepped into the controversy.
If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay the resolution of labor
problems, the complaints of the workers in particular, and hide under the cloak of its officers being "on leave" to avoid
being caught by the 5-day deadline under the CBA. If this should be allowed, the workingmen will suffer great injustice for
they will necessarily be at the mercy of their employer. That could not have been the intendment of the pertinent provision
of the CBA, much less the benevolent policy underlying our labor laws.
ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed decision of
respondent National Labor Relations Commission is AFFIRMED. This judgment is immediately executory.
SO ORDERED.
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-13778 April 29, 1960
PHILIPPINE EDUCATION CO., INC., petitioner,
vs.
UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU) and THE COURT OF INDUSTRIAL
RELATIONS,respondents.
Marcial Esposo for petitioner.
Eulogio R. Lerum for respondent Union.Jose B. Bolisay for respondent CIR.
MONTEMAYOR, J .:
The Philippine Education Company, Inc. is appealing the order of the Court of Industrial Relations, dated February 7,
1958, directing it to reinstate its former employee, Ernesto Carpio, to his former or equivalent position, without backpay,
and from the resolution of the same court in banc, dated March 22, 1958, denying the company's motion for
reconsideration.
Ernesto Carpio and other employees of the company, members of the Union of Philippine Education Employees (NLU)
joined a strike staged on January 16, 1953. After the labor dispute was settled, the Industrial Court ordered the
reinstatement of the strikers, including Carpio. The company, however, opposed the reinstatement of Carpio for the
reason that a criminal complaint had been filed against him in the Municipal Court of Manila for theft of magazines
allegedly belonging to the company. He was convicted and sentenced to two months and one day of arresto mayor. On
appeal to the Court of First Instance, Carpio was acquitted on the ground of reasonable doubt.
The question of Carpio's reinstatement was heard by the Industrial Court where the parties submitted as evidence the
transcript of the stenographic notes taken during the hearing in the criminal case before the Court of First Instance of
Manila, the exhibits presented in said case, as well as the decisions of the Municipal Court convicting him, and that of the
Court of First Instance acquitting him, or rather dismissing the case against him on reasonable doubt. After said hearing,
the Industrial Court agreed with the finding of the Court of First Instance that the offense had not been proven beyond
reasonable doubt and held that Carpio's acquittal entitled him to reinstatement, though without backpay.
We have examined the aforementioned evidence, and we are inclined to agree with the Municipal Court that Carpio's guilt
had been duly established. At least, the preponderance of evidence was against his innocence. The question for
determination is whether the whether the acquittal of an employee, specially on the ground of reasonable doubt, in a
criminal case for theft involving articles and merchandise belonging to his employer, entitles said employee to
reinstatement.
In the case of National Labor Organization of Employees and Laborers vs. Court of Industrial Relations, 95 Phil., 727; Off.
Gaz. (9) 4219, we said:
. . . the acquittal of a employee in a criminal case is no bar to the Court of Industrial Relations, after proper
hearing, finding the same employee guilty of facts inimical to the interests of his employer and justifying loss of
confidence in him by said employer, thereby warranting his dismissal or the refusal of the Company to reinstate
him. The reason for this is not difficult to see. The evidence required by law to establish guilt and to warrant
conviction in a criminal case substantially differs from the evidence necessary to establish responsibility or liability
in a civil or non-criminal case. The difference is in the amount and weight of evidence and also in degree. In a
criminal case, the evidence or proof must be beyond reasonable doubt while in a civil or non criminal case it is
merely preponderance of evidence. In further support of this principle we may refer to Art. 29 of the New Civil
Code (Rep. Act 386) which provides that when the accused in a criminal case is acquitted on the ground of
reasonable doubt a civil action for damages for the same act or omission may be instituted where only a
preponderance of evidence is necessary to establish liability. From all this it is clear that the Court of Industrial
Relations was justified in denying the petition of Rivas and Tolentino for reinstatement in the cement company,
because of their illegal possession of hand grenades intended by them for purposes of sabotage in connection
with the strike on March 16, 1952.
Then in the case of National Labor Union vs. Standard Vacuum Oil Company, 73 Phil., 279, the City Fiscal refused to
prosecute two employees charged with theft for lack of evidence and yet this Tribunal upheld their dismissal from the
employer company on the ground that their employer had ample reason to distrust them.
The relation of employer and employee, specially where the employee has access to the employer's property in the form
of articles and merchandise for sale, necessarily involves trust and confidence. If said merchandise are lost and said loss
is reasonably attributed to said employee, and he is charged with theft, even if he is acquitted of the charge on reasonable
doubt, when the employer has lost its confidence in him, it would be highly unfair to require said employer to continue
employing him or to reinstate him, for in that case the former might find it necessary for its protection to employ another
person to watch and keep an eye on him. In the present case, Carpio was refused reinstatement not because of any
union affiliation or activity or because the company has been guilty of any unfair labor practice. As already stated, Carpio
was convicted in the Municipal Court and although he was acquitted on reasonable doubt in the Court of First Instance,
the company had ample reason to distrust him. Under the circumstances, we cannot in conscience require the company
to reemploy or reinstate him.
In view of the foregoing, the appealed orders of the Industrial Court of February 7, 1958 and March 22, 1958 are hereby
reversed. No costs.
Paras, C.J., Bengzon, Bautista Angelo, Labrador, Barrera, and Gutierrez David, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 78090 July 26, 1991
PACIFIC MILLS, INC., petitioner,
vs.
ZENAIDA ALONZO, respondent.
Napoleon L. Apostol for petitioner.

NARVASA, J .:p
From July 30, 1973, Zenaida Alonzo was employed as a ring frame operator in the Pacific Mills, Inc. until September 30,
1982 when she was discharged by Management.
The record shows that in the early afternoon of September 22, 1982, Zenaida challenged Company Inspector Ernesto
Tamondong to a fight, saying: "Putang Ina mo, lumabas ka, tarantado, kalalaki mong tao, duwag ka . . Ipagugulpi kita sa
labas at kaya kitang ipakaladkad dito sa loob ng compound palabas ng gate sa mga kamag-anak ko." And suiting action
to the word, she thereupon boxed Tamondong in the stomach. The motive for the assault was Zenaida's resentment at
having been reprimanded, together with other employees, two days earlier by Tamondong for wasting time by engaging in
Idle chatter.
1
Tamondong forthwith reported the incident to the firm's Administrative Manager
2
as well as the Chairman of
Barangay Balombato, Quezon City.
3

On September 30, 1982, Zenaida Alonzo was given a Memorandum by the company's Executive Vice President &
General Manager terminating her employment as of October 1, 1982 on various grounds: poor work, habitual absences
and tardiness, wasting time, insubordination and gross disrespect. The service of that memorandum of dismissal on her
was not preceded by any complaint, hearing or other formality. These were apparently considered unnecessary by
Management
4
in view of the provision in the Company Rules and Regulations (embodied in the Collective Bargaining
Agreement between the company and the union representing the employees) that:
Fighting or attempting to inflict harm to another employee, will render (sic) the aggressor to outright
dismissal.
It was only at the hearing of the complaint for illegal dismissal (and non-payment of proportionate 13th month pay)
instituted by Zenaida on October 4, 1982 in the NCR Arbitration Branch, that evidence was presented by the company not
only of the assault by Zenaida on her superior but also of many other violations by her of company rules and regulations,
in an attempt to substantiate the validity of her dismissal from work.
The Labor Arbiter found that Alonzo had indeed verbally abused and struck her superior, Tamondong, and rejected her
contention that the assault was not punishable since it was "not work-connected and was provoked/instigated by Ernesto
Tamondong."
5
The Arbiter also declared as "fully established the previous infractions of complainant," these being "a
matter of record and not denied by complainant (Zenaida)."
The Arbiter was of the view, however, that Alonzo was entitled to relief, because (a) the penalty imposed was "harsh and
severe and not commensurate with the offense, . . . suspension of three (3) months . . (being) the proper, just and
reasonable penalty . . .;" and because (b) the company had failed "to investigate complainant before she was dismissed."
The Arbiter thus ordered Pacific Mills, Inc., Zenaida's employer:
. . . to reinstate complainant without loss of seniority rights and to pay her backwages from January 1,
1983 until fully reinstated, the period from October 1, 1982 to December 31, 1982 complainant being
under suspension without pay . . . (as well as) to pay complainant's 13th month pay in the amount of
THREE HUNDRED FIFTY-ONE PESOS ONLY (P351.00).
Acting on the employer's appeal, the National Labor Relations Commission rendered judgment on March 23, 1987,
sustaining the Labor Arbiter's findings. It however limited the award of back wages to Zenaida only to three (3) years, in
accordance with this Court's judgment in Feati University Faculty Club (PAFLU) vs. Feati University, 58 SCRA 396.
6

Pacific Mills Inc. has instituted in this Court the special civil action of certiorari at bar praying for nullification of the
judgment of the NLRC for having been rendered with grave abuse of discretion.
In the comment thereon,
7
required of him by the Court, the Solicitor General opined that:
. . . both the Labor Arbiter and the NLRC apparently failed to take into consideration the fact that Zenaida
Alonzo was dismissed not because of this isolated act (of assault against her superior) but rather
because of numerous and repeated violations of company rules and regulations. It was only this last
incident which compelled Pacific Mills, Inc. to finally terminate her services. It is the totality of the
infractions committed by the employee which should have been considered in determining whether or not
there is just cause for her dismissal.
Zenaida Alonzo was caught several times leaving her place of work to chat with her co-employees. This
is reprehensible conduct since, as ring frame operator, she must be at her post during work hours to
prevent the occurrence of incidents which could damage the machine. The company inspector precisely
warned her against doing this. She had also been repeatedly reprimanded for insubordination, habitual
tardiness, wasting time and not wearing the required company uniform, In spite of these infractions the
company bore with her services and did not see fit to dismiss her. Her assault on the company inspector
was apparently the last straw which compelled Pacific Mills, Inc. to terminate her services.
Accordingly, the Solicitor General recommended "payment of separation pay equivalent to three (3) years backwages but
without reinstatement" and of "proportionate 13th month pay."
For their part, the Chief Legal Officer of the NLRC,
8
and the private respondent,
9
insist that since the dismissal of
Zenaida Alonzo was not preceded by any notice of the charges and a hearing thereon, the judgment of the NLRC must be
sustained.
Decisive of this controversy is the judgment of the Court en banc in Wenphil Corporation v. NLRC, promulgated on
February 8, 1989,
10
in which the following policy pronouncements were made:
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of
seniority and the payment of his wages during the period of his separation until his actual reinstatement
but not exceeding three (3) years without qualification or deduction, when it appears he was not afforded
due process, although his dismissal was found to be for just and authorized cause in an appropriate
proceeding in the Ministry of Labor and Employment, should be re-examined. It will be highly prejudicial
to the interests of the employer to impose on him the services of an employee who has been shown to be
guilty of the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank
and file if the undeserving, if not undesirable, remains in the service.
Thus in the present case, where the private respondent, who appears to be of violent temper, caused
trouble during office hours and even defied his superiors as they tried to pacify him, should not be
rewarded with reemployment and back wages. It may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to observe. Under the circumstances, the
dismissal of the private respondent for just cause should be maintained. He has no right to return to his
former employer.
However, the petitioner (employer) must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as above
discussed. The dismissal of an employee must be for just or authorized cause and after due process
(Section 1, Rule XIV, Implementing Regulations of the Labor Code). Petitioner committed an infraction of
the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and
conduct an investigation as required by law before dismissing . . . (respondent) from employment.
Considering the circumstances of this case petitioner must indemnify the private respondent the amount
of P1,000.00. The measure of tills award depends on the facts of each case and the gravity of the
omission committed by the employer.
The Court perceives no sufficient cause, it has indeed been cited to none by the respondents, to decline to apply
the Wenphil doctrine to the case at bar.
While it is true that Pacific Mills, Inc. had not complied with the requirements of due process prior to removing Zenaida
Alonzo from employment, it is also true that subsequently, in the proceedings before the Labor Arbiter in which Zenaida
Alonzo had of course taken active part, it had succeeded in satisfactorily proving the commission by Zenaida of many
violations of company rules and regulations justifying termination of her employment. Under the circumstances, it is clear
that, as the Solicitor General has pointed out, the continuance in the service of the latter is patently inimical to her
employer's interests and that, citing San Miguel Corporation v. NLRC,
11
the law, in protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the employer. And it was oppressive and unjust in the premises to
require reinstatement of the employee.
WHEREFORE, the petition is granted and the challenged decision of the respondent Commission dated March 23, 1987
and that of the Labor Arbiter thereby affirmed, are NULLIFIED AND SET ASIDE. However, the petitioner is ordered to pay
private respondent a proportionate part of the 13th month pay due her, amounting to P351.00 as well as to indemnify her
in the sum of P1,000.00. No costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

THIRD DIVISION
[G.R. No. 120506. October 28, 1996]
PHILIPPINE AIRLINES, INC. petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER
CORNELIO LINSANGAN, UNICORN SECURITY SERVICES, INC., and FRED BAUTISTA, et al., respondents.
D E C I S I O N
DAVIDE, JR., J .:
This is a petition for certiorari under Rule 65 of the Rules of Court to annul the decision of the Labor Arbiter dated 12
August 1991 in NLRC Case No. 00-11-06008-90 and the resolutions of public respondent National Labor Relations
Commission (NLRC) promulgated on 27 October 1994 and 31 May 1995 dismissing the appeal filed by the petitioner and
denying the motion for reconsideration, respectively.
The dispute arose from these antecedents:
On 23 December 1987, private respondent Unicorn Security Services, Inc. (USSI) and petitioner Philippine Airlines,
Inc. (PAL) executed a security service agreement.
[1]
USSI was designated therein as the CONTRACTOR. Among the
pertinent terms and conditions of the agreement are as follows:
(4) The CONTRACTOR shall assign to PAL an initial force of EIGHTY ONE (81) bodies which may be
decreased or increased by agreement in writing . It is, of course, understood that the CONTRACTOR
undertakes to pay the wages or salaries and cost of living allowance of the guards in accordance with the
provisions of the Labor Code, as amended, the different Presidential Decrees, Orders and with the rules
and regulations promulgated by competent authorities implementing said acts, assuming all responsibilities
therefor .
x x x
(6) Without any expense on the part of PAL, CONTRACTOR shall see to it that the guards assigned to PAL
are provided, at the expense of CONTRACTOR, with the necessary firearms, ammunitions and facilities
needed for the rendition of the security services as aforesaid;
(7) CONTRACTOR shall select, engage and discharge the guards, employees, or agents, and shall otherwise
direct and control their services herein provided or heretofore to be set forth or prescribed. The
determination of wages, salaries and compensation of the guards or employees of the CONTRACTOR
shall be within its full control but shall in no way contravene existing laws on the matter. It is further
understood that CONTRACTOR as the employer of the security guards agrees to comply with all relevant
laws and regulations, including compulsory coverage under the Social Security Act, Labor Code, as
amended and the Medical Care Act, in its operations. Although it is understood and agreed between
parties hereto that CONTRACTOR in the performance of its obligations under this Agreement, is subject to
the control and direction of PAL merely as to the result as to be accomplished by the work or services
herein specified, and not as to the means and methods for accomplishing such result, CONTRACTOR
hereby warrants that it will perform such work or services in such manner as will achieve the result herein
desired by PAL.
(8) Discipline and administration of the security guards shall be the sole responsibility of the CONTRACTOR to
the end that CONTRACTOR shall be able to render the desired security service requirements of
PAL. CONTRACTOR, therefore, shall conform to such rules and regulations that may be issued by
PAL. For this purpose, Annex A, which forms part of this Agreement, contains such rules and regulations
and CONTRACTOR is expected to comply with them. At its discretion, PAL may, however, work out with
CONTRACTOR such rules and regulations before their implementation.
(9) Should PAL at any time have any justifiable objection to the presence in its premises of any of
CONTRACTORs officer, guard or agent under this Agreement, it shall send such objection in writing to
CONTRACTOR and the latter shall immediately take proper action.
(10) The security guards employed by CONTRACTOR in performing this Agreement shall be paid by the
CONTRACTOR and it is distinctly understood that there is no employee-employer relationship between
CONTRACTOR and/or his guards on the one hand, and PAL on the other. CONTRACTOR shall have
entire charge, control and supervision of the work and services herein agreed upon, and PAL shall in no
manner be answerable or accountable for any accident or injury of any kind which may occur to any guard
or guards of the CONTRACTOR in the course of, or as a consequence of, their performance of work and
services under this Agreement, or for any injury, loss or damage arising from the negligence of or
carelessness of the guards of the CONTRACTOR or of anyone of its employ to any person or persons or
to its or their property whether in the premises of PAL or elsewhere; and the CONTRACTOR hereby
covenants and agrees to assume, as it does hereby assume, any and all liability or on account of any
such injury, loss or damage, and shall indemnify PAL for any liability or expense it may incur by reason
thereof and to hold PAL free and harmless from any such liability.
x x x
(13) For and in consideration of the services to be rendered by CONTRACTOR under these presents, PAL
shall pay CONTRACTOR the amount of PESOS NINE & 40/100 CTVS (P9.40) PER HOUR multiplied by
905 hours equivalent to PESOS TWO HUNDRED SEVENTY FIVE THOUSAND NINE HUNDRED NINE
& 58/100 CTVS, Philippine currency, - (P275,909.58) the basis of eight (8) working hours per office/guard
a day, Sundays and Holidays included, the same to be payable on or before the 15
th
of each month for
services on the first half of the month and on or before the end of the month for services for the 2
nd
half of
the month.
Nothing herein contained shall prevent the parties from meeting for a review of the rates should
circumstances warrant.
x x x
(20) This Agreement shall take effect on 06 December 1987 and shall be in force for a period of SIX (6)
MONTHS 05 JUNE 1988 thereafter it shall continue indefinitely unless sooner terminated upon thirty
(30) days notice served upon by one party to the other, except as provided for in Articles 16, 17 & 18
hereof.
Sometime in August of 1988, PAL requested 16 additional security guards. USSI provided what was requested;
however, PAL insisted that what USSI did was merely to pick out 16 guards from the 86 already assigned by it and
directed them to render overtime duty.
On 16 February 1990, PAL terminated the security service agreement with USSI without giving the latter the 30-day
prior notice required in paragraph 20 thereof. Instead, PAL paid each of the security guards actually assigned at the time
of the termination of the agreement an amount equivalent to their one-month salary to compensate for the lack of notice.
In November 1990, USSI, allegedly in its capacity as Trustee for Sixteen or so Security Guards, filed with the NLRC
Arbitration Branch, National Capital Region, a complaint
[2]
against PAL for the recovery of P75,600.00 representing
termination pay benefit due the alleged 16 additional security guards, which PAL failed and refused to pay despite
demands. It further asked for an award of not less than P15,000.00 for each of the 16 guards as damages for the delay in
the performance of PALs obligation, and also for attorneys fees in an amount equivalent to 10% of whatever might be
recovered. Pertinent portions of the complaint read as follows:
3. By virtue of said contract and upon its effectivity, respondent required eighty-six (86) security guards whom
complainant USSI supplied; on or sometime in August 1989, respondent asked for sixteen (16) security
guards to render twelve (12) hours each.
4. In February 1990 and for reasons of its own, respondent caused to terminate not only the contract but also
the services of the security guards; in effecting such termination, said respondent caused to pay the
equivalent of one (1) months notice unto all the security guards, except the 16 who, as aforementioned were
rendering 12 hours each from date of assignment up to and until their termination.
5. As computed, the termination pay benefits due the 16 security guards amount to P75,600.00, more or less,
which, despite demands, respondent fails, neglects or refuses to pay, as it continue refusing, failing or
neglecting to so do up to the present time.
6. Respondent has not only incurred in delay in the performance of its obligation but also contravened the tenor
thereof; hence, complainants are, by law, entitled to be indemnified with damages for no less
than P15,000.00 each for all complainants though the correct amount is left solely to the sound discretion of
the Honorable Labor Arbiter.
7. Complainants are now compelled to litigate their plainly valid, just or demandable claim on account of which
services of counsel have been required and thereby obligated themselves to pay, for and as attorneys fees,
the sum equivalent to ten percent (10%) of whatever sums or sum may be recovered in the case.
The complaint was docketed as NLRC-NCR Case No. 00-11-06008-90 and assigned to Labor Arbiter Cornelio L.
Linsangan.
PAL filed a motion to dismiss the complaint
[3]
on the grounds that the Labor Arbiter had no jurisdiction over the
subject matter or nature of the complaint and that USSI had no cause of action against PAL. In amplification thereof, PAL
argued that the case involved the interpretation of the security service agreement, which is purely civil in character and
falls outside of the Labor Arbiters jurisdiction. It is clear from Article 217 of the Labor Code that for claims to be within the
jurisdiction of Labor Arbiters, they must arise from an employer-employee relationship. PAL claimed that USSI did not
allege the existence of an employer-employee relationship between PAL and USSI or its guards, and that in fact,
paragraph 10 of the agreement provides that there is no employer-employee relationship between the CONTRACTOR
and/or his guards on the one hand and PAL on the other.
In its Opposition,
[4]
USSI pointed out that PAL forgot or overlooked the fact that insofar as labor standards, benefits,
etc. have to be resolved or adjudicated, liability therefor is shifted to, or assumed by respondent [herein petitioners] which,
in law, has been constituted as an indirect employer.
PAL filed a supplemental motion to dismiss
[5]
wherein it cites the following reasons for the dismissal of the complaint:
(1) the clear stipulations in the agreement (paragraphs 4 and 10) that there exists no employer-employee relationship
between PAL on the one hand and USSI and the guards on the other; (2) there were no 16 additional guards, as the 16
guards who were required to render 12-hour shifts were picked out from the original 86 guards already assigned and were
already given a one-month salary in lieu of the 30-day notice of termination of the agreement; (3) USSI had no legal
personality to file the case as alleged trustee of the 16 security guards; and (4) the real parties in interest -- the 16 security
guards -- never showed any interest in the case either by attending any hearing or conference, or by following up the
status of the case.
Attached to the supplemental motion dismiss were, among other things, xerox copies of confirmation letter of USSI to
PAL to show that no additional guards were in fact provided.
[6]

Labor Arbiter Linsangan did not resolve the motion to dismiss and the supplemental motion to dismiss. On 12
August 1991, he handed down a decision
[7]
ordering PAL to pay: (1) the sum of P75,600.00 representing the equivalent of
one-months separation pay due the 16 individual security guards, plus, 10% interest from the date of filing of the case
until the whole obligations shall have been fully settled; (2) the sum of P5,000.00 by way of exemplary damages due each
of the 16 security guards; and (3) another sum equivalent to 10% of the total award for and as attorneys fees.
It was in that decision that Labor Arbiter Linsangan mentioned for the first time that the resolution of the motion to
dismiss and supplemental motion to dismiss was deferred until [the] case is decided on the merits considering the
ground not to be indubitable. In holding that he had jurisdiction over the case, he stated:
As heretofore and invariably held in similar cases, the issue of whether or not Labor Arbiters have jurisdiction over money claims
affecting security guards assigned by security agencies (like complainant herein) to their client-companies such as PAL is, more or
less, settled, especially since, as the law views such as peculiar relationship, such money claims insofar as they have to be paid, are the
ultimate responsibility of the client-firms. In effect, the security guards have been constituted as indirect employees of the client just
as the client becomes the indirect employer of the guards. Art. 107 and 109 of the Labor Code expressly provide that.
To justify the awards, Labor Arbiter Linsangan opined:
Evidence adduced clearly show that sometime in December 1987, aforementioned security service contract was executed, based on
which the required number of security guards were assigned to, or posted at, the various premises of respondent -- PAL. Said number
of security guards may, as the contract provides, be increased or reduced at respondents request, such that the original number of
eighty-six (86) guards, an additional sixteen (16) were needed and, accordingly supplied who, pursuant to PALs instructions, were
required to render twelve (12) hours each, per day.
In February 1990, and for reasons of its own, PAL caused to terminate, as it did, the contract of security service. Unequivocably, it
caused to pay the separation pay benefits of the 86-security guards for the equivalent amount of one (1) months pay. As to the
additional 16, it failed and refused to grant similar equivalent, without any valid reasons therefor.
As earlier stated, respondent opted to rely solely on the ground set forth in its Motion to Dismiss as well as Supplement thereto. It
failed to file, despite directive made thereon, its position paper. Neither did it submit, nor adduce, evidence (documentary or
otherwise) to rebut or controvert complainants claims especially since the money equivalent of the one month separation pay due the
16 guards has been duly quantified as amounting to Seventy Five Thousand Six Hundred (P75,600.00) Pesos. Thus established, it is
clear that there was absolutely no legal/justifiable reason why said 16 guards applied and who rendered 12 hours each per day had to
be discriminated against.
Following PALs failure or refusal to pay, demands were made by complainant, asking at the same time why that was
so. Conceivably, respondent has smarted itself on its mistaken belief that there was, as between the guards and itself, no employer-
employee relationship and, hence, there is no legal basis for it to pay. If that was so, why did it pay separation pay unto the 86 regular
employed guards.
PAL being widely known as a progressively-minded employer, it should be the first to show good example for emulation. In this
instant case, it did not; in fact, its actuations were not consistent with good faith. It should, therefore, be held liable for exemplary
damages and having required complainant to litigate a plainly valid, just or demandable claim, an award for attorneys fees must
perforce be assessed.
On 3 September 1991, PAL filed its Appeal
[8]
wherein it indicated that it received a copy of the decision on 26 August
1991. Attached thereto was a machine copy of the Notice of Judgment/Final Order, with the date of its receipt, i.e., 26
August 1991,
[9]
having been stamped on the upper right hand corner by PALs Legal Department.
USSI countered this Appeal with a motion for execution of judgment
[10]
on the ground that since PAL, received a copy
of the decision on the 23
rd
, not on the 26
th
, of August 1991 it had until 2 September 1991 to appeal; hence, the appeal
interposed on 3 September was late by one day. The decision had then become final and executory.
In its opposition
[11]
to this motion, PAL insisted that it received a copy of the decision on 26 August 1991; thus, it had
until 5 September 1991 to file its appeal.
On 30 September 1991, Labor Arbiter Linsangan issued a writ of execution.
[12]

On 1 October 1991, PAL filed a motion to quash
[13]
the writ of execution. It tried to explain therein why it thought
all along that it received a copy of the decision on 26 August 1991, thus:
4. Upon investigation the undersigned counsel learned that on 23 August 1991 (Friday) a server-messenger
went to PAL Legal Department to serve said decision. The receiving clerks at that time were all out of the office so
that the server persuaded a secretary, Ms. April Rose del Rosario to receive the same, notwithstanding the fact that
Ms. Del Rosario told him (server) that she was not authorized to receive documents for an in behalf of PAL. Ms. Del
Rosario then stamped the date of receipt on the services copy without stamping (the date of receipt) PALs copy of
the decision which was left by the server. Thereafter, Ms. Del Rosario placed PALs copy of the Decision on the
incoming documents rack of the receiving clerk.
Attached herewith is the affidavit of Ms. Del Rosario and as Annex A hereof.
5. On 26 August 1991 (Monday), the receiving clerk/messenger Mr. Greg Soriano upon finding the Decision
among the documents in the incoming documents rack, immediately stamped Received 26 August 1991 thereon,
on the honest and sincere belief that the same just arrived that day (26 August 1991). He then forwarded the same
to the secretary of the undersigned counsel.
Attached herewith is the affidavit of Mr. Greg Soriano marked as Annex B hereof.
6. The undersigned counsel believing that the said decision was received on 26 August 1991 reckoned/counted
the ten (10) day period for appeal from said date.
7. Considering the foregoing circumstances, the undersigned counsels innocent reliance on the date of receipt
stamped on the copy of the Decision furnished him was clearly due to an innocent mistake and/or excusable
neglect. Hence, justice and equity dictates that respondent PAL should be considered to have filed its Appeal within
the reglementary period for Appeal.
[14]

On 8 October 1991, Labor Arbiter Linsangan issued an order
[15]
denying the motion to quash.
On 10 October 1991, PAL appealed
[16]
to the NLRC the aforesaid order of 8 October 1991 on the ground that it was
issued with grave abuse of discretion.
In its resolution of 27 October 1994,
[17]
the Second Division of the NLRC dismissed PALs appeal for having been
filed out if time. It sustained the labor Arbiters finding that PAL had received a copy of the decision on 23 August 1991,
and hence the last day to appeal was 2 September 1991. It ruled that whether or not the decision was received by an
employee other than the receiving clerk or messenger was of no moment, as the proper performance of employees
duties was PALs concern.
On 31 May 1995, the NLRC denied the motion for reconsideration
[18]
for the reason that it cannot accept PALs
excuse as it may open the floodgates to abuse; and that the lapse of the period to appeal had already deprived the
Commission of jurisdiction over the case.
[19]

PAL then filed this special civil action for certiorari under Rule 65 of the Rules of Court alleging that (1) public
respondents committed serious and patent error in failing to declare that the Labor Arbiter had no jurisdiction over the
instant case; (2) The Labor Arbiter gravely abused its discretion in ordering PAL to pay the separation pay of the 16
security guards assigned at PALs premises by USSI; and (3) respondent NLRC committed grave abuse of discretion in
declaring PALs appeal to have been filed out of time.
PAL argues that since USSIs cause of action was founded on the security service agreement, and that thereunder
no employer-employee relationship existed between PAL and the security guards who were USSIs employees, the Labor
Arbiter had no jurisdiction over the complaint. Moreover, assuming arguendo that the claims of the security guards were
valid, USSI had no personality to file the complaint, for there is nothing whatsoever to show that it was expressly
authorized by the security guards to act as their trustee.
As to the second assigned error, PAL asserts that it is not liable to pay separation pay because (1) it was not the
employer of the security guards; (2) even as an indirect employer, as held by the Labor Arbiter, its liability was limited to
violations of labor standards law, and non-payment of the separation pay is not a violation of the said law; (3) the security
service agreement with USSI did not provide for payment of separation pay; (4) the payment made to the 86 security
guards upon the termination of the agreement without the prior 30-day notice was not for separation pay but a benefit in
lieu of the 30-day notice required under paragraph 20 of the agreement; and (5) since PAL was not the employer of the
security guards, in no way could it terminate their services.
In its third assigned error, PAL submits that rules of procedure ought not to be applied in a very rigid technical sense,
since they are used only to help secure and not override substantial justice, especially in this case where the appeal was
meritorious. Moreover, the delay in the perfection of the appeal, reckoned from the finding of the Labor Arbiter, was only
one day; but if reckoned from what its counsel innocently believed to be PALs date of receipt of the decision, which was
26 August 1991, the appeal could be said to have been seasonably filed.
In its Comment, USSI points out that the grounds relied upon by PAL are based on factual a issue, namely, the
discrimination made by PAL in paying the 86 and not the 16 security guards. It argues that the case touched upon the
rights of the 16 security guards as employees; thus, the same was within the juri sdiction of the Labor Arbiter. As regards
PALs plea for the relaxation of the rule on perfection of appeals, USSI contends that the negligence of PALs counsel
should not be deemed compelling reason to warrant relaxation of the rule.
In its Manifestation and Motion in Lieu of Comment,
[20]
the Office of the Solicitor General agrees with PAL that the
Labor Arbiter did not have jurisdiction over the complaint because there was no employer-employee relationship between
PAL and the 16 security guards; that Articles 107 and 109 of the Labor Code which provide for joint and several liability for
payment of wages by the direct and indirect employer find no application in the present case because the 16 security
guards employed by USSI were not after unpaid wages; and that in the interest of justice and considering that the appeal
was filed only one day late, the rule on perfection of appeals should have been relaxed to prevent a miscarriage of justice.
In view of the stand of the Office of the Solicitor General, we advised public respondents to file their own comment if
they so desired.
In their Comment, the NLRC and Labor Arbiter Linsangan maintain that they had jurisdiction over the case because
of Articles 107 and 109 of the Labor Code which constitute PAL as indirect employer of the 16 security guards, there
being a question involving separation pay due the latter; that the 16 security guards were entitled to separation pay,
because PAL paid the other 86 security guards when the service agreement was terminated; and that for the NLRC to
excuse the delay of one day in filing the appeal would open the floodgates of abuse.
The instant petition is impressed with merit.
We agree with petitioner PAL that the Labor Arbiter was without jurisdiction over the subject matter of NLRC-NCR
Case No. 00-11-06008-90, because no employer-employee relationship existed between PAL and the security guards
provided by USSI under the security service agreement, including the alleged 16 additional security guards.
We have pronounced in numerous cases
[21]
that in determining the existence of an employer-employee
relationship, the following elements are generally considered: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employees conduct.
In the instant case, the security service agreement between PAL and USSI provides the key to such
consideration. A careful perusal thereof, especially the terms and conditions embodied in paragraphs 4, 6, 7, 8, 9, 10, 13
and 20 quoted earlier in this ponencia, demonstrates beyond doubt that USSI-and not PAL was the employer of the
security guards. It was USSI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them
to PAL according to the number agreed upon; (c) provided, at its own expense, the security guards with firearms and
ammunitions; (d) discipline and supervised them or controlled their conduct; and (e) determined their wages, salaries, and
compensation; and (f) paid them salaries or wages. Even if we disregard the explicit covenant in said agreement that
there exist no employer-employee relationship between CONTRACTOR and/or his guards on the one hand, and PAL on
the other all other considerations confirm the fact that PAL was not the security guards employer. Analogous to the
instant case is Canlubang Security Agency Corp. vs. NLRC.
[22]

Considering then that no employer-employee relationship existed between PAL and the security guards, the Labor
Arbiter had no jurisdiction over the claim in NLRC-NCR Case No. 00-11-06008-90. Article 217 of the Labor Code (P.D.
No. 442), as amended, vests upon Labor Arbiter exclusive original jurisdiction only over the following:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or house hold
service, involving an amount exceeding five thousand pesos(P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite.
The Labor Arbiter cannot avoid the jurisdictional issue or justify his assumption of jurisdiction on the pretext that PAL
was the indirect employer of the security guards under Article 107 in relation to Articles 106 and 109 of the Labor Code
and, therefore, it is solidarily liable with USSI. We agree with the Solicitor General that these Articles are inapplicable to
PAL under the facts of this case. Article 107 provides:
ART. 107. Indirect employer. -- The provisions of the immediately preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work,
task, job or project.
The preceding Article referred to, which is Article 106, partly reads as follows:
ART. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the performance of
the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under
the contract, in the same manner and extent that he is liable to employees directly employed by him.
While USSI is an independent contractor under the security service agreement and PAL may be considered
an indirect employer, that status did not make PAL the employer of the security guards in every respect. As correctly
posited by the Office of the Solicitor General, PAL may be considered an indirect employer only for purposes of unpaid
wages since Article 106, which is applicable to the situation contemplated in Section 107, speaks of wages. The concept
of indirect employer only relates or refers to the liability for unpaid wages. Read together, Articles 106 and 109 simply
mean that the party with whom an independent contractor deals is solidarily liable with the latter for unpaid wages, and
only to that extent and for that purpose that the latter is considered a direct employer. The term wage is defined in
Article 97(f) of the Labor Code as the remuneration of earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating
the unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes
the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee.
No valid claim for wages or separation pay can arise from the security service agreement in question by reason of its
termination at the instance of PAL. The agreement contains no provision for separation pay. A breach thereof could only
give rise to damages under the Civil Code, which is cognizable by the appropriate regular court of justice. Besides, there
is no substantial proof that USSI in fact provided 16 additional guards. On the contrary, PAL was able to prove in the
annexes attached to its supplemental motion to dismiss that the 16 guards were actually picked out from the original
group and were just required to render overtime service.
The Labor Arbiters lack of jurisdiction was too obvious from the allegations in the complaint and its annex (the
security service agreement) in NLRC-NCR Case No. 00-11-06008-90. The Labor Arbiter then should have forthwith
resolved the motion to dismiss and the supplemental motion to dismiss. As correctly pointed out by PAL, under Section
15 of Rule V of the New Rules of Procedure of the NLRC, any motion to dismiss on the ground of lack of jurisdiction,
improper venue, res judicata, or prescription shall be immediately resolved by the Labor Arbiter by a written order. Yet,
the Labor Arbiter did not, and it was only in his decision that he mentioned that the resolution of the motion to dismiss
was deferred until this case is decided on the merits because the ground thereof was not indubitable. On this score
the Labor Arbiter acted with grave abuse of discretion for disregarding the rules he was bound to observe.
We shall now turn to the issue of tardiness of the appeal. The record does indeed show that on the original copy of
the Notice of Judgment/Final Order,
[23]
there is stamped by the PAL Legal Department the date of its receipt of the
decision, viz., AUG. 23 1991,
It is not also denied by respondents that on the right upper hand corner of PALs copy of the Notice of
Judgment/Final Orders,
[24]
there is stamped the date of receipt thereof by PAL Legal Department, viz., AUG. 26
1991. PAL explained how this discrepancy occurred and how its counsel was misled into believing that PAL received a
copy of the decision only on 26 August 1991. This belief in good faith rendered excusable any negligence it might have
committed. Besides, the delay in the perfection of the appeal was only one day. Considering that the Labor Arbiter had
no jurisdiction over the subject matter of NLRC-NCR Case No. 00-11-06008-90 and that the 16 security guards are not in
fact entitled to separation pay under the security service agreement, the higher interest of justice favors a relaxation of the
rule on perfection of appeals in labor cases.
While it is an established rule that the perfection of an appeal in the manner and within the period prescribed by law
is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the judgment final and
executory, it is equally settled that the NLRC may disregard the procedural lapse where there is an acceptable reason to
excuse tardiness in the taking of the appeal.
[25]
Among the acceptable reasons recognized by this Court are (a) counsels
reliance on the footnote of the notice of the decision of the Labor Arbiter that the aggrieved party may appeal within ten
(10) working days;
[26]
(b) fundamental consideration of substantial justice;
[27]
(c) prevention of miscarriage of justice or of
unjust enrichment, as where the tardy appeal is from a decision granting separation pay which was already granted in an
earlier final decision;
[28]
and (d) special circumstances of the case combined with its legal merits
[29]
or the amount and the
issue involved.
[30]
A one-day delay in the perfection of the appeal was excused in Pacific Asia Overseas Shipping Corp.
vs. NLRC,
[31]
Insular life Assurance Co. vs. NLRC,
[32]
and City Fair Corp vs. NLRC.
[33]

In the instant case, the Labor Arbiters lack of jurisdiction -- so palpably clear on the face of the complaint -- and the
perpetuation of unjust enrichment if the appeal is disallowed are enough combination of reasons that warrant a relaxation
of the rules on perfection of appeals in labor cases.
WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the Labor Arbiter dated 12
August 1991 and the resolution of the Second Division of the National Labor Relations Commission promulgated on 27
October 1994 and 31 May 1995 are hereby SET ASIDE, and NLRC-NCR Case No. 00-11-06008-90 is DISMISSED.
SO ORDERED.
Narvasa, C.J. (Chairman), Melo, Francisco and Panganiban, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 78409 September 14, 1989
NORBERTO SORIANO, petitioner,
vs.
OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT KNUTSEN O.A.S., and NATIONAL LABOR
RELATIONS COMMISSION (Second Division), respondents.
R. C. Carrera Law Firm for petitioner.
Elmer V. Pormento for private respondents.

FERNAN, C.J .:
This is a petition for certiorari seeking to annul and set aside the decision of public respondent National Labor Relations
Commission affirming the decision of the Philippine Overseas Employment Administration in POEA Case No. (M)85-12-
0953 entitled "Norberto Soriano v. Offshore Shipping and Manning Corporation and Knut Knutsen O.A.S.", which denied
petitioner's claim for salary differential and overtime pay and limited the reimbursement of his cash bond to P15,000.00
instead of P20,000.00.
In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed Second Marine Engineer,
sought employment and was hired by private respondent Knut Knutsen O.A.S. through its authorized shipping agent in
the Philippines, Offshore Shipping and Manning Corporation. As evidenced by the Crew Agreement, petitioner was hired
to work as Third Marine Engineer on board Knut Provider" with a salary of US$800.00 a month on a conduction basis for a
period of fifteen (15) days. He admitted that the term of the contract was extended to six (6) months by mutual agreement
on the promise of the employer to the petitioner that he will be promoted to Second Engineer. Thus, while it appears that
petitioner joined the aforesaid vessel on July 23, 1985 he signed off on November 27, 1985 due to the alleged failure of
private respondent-employer to fulfill its promise to promote petitioner to the position of Second Engineer and for the
unilateral decision to reduce petitioner's basic salary from US$800.00 to US$560.00. Petitioner was made to shoulder his
return airfare to Manila.
In the Philippines, petitioner filed with the Philippine Overseas Employment Administration (POEA for short), a complaint
against private respondent for payment of salary differential, overtime pay, unpaid salary for November, 1985 and refund
of his return airfare and cash bond allegedly in the amount of P20,000.00 contending therein that private respondent
unilaterally altered the employment contract by reducing his salary of US$800.00 per month to US$560.00, causing him to
request for his repatriation to the Philippines. Although repatriated, he claims that he failed to receive payment for the
following:
1. Salary for November which is equivalent to US$800.00;
2. Leave pay equivalent to his salary for 16.5 days in the sum of US$440.00;
3. Salary differentials which is equivalent to US$240.00 a month for four (4) months and one (1) week in
the total sum of US$1,020,00;
4. Fixed overtime pay equivalent to US$240.00 a month for four (4) months and one (1) week in the sum
of US$1,020.00;
5. Overtime pay for 14 Sundays equivalent to US$484.99;
6. Repatriation cost of US$945.46;
7. Petitioner's cash bond of P20,000.00.
1

In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment Administration or POEA found
that petitioner-complainant's total monthly emolument is US$800.00 inclusive of fixed overtime as shown and proved in
the Wage Scale submitted to the Accreditation Department of its Office which would therefore not entitle petitioner to any
salary differential; that the version of complainant that there was in effect contract substitution has no grain of truth
because although the Employment Contract seems to have corrections on it, said corrections or alterations are in
conformity with the Wage Scale duly approved by the POEA; that the withholding of a certain amount due petitioner was
justified to answer for his repatriation expenses which repatriation was found to have been requested by petitioner himself
as shown in the entry in his Seaman's Book; and that petitioner deposited a total amount of P15,000.00 only instead of
P20,000.00 cash bond.
2

Accordingly, respondent POEA ruled as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, respondents are hereby ordered to pay complainant,
jointly and severally within ten (10) days from receipt hereof the amount of P15,000.00 representing the
reimbursement of the cash bond deposited by complainant less US$285.83 (to be converted to its peso
equivalent at the time of actual payment).
Further, attorney's fees equivalent to 10 % of the aforesaid award is assessed against respondents.
All other claims are hereby dismissed for lack of merit.
SO ORDERED.
3

Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National Labor Relations
Commission. Complainant-petitioner's appeal was dismissed for lack of merit while respondents' appeal was dismissed
for having been filed out of time.
Petitioner's motion for reconsideration was likewise denied. Hence this recourse.
Petitioner submits that public respondent committed grave abuse of discretion and/or acted without or in excess of
jurisdiction by disregarding the alteration of the employment contract made by private respondent. Petitioner claims that
the alteration by private respondent of his salary and overtime rate which is evidenced by the Crew Agreement and the
exit pass constitutes a violation of Article 34 of the Labor Code of the Philippines.
6

On the other hand, public respondent through the Solicitor General, contends that, as explained by the POEA: "Although
the employment contract seems to have corrections, it is in conformity with the Wage Scale submitted to said office.
7

Apparently, petitioner emphasizes the materiality of the alleged unilateral alteration of the employment contract as this is
proscribed by the Labor Code while public respondent finds the same to be merely innocuous. We take a closer look at
the effects of these alterations upon petitioner's right to demand for his differential, overtime pay and refund of his return
airfare to Manila.
A careful examination of the records shows that there is in fact no alteration made in the Crew Agreement
8
or in the Exit
Pass.
9
As the original data appear, the figures US$800.00 fall under the column salary, while the word "inclusive" is
indicated under the column overtime rate. With the supposed alterations, the figures US$560.00 were handwritten above
the figures US$800.00 while the figures US$240.00 were also written above the word "inclusive".
As clearly explained by respondent NLRC, the correction was made only to specify the salary and the overtime pay to
which petitioner is entitled under the contract. It was a mere breakdown of the total amount into US$560.00 as basic wage
and US$240.00 as overtime pay. Otherwise stated, with or without the amendments the total emolument that petitioner
would receive under the agreement as approved by the POEA is US$800.00 monthly with wage differentials or overtime
pay included.
10

Moreover, the presence of petitioner's signature after said items renders improbable the possibility that petitioner could
have misunderstood the amount of compensation he will be receiving under the contract. Nor has petitioner advanced any
explanation for statements contrary or inconsistent with what appears in the records. Thus, he claimed: [a] that private
respondent extended the duration of the employment contract indefinitely,
11
but admitted in his Reply that his
employment contract was extended for another six (6) months by agreement between private respondent and
himself:
12
[b] that when petitioner demanded for his overtime pay, respondents repatriated him
13
which again was
discarded in his reply stating that he himself requested for his voluntary repatriation because of the bad faith and
insincerity of private respondent;
14
[c] that he was required to post a cash bond in the amount of P20,000.00 but it was
found that he deposited only the total amount of P15,000.00; [d] that his salary for November 1985 was not paid when in
truth and in fact it was petitioner who owes private respondent US$285.83 for cash advances
15
and on November 27,
1985 the final pay slip was executed and signed;
16
and [e] that he finished his contract when on the contrary, despite
prodding that he continue working until the renewed contract has expired, he adamantly insisted on his termination.
Verily, it is quite apparent that the whole conflict centers on the failure of respondent company to give the petitioner the
desired promotion which appears to be improbable at the moment because the M/V Knut Provider continues to be laid off
at Limassol for lack of charterers.
17

It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the very purpose for which
they were passed. This Court has in many cases involving the construction of statutes always cautioned against narrowly
interpreting a statute as to defeat the purpose of the legislator and stressed that it is of the essence of judicial duty to
construe statutes so as to avoid such a deplorable result (of injustice or absurdity) and that therefore "a literal
interpretation is to be rejected if it would be unjust or lead to absurd results."
18

There is no dispute that an alteration of the employment contract without the approval of the Department of Labor is a
serious violation of law.
Specifically, the law provides:
Article 34 paragraph (i) of the Labor Code reads:
Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:
x x x x
(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the
time of actual signing thereof by the parties up to and including the period of expiration of the same
without the approval of the Department of Labor.
In the case at bar, both the Labor Arbiter and the National Labor Relations Commission correctly analyzed the questioned
annotations as not constituting an alteration of the original employment contract but only a clarification thereof which by no
stretch of the imagination can be considered a violation of the above-quoted law. Under similar circumstances, this Court
ruled that as a general proposition, exceptions from the coverage of a statute are strictly construed. But such construction
nevertheless must be at all times reasonable, sensible and fair. Hence, to rule out from the exemption amendments set
forth, although they did not materially change the terms and conditions of the original letter of credit, was held to be
unreasonable and unjust, and not in accord with the declared purpose of the Margin Law.
19

The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both parties. In the instant case, the
alleged amendment served to clarify what was agreed upon by the parties and approved by the Department of Labor. To
rule otherwise would go beyond the bounds of reason and justice.
As recently laid down by this Court, the rule that there should be concern, sympathy and solicitude for the rights and
welfare of the working class, is meet and proper. That in controversies between a laborer and his master, doubts
reasonably arising from the evidence or in the interpretation of agreements and writings should be resolved in the former's
favor, is not an unreasonable or unfair rule.
20
But to disregard the employer's own rights and interests solely on the basis
of that concern and solicitude for labor is unjust and unacceptable.
Finally, it is well-settled that factual findings of quasi-judicial agencies like the National Labor Relations Commission which
have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect
but at times even finality if such findings are supported by substantial evidence.
21

In fact since Madrigal v. Rafferty
22
great weight has been accorded to the interpretation or construction of a statute by the
government agency called upon to implement the same.
23

WHEREFORE, the instant petition is DENIED. The assailed decision of the National Labor Relations Commission is
AFFIRMED in toto.
SO ORDERED.
Gutierrez, Jr., Bidin, and Cortes, JJ., concur.
Feliciano, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 46727 September 27, 1939
PAMBUSCO EMPLOYEES' UNION, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS, composed to Honorables Francisco Zulueta, Leopoldo Rovira, and
Jose Generoso, and PAMPANGA BUS COMPANY, INC., respondents.
Jose Alejandrino for petitioner.
Manuel Escudero for respondent court.
L.D. Lockwood for respondent Pampanga Bus Co., Inc.
LAUREL, J .:
This is a petition for a writ of certiorari to review the decision of the Court of Industrial Relations promulgated on January
14, 1939, denying the demands of the Pambusco Employees' Union, Inc.
The following are the pertinent facts which have given occasion to this industrial dispute: On March 26, 1938, the
Pambusco Employees' Union, Inc., addressed a thirteen- point petition to the management of the Pampanga Bus Co.
Upon the failure of the company officials to act upon the petition, a strike was declared by the workers on April 14, 1938.
However, through the timely mediation of the Department of Labor, a provisional agreement was reached, by virtue of
which the strike was called off, eight demands were granted, and the remaining five were submitted to the Court of
Industrial Relations for settlement. One of these demands, in the language of the petitioner, is that the respondent
Pampanga Bus Co. "pay to all Company drivers affiliated with the Pambusco Employees' Union, Inc., all the back
overtime pay due them under the law." After trial on the disputed demands, the Court of Industrial Relations decided inter
alia that the claim for back overtime pay could not be allowed.
The pertinent portion of the decision of the respondent Court of Industrial Relations is as follows:
The evidence is clear that even before the final approval of Act No. 4242 amending Act No. 4123, the Eight Hour
Labor Law, by extending the provisions of the latter to other class of laborers including drivers of public service
vehicles, a petition was addressed by 44 drivers of the company to the Governor-General asking him to veto the
bill amending the law extending it to drivers for the reason stated in their petition (Exhibit 5 and 5-a). About the 6th
day of September, 1935, a petition was again addressed by 97 drivers of the company to the Commissioner of
Labor requesting adjustment of working hours to permit them to retain their present status with the company as
nearly as possible under the law (Exhibits 4, 4-a, 4-b, 4-c, 4-d and 4-e). This petition was prepared after a
meeting of the employees was held and was drawn with the help of the manager of the respondent about the last
days of August, 1935. In September, 1937, about 347 employees of the different departments of the company
again addresses a petition to the Director of Labor expressing their satisfaction with the hours they work and the
pay they receive for their labor including the special bonuses and overtime pay they receive for extra work, and
asking, in view thereof, that the law be not applied to them (Exhibits 6, 6-a to 6-g).
After the enactment of Act No. 4242 several transportation companies operating motor buses filed with
Commissioner of Labor petitions for a readjustment of the hours of labor specified in section 1 of the Act on the
basis of maintaining the status quo as to the hours the drivers were required to be actually on duty in order to
enable them to make the prescribed hours daily that the exigencies of the service required. The petitions were
based on the impracticability of applying the provisions of the law to drivers of public service vehicles without
disrupting the public service and causing pecuniary loss to both employers and employees alike, and the resulting
difficulties on the part of the drivers. The testimony of Atty. Carlos Alvear on this point in uncontradicted. He
testified that in 1935, he was president of the Philippine Motor Association composed of bus operators operating
in the Philippines, of which the respondent is a member. Major Olson, who was at the time the executive
secretary of the association, and himself took up the matter with the Secretary of the Interior and the Secretary of
Labor after the passage of the Act extending the operation of the Eight Labor Law to drivers. In their conference
with the Commissioner of Labor, they were told to take advantage of the provisions of the law in which they may
apply for the readjustment of the working hours, and in conformity with that suggestion, the executive secretary of
the association filed a formal petition, Exhibit 10, on September 5, 1935. When this was filed the Department of
Labor further suggested that the drivers of each company file and address a petition of similar nature designating
their representatives who will represent them in a conference that the Commissioner of Labor may call for the
purpose. With the filing of the petition, the conferees were assured by the Under-Secretary of Labor that the
enforcement of the Eight Hour Labor Law in so far as the drivers were concerned, will be held in abeyance until
such time as the meeting or investigations are held. It is not clear as to whether investigations and hearings were
finally made but the evidence indicates that the petition was never decided and the companies continued its
schedule of hours.
Sections 3 and 4 of Act No. 4123 read as follows:
"SEC. 3. The Commissioner of Labor, with the advice of two representatives of the employers concerned,
designated by the latter, and of two representatives of the laborers concerned, designated by these, shall, at the
request of an interested party, decide in each case whether or not it is proper to increase or decrease the number
of hours of labor fixed in section one of this Act, either because the organization or nature of the work require it, or
because of lack or insufficiency of competent laborers for certain work in a locality, or because the relieving of the
laborers must be done under certain conditions, or by reason of any other exceptional circumstances or
conditions of the work or industry concerned; but the number of hours of labor shall in no case exceed twelve
daily or seventy-two weekly.
"SEC. 4. Employees or laborers desiring an increase or decrease of the number of hours of labor shall address an
application to this effect to the Commissioner of Labor, stating their reasons. Upon receipt of an application of this
kind, the Commissioner of Labor shall call a meeting of the employers and laborers of the establishment or
industry concerned, for the designation of advisers as provided in the preceding section hereof. The
Commissioner of Labor or his authorized representative, together with the advisers, shall make an investigation of
the facts, giving special attention, in the first place, to the human aspect, and in the second place, to the economic
aspect of the matter, and he may for this purpose administer oaths, take affidavits examine witnesses and
documents and issue subpoenasand subpoenas duces tecum. The decision of the Commissioner of Labor may
be reconsidered by him at any time."
It seems clear that the petitions of both employers and employees for the non-enforcement of the Eight Hour
Labor Law were made in accordance with these provisions of the law. Exhibit 9 of the respondent which is a
communication addressed by the Under-Secretary of Labor on September 6, 1935, to the A.L. Ammen
Transportation Company, Inc., defines the attitude taken by the Department of Labor in connection with those
petitions. It advises the company to submit an application under sections 3 and 4 of Act No. 4123 above-quoted
for an increase of working hours of such laborers as may fall under the amendment and that pending final solution
of said application, the Department of Labor will not make any attempt to enforce said amendment. As has
already been stated it is not clear whether final action or decision has been made on the applications with respect
to the drivers of the respondent; that it is undeniable fact that up to the outbreak of the dispute, the law was not
observed nor enforced in the company; and that upon mutual agreement arrived at by the parties on April 14,
1938, the company worked out a schedule beginning May 1, 1938, placing all its employees under an eight-hour
schedule.
In view of the foregoing fact, the court is the opinion that the drivers are not entitled to the overtime pay
demanded for the whole period the law was not observed or enforced in the company. They are entitled to
payment of wages for hours worked in excess of the legal hours only beginning May 1, 1938.
On January 30, 1939, the petitioner filed a motion for reconsideration which was denied by the Court of Industrial
Relations, sitting in banc, with the following observations:
We have reviewed carefully the evidence on record with regard to the claim for back overtime pay we find that it
amply supports the findings and conclusions set forth in support of the motion for reconsideration are virtually a
repetition of the reasons advanced in the memorandum of the petitioner filed before the case was decided and
were already discussed and considered in the decision. The evidence permits no other conclusion than that the
employees were not coerced not intimidated by the respondent on the repeated occasions they signed and
presented to the Department of Labor their petitions for non-enforcement of the Eight Hour Labor Law. The
employees were indubitably aware of certain hardships the enforcement of the law at that time would bring to
them and these prompted their attitude of preferring the continuation of the schedule of hours observed prior to
the enactment of the legislation extending the benefits of the Eight Hour Labor Law to drivers of motor vehicles in
public utility enterprises. Whatever pecuniary advantage they would have gained by the strict observance of the
law by the company should they be made to work more than eight hours a day was apparently waived or given up
by them in exchange of their personal convenience and of the additional monthly pay the respondent gave to
those employees who were assigned to routes where the daily working hours exceeded the maximum fixed by
law. The evidence that the company paid additional salaries not only to drivers but also to its conductors who
were assigned to such routes stands uncontradicted and no attempt even was made by the petitioner to deny it.
Without need of passing on the question as to whether the provisions of the law are mandatory or not, in the light
of the above facts and applying the rules of equity invoked by the union, we are constrained to hold that the
petitioners are not rightly entitled to the payment sought.
In Kapisanan ng mga Manggagawa sa Pantranco vs. Pangasinan Transportation Co. (39 Off. Gaz., 1217), we have held
that, to be entitled to the benefits of section 5 of Act No. 4123, fulfillment of the mandate of the law is necessary, this
being a matter of public interest. Where both parties, as in this case, we have violated the law, this court must decline to
extend the strong arm of equity, as neither party is entitled to its aid. This is especially true in view of the findings of fact
made by the Court of Industrial Relations which we should not disturb.
We are not, to be sure insensible to the argument that industrial disputes should be decided with an eye on the welfare of
the working class, who, in the inter-play of economic forces, is said to find itself in the "end of the stick." In the case at bar,
however, we find no reason for disturbing the action taken by the respondent Court of Industrial Relations, which is a
special court enjoined to "act according to justice and equity and substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any technical rules of legal evidence but may inform its mind in
such manner as it may deem just and equitable" (sec. 20, Commonwealth Act No. 103).
The petition is dismissed, without pronouncement regarding costs. So ordered.
Avancea, C.J., Villa-Real, Imperial, Diaz, Concepcion, and Moran, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL PHILIPPINES, INC. (formerly
FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J .:
This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor
in the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations
Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its
monthly paid employees for holiday pay in the light of the Court's decision in Chartered Bank Employees Association
v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed
respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the
exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in
the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen,
sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime,
night differential, vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their
sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of251 as divisor is an
established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall
retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales
personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days'
holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two
motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the
case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases
pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by
Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he
had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and
whether or not the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and sick
leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The
respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agritultural
employees who regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined
with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come
back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working
hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00
a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to report for work at the office at
8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code
but an exercise of purely management prerogative of providing administrative control over such
personnel. This does not in any manner provide a reasonable level of determination on the actual field
work of the employees which can be reasonably ascertained. The theoretical analysis that salesmen and
other similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at
4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is surface projection. Actual
field work begins after 8:00 a.m.,when the sales personnel follow their field itinerary, and ends
immediately before 4:00 or 4:30 p.m. when they report back to their office. The period between 8:00 a.m.
and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of which
are subject to their individual capacity and industry and which "cannot be determined with reasonable
certainty." This is the reason why effective supervision over field work of salesmen and medical
representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently,
they are excluded from the ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be
read in conjunction with Rule IV, Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer .
. . (Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless
attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the
company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the
company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to
the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer"
did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines
field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly
supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and
performance are supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the
office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an
employee through the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their
performance is proof that their actual hours of work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good
collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal
market returns; and (6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in
measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the
actual hours of field work which are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss
the nature of the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court
stated:
The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent,
works individually. There are no restrictions respecting the time he shall work and he can earn as much or
as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives
commissions as extra compensation. He works away from his employer's place of business, is not subject
to the personal supervision of his employer, and his employer has no way of knowing the number of
hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their
exclusion as field personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the
divisor should be changed from 251 to 261 days to include the additional 10 holidays and the employees should
reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or
accelerates the basis of conversion and computation by ten days. With the inclusion of ten holidays as
paid days, the divisor is no longer 251 but 261 or 262 if election day is counted. This is indeed an
extremely difficult legal question of interpretation which accounts for what is claimed as falling within the
concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there was a consequent need to
abandon that 251 divisor. To maintain it would create an impossible situation where the employees would
benefit with additional ten days with pay but would simultaneously enjoy higher benefits by discarding the
same ten days for purposes of computing overtime and night time services and considering sick and
vacation leave credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor
arises concomitant with the award of ten holidays with pay. (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid
employee's salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank
Employees Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the rules and in the policy instruction, the
company practice indicates that the monthly salaries of the employees are so computed as to include the
holiday pay provided by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing
overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor
is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of
calendar days in a year. If the employees are already paid for all non-working days, the divisor should be
365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates
that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the
purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily,
the daily rate should also be the same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is
violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same
daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should
correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the
employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of
10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this
by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime
and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate,
since the daily rate is still the same before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in
light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980,
when the company was on a 6-day working schedule, the divisor used by the company was 303, indicating that the 10
holidays were likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the
chance to rectify its error, if ever there was one but did not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This
ruling was not questioned by the petitioner union as obviously said decision was favorable to it. Technically, therefore,
respondent Nestle should have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court
has ruled that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the
judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has
also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the issues so that
the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court resolved to
take up the matter of effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when theChartered
Bank decision, promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the
Labor Code. Although the Court does not entirely agree with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to
as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No.
9, issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded
monthly paid employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of
clarifying the Labor Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction
amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added
the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption
of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October 23,
1984 was in compliance with these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to
a legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or
executive act must have been in force and had to be complied with. This is so as until after the judiciary,
in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more fitting than that in a
subsequent litigation regard be had to what has been done while such legislative or executive act was in
operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely
because the judiciary is the government organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such
a determination of [unconstitutionality], is an operative fact and may have consequences which cannot
justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in various aspects, with respect to
particular relations, individual and corporate, and particular conduct, private and official." (Chicot County
Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with
approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co.,
Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of Justice Zaldivar
speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting
unfairness must be avoided. It is now almost the end of 1991. To require various companies to reach back to
1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of
the implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give
holiday pay benefits to its monthly paid employees, may have been moved to grant other concessions to its employees,
especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's
employees are among the highest paid in the industry. With this consideration, it would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's
fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered
Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of
the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in computing holiday pay
shall be 251 days. The holiday pay as above directed shall be computed from October 23, 1984. In all other respects, the
order of the respondent arbitrator is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin, Medialdea, Grio-Aquino, Regalado, Davide, Jr. and
Romero, JJ., concur.
Cruz and Nocon, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. Nos. 117442-43 January 11, 1995
FEM'S ELEGANCE LODGING HOUSE, FENITHA SAAVEDRA and IRIES ANTHONY SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional Arbitration Branch, Region X, National Labor
Relations Commission, Cagayan de Oro City, ALFONSO GALLETO, GEORGE VEDAD, ROLAND PANTONIAL,
REYNALDO DELAORAO, FELICISIMO BAQUILID, CECILIO SAJOL, ANNABEL CASTRO, BENJAMIN CABRERA,
RHONDEL PADERANGA, ZENAIDA GUTIB, AIDA IMBAT and MARIA GRACE ATUEL, respondents.
R E S O L U T I O N

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



Separate Opinions

PADILLA, J ., concurring:
The petition in this case should be dismissed because petitioners did not exhaust their remedies in the National Labor
Relations Commission (NLRC) before coming to this Court.
It is clear from Article 223 of the Labor Code that decisions, awards or orders of the labor arbiter are appealable to the
National Labor Relations Commission. The proper remedy which petitioners should have taken was to appeal to the
NLRC the labor arbiter's order denying their motion to dismiss and motion to expunge private respondents' position paper.
The present petition is therefore clearly premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters, even in the form of a petition for certiorarifor alleged
grave abuse of discretion under Rule 65 of the Rules of Court, we will be opening the flood gates to petitions
for certiorari against orders (including interlocutory ones) of labor arbiters when the clear intent of the law is to subject the
decisions, awards and orders of labor arbiters to review by the NLRC before they are brought to this Court.

Separate Opinions
PADILLA, J ., concurring:
The petition in this case should be dismissed because petitioners did not exhaust their remedies in the National Labor
Relations Commission (NLRC) before coming to this Court.
It is clear from Article 223 of the Labor Code that decisions, awards or orders of the labor arbiter are appealable to the
National Labor Relations Commission. The proper remedy which petitioners should have taken was to appeal to the
NLRC the labor arbiter's order denying their motion to dismiss and motion to expunge private respondents' position paper.
The present petition is therefore clearly premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters, even in the form of a petition for certiorarifor alleged
grave abuse of discretion under Rule 65 of the Rules of Court, we will be opening the flood gates to petitions
for certiorari against orders (including interlocutory ones) of labor arbiters when the clear intent of the law is to subject the
decisions, awards and orders of labor arbiters to review by the NLRC before they are brought to this Court.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-48605 December 14, 1981
DOMNA N. VILLAVERT, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE INSURANCE SYSTEM (Philippine
Constabulary), respondents.

FERNANDEZ, J .:
This is a petition to review the decision of the Employees' Compensation Commission in ECC Case No. 0692, entitled
"Domna N. Villavert, appellant versus Government Service Insurance System (Philippine Constabulary), respondents,"
affirming the decision of the Government Service Insurance System denying the claim for death benefits.
1

The petitioner, Domna N. Villavert, is the mother of the late, Marcelino N. Villavert who died of acute hemorrhagic
pancreatitis on December 12, 1975 employed as a Code Verifier in the Philippine Constabulary. She filed a claim for
income benefits for the death of her son under P.D. No. 626 as amended with the Government Service Insurance System
on March 18, 1976. The said claim was denied by the Government Service Insurance System on the ground that acute
hemorrhagic pancreatitis is not an occupational disease and that the petitioner had failed to show that there was a causal
connection between the fatal ailment of Marcelino N. Villavert and the nature of his employment.
The petitioner appealed to the Employees' Compensation Commission which affirmed on May 31, 1978 the decision of
the respondent, Government Service Insurance System, denying the claim.
The record shows that in addition to his duties as Code Verifier, Marcelino N. Villavert also performed the duties of a
computer operator and clerk typist. In the morning of December 11, 1975, Marcelino reported as usual to the
Constabulary Computer Center at Camp Crame, Quezon City. He performed his duties not only as code verifier but also
handled administrative functions, computer operation and typing jobs due to shortage of civilian personnel. Although he
was complaining of chest pain and headache late in the afternoon of December 11, 1975, after a whole day of strenuous
activities, Marcelino was still required to render overtime service until late in the evening of the same day, typing
voluminous classified communications, computing allowances and preparing checks for the salary of Philippine
Constabulary and Integrated National Police personnel throughout the country for distribution on or before December 15,
1975. He went home late at night and due to fatigue, he went to bed as soon as he arrived without taking his meal. Shortly
thereafter, Marcelino was noticed by his mother, the herein petitioner, gasping for breath, perspiring profusely, and
mumbling incoherent words. The petitioner tried to wake him up and after all efforts to bring him to his senses proved
futile, she rushed Marcelino to the UE Ramon Magsaysay Memorial Hospital where he was pronounced dead at 5:30
o'clock in the morning of December 12, 1975 without regaining consciousness. The case of death was acute hemorrhagic
pancreatitis.
To support the claim that Marcelino N. Villavert died of acute hemorrhagic pancreatitis as a result of his duties as a code
verifier, computer operator and typist of the Philippine Constabulary, the petitioner submitted the following certification of
Lt. Colonel Felino C. Pacheco Jr., commanding officer, of the Philippine Constabulary, which reads:
THIS IS TO CERTIFY that MARCELINO N. VILLAVERT, a regular employee of the Constabulary
Computer Center, had been performing the following duty assignments in this office in addition to his
appointment as Coder Verifier before his death;
a. Computer Operator As computer operator he was subject to excessive heat and cold;
b. Clerk TypistAs typist he was responsible for typing important communications not only for the office
of the Constabulary Computer Center but also for other posts, including engagement speeches of the
Chief of Constabulary and other ranking officers of the Command;
c. Due to the shortage of qualified civilian personnel to handle the task, he was given excessive work
responsibilities in the office which could have aggravated his ailment.
d. That more often he took his meals irregularly late in view of the nature of his work especially during the
preparation of checks for the salary of the Philippine Constabulary and the National Integrated Police
personnel throughout the country;
e. He used to perform rotation duties, thereby leaving him in sufficient time to consult the Constabulary
Medical Dispensary for routine physical check up about his health.
f. That subject employee never drinks alcoholic liquor, neither smokes nor engages on immoral habits
during his lifetime.
g. That he died in line of duty after retiring from his night shift.
This certification is being issued in behalf of legal heirs in order to justify their claim for payment of
benefits from the Employees' Compensation to reciprocate the services rendered by the late Marcelino N.
Villavert, a loyal and dedicated public servant.
2

The foregoing certification of Lt. Col. Felino C. Pacheco, Jr. was corroborated by the affidavit of Rustico P. Valenzuela,
Chief Clerk of the Constabulary Computer Center, which reads:
I, RUSTICO P. VALENZUELA, Master Sergeant, Philippine Constabulary, Filipino of legal age, married
and presently Chief Clerk of the Constabulary Computer Center, Camp Crame, Quezon City after having
been duly sworn to in accordance to law hereby depose and say:
a. That as Chief Clerk I am responsible to my Commanding Officer about the accounting, detail, duties,
etc. of all military and civilian personnel in the office and therefore the duties of the late Marcelino N.
Villavert are personally known to me prior to his death;
b. That the late Marcelino N. Villavert although was appointed as Coder Verifier, still he was instructed to
perform extra additional workload due to shortage of qualified civilian personnel to handle administrative
function, he being a graduate of the Computer Operator and an expert typist which is seldom found
among the qualities of civilian personnel assigned in the Constabulary Computer Center;
c. That the late Marcelino N. Villavert was complaining of chest pain and headache prior to his death but
because of an urgent call to the service, although it necessitated his rest; he was obliged to go on
strenuous duty on the night of December 11, 1975, typing voluminous classified communications,
compute allowances and prepare checks for the salary of Philippine Constabulary and Integrated National
Police personnel throughout the country for distribution on or before December 15, 1975, scheduled
payday, thereby aggravating his ailment due to excessive work, disposed to heat and cold, operating
computer machine and over fatigue that caused his sudden death;
d. That the late Marcelino N. Villavert before his death have insufficient time to consult the Medical
Dispensary for routine physical check-up due to the rotation of his duties and therefore no record of his
physical examination could be found in this Headquarters;
e. That the death of late Marcelino N. Villavert was service connected in view of the fact that he died while
in the performance of his official duties.
Affiant further sayeth none.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of August 1977 at Quezon City.
(SGD) RUSTICO P. VALENZUEL
Affiant
SUBSCRIBED AND SWORN to before me this 22nd day of August 1977 at Quezon City, Metro Manila.
Affiant exhibited his Residence Certificate No. A-1183510 issued at Taguig, Metro Manila on January 10,
1977.
(SGD) ENRIQUE C VILLANUEVA JR
1Lt. PC Administrative Officer
3

The Government Service Insurance System and the Employees' Compensation Commission denied the claim for
compensation on the ground that the petitioner did not present evidence that the illness of Marcelino N. Villavert, acute
hemorrhagic pancreatitis, was caused or aggravated by the nature of his duties as employee of the Philippine
Constabulary.
The Employees' Compensation Commission, citing a book on medicine, said:
In medical science, acute hemorrhagic pancreatitis is "acute inflammation with hemorrhagic necrosis of
the pancreas." It occurs most commonly in association with alcoholism. The onset of the symptoms often
occurs during or shortly after bouts of alcoholic intoxication. It also occurs in association with biliary tract
disease. Occasionally, it occurs as a complication of peptic ulcer, mumps, viral hepatitis or following the
use of drugs such as glucocorticoids, or chlorothiazide. It is sometimes associated with metabolic
disorders such as hyperpidemia and hyperparathyroidism. It may also be associated with a genetic type
of pancreatitis with onset in childhood. Trauma is a relatively frequent cause of pancreatitis; it may result
from a severe blow to the abdomen, a penetrating injury from a bullet or knife wound, inadvertent trauma
from surgical procedures in the upper abdomen or rarely, electric shock. Approximately 20% of the
patients have no apparent underlying or predisposing cause. (Principles of Internal Medicine by Harrison,
7th Edition, pp. 157)
4

However, the Medico Legal Officer of the National Bureau of Investigation stated that the exact cause of acute
hemorrhagic pancreatitis is still unknown despite extensive researches in this field, although most research data are
agreed that physical and mental stresses are strong causal factors in the development of the disease.
5

From the foregoing facts of record, it is clear that Marcelino N. Villavert died of acute hemorrhagic pancreatitis which was
directly caused or at least aggravated by the duties he performed as coder verifier, computer operator and clerk typist of
the Philippine Constabulary. There is no evidence at all that Marcelino N. Villavert had a "bout of alcoholic intoxication"
shortly before he died. Neither is there a showing that he used drugs.
It should be noted that Article 4 of the Labor Code of the Philippines, as amended, provides that "All doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations shall be resolved in favor
of labor."
WHEREFORE, the decision of the Employees' Compensation Commission sought to be reviewed is set aside and
judgment is hereby rendered ordering the Government Service Insurance System to pay the petitioner death benefits in
the amount of SIX THOUSAND PESOS (P6,000.00).
SO ORDERED.
Teehankee (Chairman), Makasiar, Guerrero and Plana, JJ., concur.


Separate Opinions

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


Footnotes
1 Rollo, pp. 17-21.
2 Rollo, p. 23.
3 Rollo, p. 24.
4 Rollo, pp. 31-32.
5 Rollo, p. 25.

SECOND DIVISION

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

RUTH JIMENEZ, Petitioner, v. EMPLOYEES COMPENSATION COMMISSION and GOVERNMENT
SERVICE INSURANCE SYSTEM, Respondents.

Isidro Pasana for Petitioner.

The Solicitor General for Respondents.


SYLLABUS


1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYEES COMPENSATION COMMISSION;
COMPENSABILITY OF ILLNESS; CANCER OF THE LUNGS, A BORDERLINE CASE REQUIRING STUDY OF
CIRCUMSTANCES OF CASE. Admittedly, cancer of the lungs (bronchogenic carcinoma) is one of those
borderline cases where a study of the circumstances of the case is mandated to fully appreciate whether
the nature of the work of the deceased increased the possibility of contracting such an ailment. WE have
ruled in the case of Dator v. Employees Compensation Commission (111 SCRA 634, L-57416, January 30,
1982) that" (U)ntil now, the cause of cancer is not known." Indeed, the respondent has provided an
opening through which petitioner can pursue and did pursue the possibility that the deceaseds ailment
could have been caused by the working conditions while employed with the Philippine Constabulary.
Respondents maintain that the deceased was a smoker and the logical conclusion is that the cause of the
fatal lung cancer could only be smoking which cannot in any way be justified as work-connected.
However, medical authorities support the conclusion that up to now, the etiology or cause of cancer of the
lungs is still largely unknown.

2. ID.; ID.; ID.; ID.; CONCLUSION OF COMMISSION NOT IN ACCORDANCE WITH MEDICAL AUTHORITIES
AND FACTS ON RECORD. The sweeping conclusion of the respondent Employees Compensation
Commission to the effect that the cause of the bronchogenic carcinoma of the deceased was due to his
being a smoker and not in any manner connected with his work as a soldier, is not in accordance with
medical authorities nor with the facts on record. No certitude can arise from a position of uncertainty. WE
are dealing with possibilities and medical authorities have given credence to the stand of the petitioner
that her husband developed bronchogenic carcinoma while working as a soldier with the Philippine
Constabulary. The records show that when the deceased enlisted with the Philippine Constabulary in 1969,
he was found to be physically and mentally healthy. A soldiers life is a hard one. As a soldier assigned to
field duty, exposure to the elements, dust and dirt, fatigue and lack of sleep and rest is a common
occurrence. Exposure to chemicals while handling ammunition and firearms cannot be discounted. WE
take note also of the fact that he became the security of one Dr. Emilio Cordero of Anulung, Cagayan, and
he always accompanied the doctor wherever the latter went (p. 26, rec.). Such assignment invariably
involved irregular working hours, exposure to different working conditions, and body fatigue, not to
mention psychological stress and other similar factors which influenced the evolution of his ailment.

3. ID.; ID.; ID.; ID.; THEORY OF INCREASED RISK. The theory of increased risk is applicable in the
case at bar. In the case of Cristobal v. ECC (103 SCRA, 336-337) where the Court held that "to establish
compensability under the said theory, the claimant must show proof of work-connection. Impliedly, the
degree of proof required is merely substantial evidence, which means such relevant evidence to support a
decision (Ang Tibay v. The Court of Industrial Relations and National Labor Union, Inc., 69 Phil. 635) or
clear and convincing evidence. In this connection, it must be pointed out that the strict rules of evidence
are not applicable in claims for compensation. Respondents however insist on evidence which would
establish direct causal relation between the disease rectal cancer and the employment of the deceased.
Such a strict requirement which even medical experts cannot support considering the uncertainty of the
nature of the disease would negate the principle of the liberality in the matter of evidence. Apparently,
what the law merely requires is a reasonable work-connection and not a direct causal relation. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as embodied
in Article 4 of the new Labor Code which states that all doubts in the implementation of the provisions of
this Code, including its implementing rules and regulations shall be resolved in favor of labor."cralaw
virtua1aw library

4. ID.; ID.; ID.; STRICT RULES ON EVIDENCE NOT APPLICABLE; STATE POLICY OF LIBERALITY TOWARDS
LABOR MUST BE MAINTAINED. In San Valentin v. ECC (118 SCRA 160), the Court held that "In
compensation cases, strict rules on evidence are not applicable. A reasonable work-connection is all that is
required or that the risk of contracting the disease is increased by the working condition." This is in line
with the avowed policy of the State as mandated by the Constitution (Art. II, Sec. 9) and restated in the
New Labor Code (Art. 4) to give maximum aid and protection to labor.


D E C I S I O N


MAKASIAR, J.:


This is a petition to review the decision of respondent Employees Compensation Commission (ECC) dated
August 20, 1981 (Annex "A", Decision, pp. 10-12, rec.) in ECC Case No. 1587, which affirmed the decision
of respondent Government Service Insurance System (GSIS), denying petitioners claim for death benefits
under Presidential Decree No. 626, as amended.

The undisputed facts are as follows:chanrob1es virtual 1aw library

Petitioner is the widow of the late Alfredo Jimenez, who joined the government service in June, 1969 as a
constable in the Philippine Constabulary (p. 2, rec.)

After rendering service for one year, he was promoted to the rank of constable second class. On
December 16, 1974, he was again promoted to the rank of sergeant (p. 26, rec.)

Sometime in April, 1976, he and his wife boarded a bus from Tuguegarao, Cagayan, to Anulung, Cagayan.
While on their way, Sgt. Jimenez, who was seated on the left side of the bus, fell down from the bus
because of the sudden stop of the vehicle. As a result, he was confined at the Cagayan Provincial Hospital
for about one (1) week, and thereafter, released (comment of respondent ECC, pp. 25-36, rec.). He was
again confined for further treatment from November 7, 1978 to May 16, 1979 at the AFP Medical Center in
Quezon City.

While on duty with the 111th PC Company, Tuguegarao, Cagayan, he was assigned as security to one Dr.
Emilio Cordero of Anulung, Cagayan (ECC rec., Proceedings of the PC Regional Board, June 6, 1980). In
compliance with his duty, he always accompanied the doctor wherever the latter went (p. 26,
rec.)chanroblesvirtualawlibrary

On November 7, 1978, the deceased was again confined at the Cagayan Provincial Hospital and then
transferred to the AFP V. Luna Medical Center at Quezon City for further treatment. He complained of off-
and-on back pains, associated with occasional cough and also the swelling of the right forearm. The
doctors found a mass growth on his right forearm, which grew to the size of 3 by 2 inches, hard and
associated with pain, which the doctors diagnosed as "aortic aneurysm, medrastinal tumor" (p. 27, rec.)

His condition improved somewhat after treatment and he was released on May 16, 1979. He was advised
to have complete rest and to continue medication. He was then given light duty inside the barracks of
their company.

Unfortunately, his ailment continued and became more serious.

On May 12, 1980, he died in his house at Anulung, Cagayan, at about 9:00 oclock in the evening. He was
barely 35 years old at the time of his death.

The cause of death, as found by the doctors, is "bronchogenic carcinoma" which is a malignant tumor of
the lungs.

On June 6, 1980, an administrative hearing was conducted before the PC Regional Board. It was their
official findings that the subject enlisted man "died in line of duty" ; that the deceased was a PC member
of the 111th PC Company at Tuguegarao, Cagayan; that he died due to "bronchogenic CA" ; and that he
"died not as a result of his misconduct and did not violate any provisions of the Articles of War" (ECC rec.,
Proceedings of the PC Regional Board, June 6, 1980).

The Board recommended "that all benefits due to or become due subject EP be paid and settled to his
legal heirs" (ECC rec., Proceedings of the PC Regional Board, June 6, 1980). Thus, as per records of the
GSIS, petitioner was paid benefits due to her deceased husband under Republic Act No. 610 (Comment of
respondent ECC, p. 27, rec.)cralawnad

Nevertheless, petitioner filed a claim for death benefits under PD No. 626, as amended with the
respondent GSIS. Said claim was denied by the GSIS on the ground that her husbands death is not
compensable "for the reason that the injury/sickness that caused his death is not due to the
circumstances of the employment or in the performance of the duties and responsibilities of said
employment" (Letter of denial by the GSIS dated July 14, 1980, ECC rec.)

The said decision was affirmed by respondent Employees Compensation Commission in its decision dated
August 21, 1981, stating among others:chanrob1es virtual 1aw library
x x x


"After an exhausted (sic) study of the evidences (sic) on record and the applicable law on the case, we
conclude that the law has been properly applied by the respondent System. . . .

"Bronchogenic carcinoma, medical authorities disclose, is the most common form of malignancy in males
reaching a peak between the fifth and seventh decades and accounting for one in four male cancer deaths.
The sex incidence is at least 5 to 1, male to female. Extensive statistical analysis by medical authorities
have confirmed the relationship between lung cancer and cigarette smoking. Other factors that may have
potential roles are exposure to ionizing radiation, exposure to chromates, metallic iron and iron oxides,
arsenic, nickel, beryllium and asbestos (Harrisons Principles of Internal Medicine by Wintrobe, Et Al., 7th
Edition, p. 1322).

"Although Presidential Decree No. 626, as amended, was envisioned to give relief to workingmen, who
sustain an injury or contract an ailment in the course of employment and that to best attain its lofty
objective, a liberal interpretation of the law should pervade in its implementation, this precept, however,
may not be invoked as not even a slight causal link between the development of the ailment and the
decedents (sic) duties and working conditions as a PC sergeant could be deduced from the records of this
case. The respondent Systems ruling that appellants claim does not fall within the beneficiant provisions
of Presidential Decree No. 626, as amended, and therefore the same should be denied, is in full harmony
with the law and the facts obtaining herein.

. . ." (Decision, pp. 10-12, rec.)

On September 28, 1981, Petitioner, assisted by counsel, filed the instant petition, the only pertinent issue
being whether or not her husbands death from bronchogenic carcinoma is compensable under the law.

The petitioner contends that her husbands death is compensable and that respondent Commission erred
in not taking into consideration the uncontroverted circumstance that when the deceased entered into the
Philippine Constabulary, he was found to be physically and mentally healthy. She farther contends that as
a soldier, her husbands work has always been in the field where exposure to the elements, dust and dirt,
fatigue and lack of sleep and rest was the rule rather than the exception. The nature of work of a soldier
being to protect life and property of citizens, he was subject to call at any time of day or night.
Furthermore, he was even assigned as security to one Emilio Cordero and always accompanied the latter
wherever he went. Exposed to these circumstances for several years, the deceaseds physical constitution
began to deteriorate, which eventually resulted to his death from bronchogenic carcinoma (Petition, pp. 2-
9, rec.)

On the other hand, respondent Commission maintains that while the deceased soldier may have been
exposed to elements of dust and dirt and condition of lack of rest and continued fatigue by virtue of his
duties to protect the life and property of the citizens, such conditions have no causal relation to his
contraction of bronchogenic carcinoma. It is also the opinion of the respondent that since there is evidence
of the deceased to be a smoker, "the late Sgt. Jimenez may have indulged heavily in smoking and
drinking, not merely occasionally. And it has been demonstrated medically that the more cigarettes a
person smokes, the greater the risk of developing lung cancer" (Memorandum, p. 62, rec.). In short, the
respondent alleges that the deceased was responsible to a large degree for his having contracted
bronchogenic carcinoma that led to his demise.cralawnad

WE find the petitioners claim meritorious.

Primary carcinoma of the lung is the most common fatal cancer and its frequency is increasing (The Merck
Manual, 13th Edition, p. 647). Admittedly, cancer of the lungs (bronchogenic carcinoma) is one of those
borderline cases where a study of the circumstances of the case is mandated to fully appreciate whether
the nature of the work of the deceased increased the possibility of contracting such an ailment. In the
case of Laron v. Workmens Compensation Commission (73 SCRA 90), WE held, citing Schmidts
Attorneys Dictionary of Medicine, 165 Sup. 143; Beerman v. Public Service Coordinated Transport, 191 A
297, 299; Words and Phrases, 6 Permanent Edition 61, "The English word cancer means crab, in the
medical sense, it refers to a malignant, usually fatal, tumor or growth." Findings of fact by the respondent
points out that bronchogenic carcinoma is a malignant tumor of the lungs. WE have ruled in the case of
Dator v. Employees Compensation Commission (111 SCRA 634, L-57416, January 30, 1982) that" (U)ntil
now, the cause of cancer is not known." Indeed, the respondent has provided an opening through which
petitioner can pursue and did pursue the possibility that the deceaseds ailment could have been caused
by the working conditions while employed with the Philippine Constabulary.

Respondents maintain that the deceased was a smoker and the logical conclusion is that the cause of the
fatal lung cancer could only be smoking which cannot in any way be justified as work-connected.
However, medical authorities support the conclusion that up to now, the etiology or cause of cancer of the
lungs is still largely unknown as provided for in the following:jgc:chanrobles.com.ph

"Although the etiology of cancer in humans cannot yet be explained at the molecular level, it is clear that
genetic composition of the host is important in cancer induction. Related immunologic factors may
predispose the host to a putative carcinogen. There is some evidence that viruses may play a role in the
neoplastic process. In addition, both environmental and therapeutic agents have been identified of
carcinogens" (Harrison, Principles of Internal Medicine, 9th Edition, 1980, p. 1584).

"Considerable attention has been directed to the potential role of air pollution exposure to ionizing
radiation and numerous occupational hazards, including exposure to chromates, metallic iron and iron
oxides, arsenic, nickel, beryllium and asbestos" (Harrison, Ibid, p. 1259).

"The lungs are the site of origin of primary benign and malignant tumors and receive metastases from
many other organs and tissues. Specific causes have not been established but a strong dose-related
statistical association exists between cigarette smoking and squamous cell and undifferentiated small (oat)
cell bronchogenic carcinomas. There is suggestive evidence that prolonged exposure to air pollution
promotes lung neoplasms" (The Merck Manual, 13th Edition, p. 647).

"What emerges from such concepts is the belief that cancers in man do not appear suddenly out of the
blue. . . . Moreover, there need not be a single etiology or pathogenesis. Many influences may be at work
during the evolution of the lesion and many pathways may be involved. Indeed, the term cancer may
embrace a multiplicity of diseases of diverse origins" (Robbins, Pathologic Basis of Disease, 2nd Edition,
1979, p. 185, Emphasis supplied).

WE cannot deny the fact that the causes of the illness of the deceased are still unknown and may embrace
such diverse origins which even the medical sciences cannot tell with reasonable certainty. Indeed,
scientists attending the World Genetic Congress in New Delhi, India, have warned that about 25,000
chemicals used around the world could potentially cause cancer, and Lawrence Fishbein of the U.S.
National Center for Toxilogical Research pointed out that humans were daily exposed to literally hundreds
of chemical agents via air, food, medication, both in their industrial home and environments (Evening
Post, December 16, 1983, p. 3, cols. 2-3).

The theory of increased risk is applicable in the instant case. WE had the occasion to interpret the
theory of increased risk in the case of Cristobal v. Employees Compensation Commission (103 SCRA, 336-
337, L-49280, February 26, 1981):chanrobles.com.ph : virtual law library

"To establish compensability under the said theory, the claimant must show proof of work-connection.
Impliedly, the degree of proof required is merely substantial evidence, which means such relevant
evidence to support a decision (Ang Tibay v. The Court of Industrial Relations and National Labor Union,
Inc., 69 Phil. 635) or clear and convincing evidence. In this connection, it must be pointed out that the
strict rules of evidence are not applicable in claims for compensation. Respondents however insist on
evidence which would establish direct causal relation between the disease rectal cancer and the
employment of the deceased. Such a strict requirement which even medical experts cannot support
considering the uncertainty of the nature of the disease would negate the principle of the liberality in the
matter of evidence, Apparently, what the law merely requires is a reasonable work-connection and not a
direct causal relation. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as embodied in Article 4 of the new Labor Code which states that all
doubts in the implementation of the provisions of this Code, including its implementing rules and
regulations shall be resolved in favor of labor.

". . . As the agents charged by the law to implement the social justice guarantee secured by both 1935
and 1973 Constitutions, respondents should adopt a more liberal attitude in deciding claims for
compensation especially when there is some basis in the facts inferring a work-connection. This should not
be confused with the presumption of compensability and theory of aggravation under the Workmens
Compensation Act. While these doctrines may have been abandoned under the New Labor Code (the
constitutionality of such abrogation may still be challenged), it is significant that the liberality of the law,
in general, still subsists. . . ." (Emphasis supplied)

The sweeping conclusion of the respondent Employees Compensation Commission to the effect that the
cause of the bronchogenic carcinoma of the deceased was due to his being a smoker and not in any
manner connected with his work as a soldier, is not in accordance with medical authorities nor with the
facts on record. No certitude can arise from a position of uncertainty.

WE are dealing with possibilities and medical authorities have given credence to the stand of the petitioner
that her husband developed bronchogenic carcinoma while working as a soldier with the Philippine
Constabulary. The records show that when the deceased enlisted with the Philippine Constabulary in 1969,
he was found to be physically and mentally healthy. A soldiers life is a hard one. As a soldier assigned to
field duty, exposure to the elements, dust and dirt, fatigue and lack of sleep and rest is a common
occurrence. Exposure to chemicals while handling ammunition and firearms cannot be discounted. WE
take note also of the fact that he became the security of one Dr. Emilio Cordero of Anulung, Cagayan, and
he always accompanied the doctor wherever the latter went (p. 26, rec.). Such assignment invariably
involved irregular working hours, exposure to different working conditions, and body fatigue, not to
mention psychological stress and other similar factors which influenced the evolution of his ailment.

WE held in the case of San Valentin v. Employees Compensation Commission (118 SCRA 160)
that:jgc:chanrobles.com.ph

"x x x

"In compensation cases. strict rules of evidence are not applicable. A reasonable work-connection is all
that is required or that the risk of contracting the disease is increased by the working conditions."cralaw
virtua1aw library

In the case of Dator v. Employees Compensation Commission

(L-57416, January 30, 1982), WE held the death of Wenifreda Dator, a librarian for 15 years, caused by
bronchogenic carcinoma compensable. Being a librarian, "she was exposed to duty books and other
deleterious substances in the library under unsanitary conditions" (Ibid., 632). WE do not see any reason
to depart from the ruling in the said case, considering that a soldiers duties and environment are more
hazardous.

This is in line with the avowed policy of the State as mandated by the Constitution (Article II, Section 9)
and restated in the new Labor Code (Article 4), to give maximum aid and protection to labor.

WHEREFORE, THE DECISION APPEALED FROM IS HEREBY SET ASIDE AND THE GOVERNMENT SERVICE
INSURANCE SYSTEM IS HEREBY ORDERED.

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

2. TO REIMBURSE THE PETITIONERs MEDICAL AND HOSPITAL EXPENSES DULY SUPPORTED BY PROPER
RECEIPTS; AND

3. TO PAY THE PETITIONER THE SUM OF ONE THOUSAND TWO HUNDRED (P1,200.00) PESOS FOR
BURIAL EXPENSES.

SO ORDERED.

Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.
Separate Opinions


AQUINO, J., dissenting:chanrob1es virtual 1aw library

I dissent. Bronchogenic carcinoma was not work-connected. The ECC did not err in denying death
benefits.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-50999 March 23, 1990
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E.
ZUELLIG (M), INC., respondents.
Raul E. Espinosa for petitioners.
Lucas Emmanuel B. Canilao for petitioner A. Manuel.
Atienza, Tabora, Del Rosario & Castillo for private respondent.

MEDIALDEA, J .:
This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in NLRC Case
No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v.
F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the
decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor (Regional
Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and
Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of retrenchment due to financial losses.
This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They
alleged further that they are being dismissed because of their membership in the union. At the last hearing of the case,
however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole
issue to be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of
Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made.
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of which
petitioners are members, contains the following provision (p. 71, Rollo):
ARTICLE XIV Retirement Gratuity
Section l(a)-Any employee, who is separated from employment due to old age, sickness, death or
permanent lay-off not due to the fault of said employee shall receive from the company a retirement
gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salary as
used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service
shall be deemed equivalent to total service credits, a fraction of at least six months being considered one
year, including probationary employment. (Emphasis supplied)
On the other hand, Article 284 of the Labor Code then prevailing provides:
Art. 284. Reduction of personnel. The termination of employment of any employee due to the
installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar
causes, shall entitle the employee affected thereby to separation pay. In case of termination due to the
installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one (1)
month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of
at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:
x x x
Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to
prevent losses or other similar causes, or where the employee suffers from a disease and his continued
employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the
employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half
month pay for every year of service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year.
x x x
Sec. 10. Basis of termination pay. The computation of the termination pay of an employee as provided
herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat
the intention of the Code, in which case the basis of computation shall be the rate before its deduction.
(Emphasis supplied)
On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the
complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances,
etc.) for every year of service that they have worked with the company.
SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of Petition dated
April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by the decision appealed
from" since he had "received, to his full and complete satisfaction, his separation pay," resolved to dismiss the petition as
to him.
The issue is whether or not earned sales commissions and allowances should be included in the monthly salary
of petitioners for the purpose of computation of their separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of separation pay due them, whether under the
Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. They
cited Article 97(f) of the Labor Code which includes commission as part on one's salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered, and includes the fair and reasonable value, as determined by the Secretary
of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. 'Fair
reasonable value' shall not include any profit to the employer or to any person affiliated with the employer.
Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include commission
in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms. Furthermore, in the
definition of the term "wage", "commission" is used only as one of the features or designations attached to the word
remuneration or earnings.
Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the purpose of
computation of their separation pay is concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No.
76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay,
account must be taken not only of the basic salary of petitioner but also of her transportation and emergency living
allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and
recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989.
We shall concern ourselves now with the issue of whether or not earned sales commission should be included in the
monthly salary of petitioner for the purpose of computation of their separation pay.
Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been
repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for
interpretation or construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, G.R.
Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51
SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and tends
only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining
Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an
ambiguity. In this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a
general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not show any
indication that commission is part of salary. We can say that commission by itself may be considered a
wage. This is not something novel for it cannot be gainsaid that certain types of employees like agents,
field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but rely mainly on
commission earned.
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in
conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination
pay due to one who is sought to be legally separated from the service is 'his latest salary rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.
The above terms found in those Articles and the particular Rules were intentionally used to express the
intent of the framers of the law that for purposes of separation pay they mean to be specifically referring
to salary only.
.... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities and
nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is
attached to simplify matters that may arise there from. The general guidelines in (sic) the formation of
specific rules for particular purpose. Thus, that what should be controlling in matters concerning
termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate,
settled is the rule that in matters of conflict between the general provision of law and that of a particular-
or specific provision, the latter should prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the implementing rules, it could be deduced that wage is
used in its generic sense and obviously refers to the basic wage rate to be ascertained on a time, task,
piece or commission basis or other method of calculating the same. It does not, however, mean that
commission, allowances or analogous income necessarily forms part of the employee's salary because to
do so would lead to anomalies (sic), if not absurd, construction of the word "salary." For what will prevent
the employee from insisting that emergency living allowance, 13th month pay, overtime, and premium
pay, and other fringe benefits should be added to the computation of their separation pay. This situation,
to our mind, is not the real intent of the Code and its rules.
We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective
Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention
the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means a recompense or consideration
made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more
fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services
rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous
(Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481;
38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage",
the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that
is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law
Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is
included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of
petitioners, their salary base should include also their earned sales commissions.
The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners.
We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of incentives
or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to
them, still these commissions are direct remuneration services rendered which contributed to the increase of income of
Zuellig . Commission is the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver,
factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to
the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the
work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that
commission are part of petitioners' wage or salary. We take judicial notice of the fact that some salesman do not received
any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee
relationship exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do not
form part of wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary and
therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which
is, to alleviate the difficulties which confront a dismissed employee thrown the the streets to face the harsh necessities of
life.
Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in computing
the separation pay, We held that:
The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not
properly includible in such base figure since such commissions must be earned by actual market
transactions attributable to petitioner.
Applying this by analogy, since the commissions in the present case were earned by actual market transactions
attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be
taken into account is the average commissions earned during their last year of employment.
The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing regulations,
the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning
and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which
states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152
SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code
which provides that "in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety
and decent living for the laborer.
ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations Commission
is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose Songco and Amancio
Manuel. The case is remanded to the Labor Arbiter for the proper computation of said separation pay.
SO ORDERED.
Narvasa (Chairman), Cruz, Gancayco and Grio-Aquino, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 81077 June 6, 1990
LUIS DE OCAMPO, JR., JOSE RODRIGO, EUGENIO ESQUEJO, VICTORINO TABERNERO, RIZALO DALIVA,
FRANCISCO ACOSTA and 87 others listed in Annex 'A' hereof, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MAKATI DEVELOPMENT CORPORATION, respondents.
Alfra Beta A. Serquina for petitioners.
Maximo P. Amurao, Jr. for private respondent.

CRUZ, J .:
The petition seeks a reversal of the decision of the respondent NLRC dated June 8, 1984, the dispositive portion of which
reads as follows:
WHEREFORE, the Decision appealed from is hereby MODIFIED as hereinabove indicated.
Consequently, the application for clearance to dismiss the union officers is granted; the employment
status of the individual complainants who were project employees is also considered severed, not on
account of illegality of the strike but due to the expiration of their employment contracts; and the
respondent is ordered to reinstate, without back wages, the individual complainants who were regular
employees except those who were officers of the union among them or paid separation pay at their
option, equivalent to one month's pay or one-half month's pay for every year of service, whichever is
greater.
It appears that on September 30, 1980, the services of 65 employees of private respondent Makati Development
Corporation were terminated on the ground of the expiration of their contracts; that the said employees filed a complaint
for illegal dismissal against the MDC on October 1, 1980; * that on October 8, 1980, as a result of the aforementioned
termination, the Philippine Transport and General Workers Association, of which the complainants were members, filed a
notice of strike on the grounds of union-busting, subcontracting of projects which could have been assigned to the
dismissed employees, and unfair labor practice; that on October 14, 1980, the PTGWA declared a strike and established
picket lines in the perimeter of the MDC premises; that on November 4, 1980, the MDC filed with the Bureau of Labor
Relations a motion to declare the strike illegal and restrain the workers from continuing the strike; that on that same day
and several days thereafter the MDC filed applications for clearance to terminate the employment of 90 of the striking
workers, whom it had meanwhile preventively suspended; that of the said workers, 74 were project employees under
contract with the MDC with fixed terms of employment; and that on August 31, 1982, Labor Arbiter Apolinar L. Sevilla
rendered a decision
1
denying the applications for clearance filed by the MDC and directing it to reinstate the individual
complainants with two months back wages each.
This is the decision modified by the NLRC
2
which is now faulted by the petitioners for grave abuse of discretion. The
contention is that the public respondent acted arbitrarily and erroneously in ruling that: a) the motion for
reconsideration was filed out of time; b) the strike was illegal; and c) the separation of the project employees was
justified.
Having considered the issues and the arguments of the parties in their respective pleadings, including the petitioners' ex
parte motion for early resolution of this case, the Court makes the findings that follow.
On the first issue, we note that the rule on motions for reconsideration of the decision of the NLRC is now found in Rule X
of the Revised Rules of the NLRC, providing thus:
Section 9.Motions for reconsideration Motions for reconsideration of any order, resolution or decision
of the Commission shall not be entertained except when based on palpable or patent errors, provided that
the motion is under oath and filed within ten (I 0) calendar days from receipt of the order, resolution or
decision, with proof of service that a copy of the same has been furnished, within the aforesaid
reglementary period, the adverse party and provided further, that only one such motion shall be
entertained.
Subject to the provisions of Section 3, Rule IX of these Rules, motions for reconsideration of an order,
resolution or decision of a Division shall be resolved by the Division of origin.
However, this section was promulgated only on November 5, 1986, and became effective only on November 29, 1986,
after the required publication.
3
It was therefore not yet in force when the required resolution in the present case was
rendered in 1984.
Apparently agreeing that the reglementary period then was fifteen days, the Solicitor General argues that the petitioner's
motion for reconsideration was nevertheless filed late on June 26, 1984, the decision of the NLRC having been rendered
on June 7, 1984, or 19 days earlier.
4
This is not exactly accurate. The fact is Annex "C" of the petition shows that a copy
of the decision was received by the petitioner only on June 13, 1984, and it was from that date that the reglementary
period commenced to run. This means that the motion for reconsideration was filed on time, only 13 days having elapsed
before the deadline.
But this notwithstanding, we must hold that under the law then in force, to wit, PD No. 823 as amended by PD No. 849,
the strike was indeed illegal. In the first place, it was based not on the ground of unresolved economic issues, which was
the only ground allowed at that time, when the policy was indeed to limit and discourage strikes. Secondly, the strike was
declared only after 6 days from the notice of strike and before the lapse of the 30-day period prescribed in the said law for
a cooling-off of the differences between the workers and management and a possible avoidance of the intended strike.
That law clearly provided:
Sec. 1. It is the policy of the state to encourage free trade unionism and free collective bargaining within
the framework of compulsory and voluntary arbitration. Therefore all forms of strikes, picketing and
lockout are hereby strictly prohibited in vital industries such as in public utilities, including transportation
and communication, companies engaged in the manufacturer processing as well as in the distribution of
fuel gas, gasoline and fuel or lubricating oil, in companies engaged in the production or processing of
essential commodities or products for export, and in companies engaged in banking of any kind, as well
as in hospitals and in schools and colleges.
However, any legitimate labor union may strike and any employer may lockout in establishments not
covered by General Order No. 5 only on grounds of unresolved economic issues in collective bargaining,
in which case the union or the employer shall file a notice with the Bureau of Labor Relations at least 30
days before the intended strike or lockout. (Emphasis supplied)
It is our ruling that the leaders of the illegal strike were correctly punished with dismissal, but their followers (other than the
contract workers) were properly ordered reinstated, considering their lesser degree of responsibility. The penalty imposed
upon the leaders was only proper because it was they who instigated the strike even if they knew, or should have known,
that it was illegal. It was also fair to rule that the reinstated strikers were not entitled to backpay as they certainly should
not be compensated for services not rendered during the illegal strike. In our view, this is a reasonable compromise
between the demands of the workers and the rights of the employer.
Coming now to the last question, we stress the rule in Cartagenas v. Romago Electric Co.,
5
that contract workers are not
considered regular employees, their services being needed only when there are projects to be undertaken. 'The rationale
of this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in
the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these
stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be
disbursed by the employer from profits not earned. This is not fair by any standard and can only lead to a coddling of labor
at the expense of management.
We believe, however, that this rule is not applicable in the case at bar, and for - good reason. The record shows that
although the contracts of the project workers had indeed expired, the project itself was still on-going and so continued to
require the workers' services for its completion.
6
There is no showing that such services were unsatisfactory to justify
their termination. This is not even alleged by the private respondent. One can therefore only wonder why, in view of these
circumstances, the contract workers were not retained to finish the project they had begun and were still working on. This
had been done in past projects. This arrangement had consistently been followed before, which accounts for the long
years of service many of the workers had with the MDC.
It is obvious that the real reason for the termination of their services-which, to repeat, were still needed-was the complaint
the project workers had filed and their participation in the strike against the private respondent. These were the acts that
rendered them persona non grata to the management. Their services were discontinued by the MDC not because of the
expiration of their contracts, which had not prevented their retention or rehiring before as long as the project they were
working on had not yet been completed. The real purpose of the MDC was to retaliate against the workers, to punish them
for their defiance by replacing them with more tractable employees.
Also noteworthy in this connection is Policy Instruction No. 20 of the Department of Labor, providing that "project
employees are not entitled to separation pay if they are terminated as a result of the completion of the project or any
phase thereof in which they are employed, regardless of the projects in which they had been employed by a particular
construction company."
7
Affirmatively put, and interpreting it in the most liberal way to favor the working class, the rule
would entitle project employees to separation pay if the projects they are working on have not yet been completed when
their services are terminated. And this should be true even if their contracts have expired, on the theory that such
contracts would have been renewed anyway because their services were still needed.
Applying this rule, we hold that the project workers in the case at bar, who were separated even before the completion of
the project at the New Alabang Village and not really for the reason that their contracts had expired, are entitled to
separation pay. We make this disposition instead of ordering their reinstatement as it may be assumed that the said
project has been completed by this time. Considering the workers to have been separated without valid cause, we shall
compute their separation pay at the rate of one month for every year of service of each dismissed employee, up to the
time of the completion of the project.
8
We feel this is the most equitable way to treat their claim in light of their cavalier
dismissal by the private respondent despite their long period of satisfactory service with it.
It is the policy of the Constitution to afford protection to labor in recognition of its role in the improvement of our welfare
and the strengthening of our democracy. An exploited working class is a discontented working class. It is a treadmill to
progress and a threat to freedom. Knowing this, we must exert all effort to dignify the lot of the employee, elevating him to
the same plane as his employer, that they may better work together as equal partners in the quest for a better life. This is
a symbiotic relationship we must maintain if such a quest is to succeed.
WHEREFORE, the appealed decision of the NLRC is AFFIRMED but with the modification that the contract workers are
hereby declared to have been illegally separated before the expiration of the project they were working on and so are
entitled to separation pay equivalent to one month salary for every year of service. No costs.
SO ORDERED.
Narvasa (Chairman), Gancayco and Medialdea, JJ., concur.
Grio-Aquino, J., is on leave.


Footnotes
* On April 14, 1983, a compromise agreement subsequently approved by the NLRC en banc provided for
the reinstatement of the workers and payment to them of one year backwage and separation pay by the
MDC.
1 Rollo, pp. 53-61.
2 Rollo, pp. 45-52.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 76633 October 18, 1988
EASTERN SHIPPING LINES, INC., petitioner,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR AND EMPLOYMENT,
HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO, respondents.
Jimenea, Dala & Zaragoza Law Office for petitioner.
The Solicitor General for public respondent.
Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J .:
The private respondent in this case was awarded the sum of P192,000.00 by the Philippine Overseas Employment
Administration (POEA) for the death of her husband. The decision is challenged by the petitioner on the principal ground
that the POEA had no jurisdiction over the case as the husband was not an overseas worker.
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo, Japan, March 15,
1985. His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2 of the POEA. The
petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by the Social Security
System and should have been filed against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and
after considering the position papers of the parties ruled in favor of the complainant. The award consisted of P180,000.00
as death benefits and P12,000.00 for burial expenses.
The petitioner immediately came to this Court, prompting the Solicitor General to move for dismissal on the ground of non-
exhaustion of administrative remedies.
Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations Commission, on the
theory inter alia that the agency should be given an opportunity to correct the errors, if any, of its subordinates. This case
comes under one of the exceptions, however, as the questions the petitioner is raising are essentially questions of
law.
1
Moreover, the private respondent himself has not objected to the petitioner's direct resort to this Court, observing
that the usual procedure would delay the disposition of the case to her prejudice.
The Philippine Overseas Employment Administration was created under Executive Order No. 797, promulgated on May 1,
1982, to promote and monitor the overseas employment of Filipinos and to protect their rights. It replaced the National
Seamen Board created earlier under Article 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order,
the POEA is vested with "original and exclusive jurisdiction over all cases, including money claims, involving employee-
employer relations arising out of or by virtue of any law or contract involving Filipino contract workers, including seamen."
These cases, according to the 1985 Rules and Regulations on Overseas Employment issued by the POEA, include
"claims for death, disability and other benefits" arising out of such employment.
2

The petitioner does not contend that Saco was not its employee or that the claim of his widow is not compensable. What it
does urge is that he was not an overseas worker but a 'domestic employee and consequently his widow's claim should
have been filed with Social Security System, subject to appeal to the Employees Compensation Commission.
We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas employee of the
petitioner at the time he met with the fatal accident in Japan in 1985.
Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined as "employment
of a worker outside the Philippines, including employment on board vessels plying international waters, covered by a valid
contract.
3
A contract worker is described as "any person working or who has worked overseas under a valid employment
contract and shall include seamen"
4
or "any person working overseas or who has been employed by another which may
be a local employer, foreign employer, principal or partner under a valid employment contract and shall include
seamen."
5
These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while under a contract of
employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign
country.
6

It is worth observing that the petitioner performed at least two acts which constitute implied or tacit recognition of the
nature of Saco's employment at the time of his death in 1985. The first is its submission of its shipping articles to the
POEA for processing, formalization and approval in the exercise of its regulatory power over overseas employment under
Executive Order NO. 797.
7
The second is its payment
8
of the contributions mandated by law and regulations to the
Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing social and
welfare services to Filipino overseas workers."
Significantly, the office administering this fund, in the receipt it prepared for the private respondent's signature, described
the subject of the burial benefits as "overseas contract worker Vitaliano Saco."
9
While this receipt is certainly not
controlling, it does indicate, in the light of the petitioner's own previous acts, that the petitioner and the Fund to which it
had made contributions considered Saco to be an overseas employee.
The petitioner argues that the deceased employee should be likened to the employees of the Philippine Air Lines who,
although working abroad in its international flights, are not considered overseas workers. If this be so, the petitioner
should not have found it necessary to submit its shipping articles to the POEA for processing, formalization and approval
or to contribute to the Welfare Fund which is available only to overseas workers. Moreover, the analogy is hardly
appropriate as the employees of the PAL cannot under the definitions given be considered seamen nor are their
appointments coursed through the POEA.
The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA pursuant to its
Memorandum Circular No. 2, which became effective on February 1, 1984. This circular prescribed a standard contract to
be adopted by both foreign and domestic shipping companies in the hiring of Filipino seamen for overseas employment. A
similar contract had earlier been required by the National Seamen Board and had been sustained in a number of cases by
this Court.
10
The petitioner claims that it had never entered into such a contract with the deceased Saco, but that is hardly
a serious argument. In the first place, it should have done so as required by the circular, which specifically declared that
"all parties to the employment of any Filipino seamen on board any ocean-going vessel are advised to adopt and use this
employment contract effective 01 February 1984 and to desist from using any other format of employment contract
effective that date." In the second place, even if it had not done so, the provisions of the said circular are nevertheless
deemed written into the contract with Saco as a postulate of the police power of the State.
11

But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the principle of non-delegation
of legislative power. It contends that no authority had been given the POEA to promulgate the said regulation; and even
with such authorization, the regulation represents an exercise of legislative discretion which, under the principle, is not
subject to delegation.
The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797, reading as
follows:
... The governing Board of the Administration (POEA), as hereunder provided shall promulgate the
necessary rules and regulations to govern the exercise of the adjudicatory functions of the Administration
(POEA).
Similar authorization had been granted the National Seamen Board, which, as earlier observed, had itself prescribed a
standard shipping contract substantially the same as the format adopted by the POEA.
The second challenge is more serious as it is true that legislative discretion as to the substantive contents of the law
cannot be delegated. What can be delegated is the discretion to determine how the law may be enforced,
not what the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative
cannot be abdicated or surrendered by the legislature to the delegate. Thus, in Ynot v. Intermediate Apellate
Court
12
which annulled Executive Order No. 626, this Court held:
We also mark, on top of all this, the questionable manner of the disposition of the confiscated property as
prescribed in the questioned executive order. It is there authorized that the seized property shall be
distributed to charitable institutions and other similar institutions as the Chairman of the National Meat
Inspection Commission may see fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" is
an extremely generous and dangerous condition, if condition it is. It is laden with perilous opportunities for
partiality and abuse, and even corruption. One searches in vain for the usual standard and the
reasonable guidelines, or better still, the limitations that the officers must observe when they make their
distribution. There is none. Their options are apparently boundless. Who shall be the fortunate
beneficiaries of their generosity and by what criteria shall they be chosen? Only the officers named can
supply the answer, they and they alone may choose the grantee as they see fit, and in their own
exclusive discretion. Definitely, there is here a 'roving commission a wide and sweeping authority that is
not canalized within banks that keep it from overflowing,' in short a clearly profligate and therefore invalid
delegation of legislative powers.
There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz, the
completeness test and the sufficient standard test. Under the first test, the law must be complete in all its terms
and conditions when it leaves the legislature such that when it reaches the delegate the only thing he will have to
do is enforce it.
13
Under the sufficient standard test, there must be adequate guidelines or stations in the law to
map out the boundaries of the delegate's authority and prevent the delegation from running riot.
14

Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not allowed to step
into the shoes of the legislature and exercise a power essentially legislative.
The principle of non-delegation of powers is applicable to all the three major powers of the Government but is especially
important in the case of the legislative power because of the many instances when its delegation is permitted. The
occasions are rare when executive or judicial powers have to be delegated by the authorities to which they legally certain.
In the case of the legislative power, however, such occasions have become more and more frequent, if not necessary.
This had led to the observation that the delegation of legislative power has become the rule and its non-delegation the
exception.
The reason is the increasing complexity of the task of government and the growing inability of the legislature to cope
directly with the myriad problems demanding its attention. The growth of society has ramified its activities and created
peculiar and sophisticated problems that the legislature cannot be expected reasonably to comprehend. Specialization
even in legislation has become necessary. To many of the problems attendant upon present-day undertakings, the
legislature may not have the competence to provide the required direct and efficacious, not to say, specific solutions.
These solutions may, however, be expected from its delegates, who are supposed to be experts in the particular fields
assigned to them.
The reasons given above for the delegation of legislative powers in general are particularly applicable to administrative
bodies. With the proliferation of specialized activities and their attendant peculiar problems, the national legislature has
found it more and more necessary to entrust to administrative agencies the authority to issue rules to carry out the general
provisions of the statute. This is called the "power of subordinate legislation."
With this power, administrative bodies may implement the broad policies laid down in a statute by "filling in' the details
which the Congress may not have the opportunity or competence to provide. This is effected by their promulgation of what
are known as supplementary regulations, such as the implementing rules issued by the Department of Labor on the new
Labor Code. These regulations have the force and effect of law.
Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribed thereby has been
applied in a significant number of the cases without challenge by the employer. The power of the POEA (and before it the
National Seamen Board) in requiring the model contract is not unlimited as there is a sufficient standard guiding the
delegate in the exercise of the said authority. That standard is discoverable in the executive order itself which, in creating
the Philippine Overseas Employment Administration, mandated it to protect the rights of overseas Filipino workers to "fair
and equitable employment practices."
Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest" in People v.
Rosenthal
15
"justice and equity" in Antamok Gold Fields v. CIR
16
"public convenience and welfare" in Calalang v.
Williams
17
and "simplicity, economy and efficiency" in Cervantes v. Auditor General,
18
to mention only a few cases. In the
United States, the "sense and experience of men" was accepted in Mutual Film Corp. v. Industrial Commission,
19
and
"national security" in Hirabayashi v. United States.
20

It is not denied that the private respondent has been receiving a monthly death benefit pension of P514.42 since March
1985 and that she was also paid a P1,000.00 funeral benefit by the Social Security System. In addition, as already
observed, she also received a P5,000.00 burial gratuity from the Welfare Fund for Overseas Workers. These payments
will not preclude allowance of the private respondent's claim against the petitioner because it is specifically reserved in the
standard contract of employment for Filipino seamen under Memorandum Circular No. 2, Series of 1984, that
Section C. Compensation and Benefits.
1. In case of death of the seamen during the term of his Contract, the employer shall pay his beneficiaries
the amount of:
a. P220,000.00 for master and chief engineers
b. P180,000.00 for other officers, including radio operators and master electrician
c. P 130,000.00 for ratings.
2. It is understood and agreed that the benefits mentioned above shall be separate and distinct from, and
will be in addition to whatever benefits which the seaman is entitled to under Philippine laws. ...
3. ...
c. If the remains of the seaman is buried in the Philippines, the owners shall pay the
beneficiaries of the seaman an amount not exceeding P18,000.00 for burial expenses.
The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the National Seamen Board on
July 12,1976, providing an follows:
Income Benefits under this Rule Shall be Considered Additional Benefits.
All compensation benefits under Title II, Book Four of the Labor Code of the Philippines (Employees
Compensation and State Insurance Fund) shall be granted, in addition to whatever benefits, gratuities or
allowances that the seaman or his beneficiaries may be entitled to under the employment contract
approved by the NSB. If applicable, all benefits under the Social Security Law and the Philippine
Medicare Law shall be enjoyed by the seaman or his beneficiaries in accordance with such laws.
The above provisions are manifestations of the concern of the State for the working class, consistently with the social
justice policy and the specific provisions in the Constitution for the protection of the working class and the promotion of its
interest.
One last challenge of the petitioner must be dealt with to close t case. Its argument that it has been denied due process
because the same POEA that issued Memorandum Circular No. 2 has also sustained and applied it is an uninformed
criticism of administrative law itself. Administrative agencies are vested with two basic powers, the quasi-legislative and
the quasi-judicial. The first enables them to promulgate implementing rules and regulations, and the second enables them
to interpret and apply such regulations. Examples abound: the Bureau of Internal Revenue adjudicates on its own revenue
regulations, the Central Bank on its own circulars, the Securities and Exchange Commission on its own rules, as so too do
the Philippine Patent Office and the Videogram Regulatory Board and the Civil Aeronautics Administration and the
Department of Natural Resources and so on ad infinitum on their respective administrative regulations. Such an
arrangement has been accepted as a fact of life of modern governments and cannot be considered violative of due
process as long as the cardinal rights laid down by Justice Laurel in the landmark case of Ang Tibay v. Court of Industrial
Relations
21
are observed.
Whatever doubts may still remain regarding the rights of the parties in this case are resolved in favor of the private
respondent, in line with the express mandate of the Labor Code and the principle that those with less in life should have
more in law.
When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the
latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged worker. This is
only fair if he is to be given the opportunity and the right to assert and defend his cause not as a subordinate but as a peer
of management, with which he can negotiate on even plane. Labor is not a mere employee of capital but its active and
equal partner.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary restraining order dated
December 10, 1986 is hereby LIFTED. It is so ordered.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21849 December 11, 1967
LOURDES VDA. DE MAGALONA, petitioner,
vs.
THE WORKMEN'S COMPENSATION COMMISSION and THE NATIONAL SHIPYARD AND STEEL CORPORATION
(NASSCO), respondents.
Pablo B. Badong and Associates for petitioner.
P. C. Villavieja and P. E. Villanueva for respondent WCC.
Eduardo S. Rodriguez for respondent NASSCO.
BENGZON, J.P., J .:
Since April 1, 1954, Jorge Magalona worked for NASSCO-Iligan Steel Mills, as batteryman, then as electrician-helper and
finally as pulpit operator with a weekly salary of P26.40, with hours of work at 7:00 A.M.-12: 00 Noon, 1:00 P.M.-4:00 P.M.
As a batteryman, he filled jars of dry cells with hydrochloric acid inside a room that was always damp because of the
sprinkling of water over the dry cells to prevent the acid from flowing. As electrician-helper, he helped clean electric
motors, rewound coils and did other work in the electric shop. In his last designation as pulpit operator, he worked in the
rolling mill department, which was hot, operated an electric switch and caught steel bars passing through at a finish line.
On February 16, 1956, Magalona went on sick leave, to last up to March 10, 1956. He was not able to report for work after
his leave expired. On May 1, 1956, he was admitted in Riverside Hospital, Bacolod City, where he died on May 17, of that
year, of duodenal ulcer with partial obstruction at the pyloric end of the stomach, severe anemia with kidney
complications.
On July 25, 1956, his widow, Lourdes Magalona, filed a claim for compensation under the Workmen's Compensation Act.
Respondent company did not controvert the claim. The hearing officer of the Regional Office, Department of Labor,
awarded the widow and her child P2,745.60 as death benefits, P200.00 as burial expenses, P1,645.60 as medical
expenses and P135.28 as attorney's fees. The award was based on the ground that the conditions of work inhalation of
gas fumes, incessant heat, irregular eating habits might have caused duodenal ulcer, in line with the principle of liberal
construction of labor laws in favor of the laborer.
On review before the Workmen's Compensation Commission in Manila, claimant's counsel filed a "Motion to Dismiss the
Appeal or Reply to Petition for Review", alleging, as it did before the hearing officer, that the case should be dismissed
because NASSCO had not filed any written notice of controversion of the claim. Since medical considerations were
involved, Workmen's Compensation Commissioner Cesareo Perez referred the case to the Evaluation Division of the
Bureau of Workmen's Compensation for a medical opinion. Dr. Elda M. Montemayor, Senior Compensation Rating
Medical Officer therein, in her report dated February 20, 1963 (approved by the Chief of the Evaluation Division), stated
that although the exact cause of duodenal ulcer is still unknown, the conditions of his work, in the absence of sufficient
proof that the deceased missed or had irregular meals, had no causal relationship with the ailment causing his death.
Without resolving the motion to dismiss, Commissioner Perez reversed the decision of the hearing officer, absolved
NASSCO and ruled that duodenal ulcer is not compensable without any showing that there was any causal connection
between the ulcer and the nature of the work, such as aggravation of the illness through an accident, over exertion and
the like.
After the Commission en banc denied her motion for reconsideration, claimant appealed to Us by way ofcertiorari, raising
the following questions for determination:
1. Could the NASSCO have legally petitioned for review of the decision of the hearing officer considering that it had not
controverted the claim?
2. Was the admission by Commissioner Perez of the medical opinion of a Senior Compensation Rating Officer of the
Commission proper?
3. Was there need for claimant to show causal connection between the death of the employee and the nature of his work?
As the hearing officer found, NASSCO failed to controvert the claim. It is NASSCO's position that granting there was no
controversion, the acceptance by the hearing officer of NASSCO's evidence was tantamount to reinstatement of its right
to controvert, citing Section 4 of Rule 14 of the Rules of the Workmen's Compensation Commission. However, to reinstate
one's right to controvert, the section requires a petition under oath by the employer, specifying the reason for its failure to
controvert.itc-alf In the case at bar, there was no such petition. Mere acceptance by the hearing officer of the evidence
presented did not mean the reinstatement of the right to controvert. The law itself provides that only the Commissioner
may reinstate the right to controvert. (See Sec. 45, par. 2, Workmen's Compensation Act; Agustin v. WCC, L-19957, Sept.
29, 1964).lawphil.net By failing to present a written controversion of the claim, the employer, NASSCO, renounced its right
to challenge the claim. And this means that all non-jurisdictional defenses, such as non-compensability of the illness,
prescription, etc., are barred.
1

Respondent NASSCO, in its answer before Us, alleges that the claim had prescribed, for it allegedly received notice of the
claim for compensation only on July 25, 1962 (p. 64 of the Record).itc-alf The hearing officer, however, found that the
records show the claim to have been received July 25, 1956 (Record, p. 33). Furthermore, it was the company physician
who diagnosed the employee's illness (pp. 73 of T.s.n., quoted in petition, p. 22 of Record).The wife testified under oath
that she sent a telegram to NASSCO right after the death of her husband and later filed her claim with its manager. These
matters were not touched on by the reviewing commissioner or the Commission en banc and should stand. The widow's
acts after the death of her husband may be considered as substantial compliance with the required notice of claim for
compensation. In a case, We accepted as substantial compliance with Section 24 of the Act an oral demand for
compensation hardly a month after lay-off, making of little consequence a subsequent written claim filed much later.
2
And
besides, as stated, for lack of proper controversion, the defense of prescription is likewise barred.
With regard to the admissibility of the medical opinion report of Dr. Montemayor, said report should not have been
admitted because while technical rules of procedure need not be followed by the Commission,
3
no evidence should be
taken into account where the adverse party was not given the opportunity to object to its admissibility.
4
This is sound
especially where on such admitted report was principally based the decision of reversal.
Based on the medical report, the Workmen's Compensation Commissioner ruled that the claimant must first establish a
causal link between the nature of the employment and the cause of death of Magalona, before claimant can be
compensated. This is a reversible error. The employee had obviously been sick. His inability to report sack to work when
his sick leave expired did not sever the employer-employee relationship. NASSCO never claimed that it had terminated
his employment. NASSCO claimed that he was "absent without leave" (pp. 36-38 of T.s.n., quoted in respondent's
answer, pp. 68-69 of the Record).lawphil.net It is now unquestionable that once the illness supervened at the time of the
employment there is a rebuttable presumption that such illness arose out of the employment or was at least aggravated
by such employment. The claimant is relieved from the burden of proving causation once the illness or the injury is shown
to have arisen in the course of employment.
5
Thus, the precise medical cause of the illness is not legally significant, as
long as the illness supervened in the course of the employment. The presumption of causation or aggravation then
applies. The function of a presumption is precisely to dispense with the need for proof. The burden to overthrow the
presumption and to disconnect, by substantial evidence, the injury or sickness from employment, is laid by the statute at
the door of the employer.
6
In the case at bar no substantial evidence exists to overcome said presumption. And, even if
the medical report is considered, since the report itself admits that the real cause of duodenal ulcer is unknown, the
presumption established by law would still apply as against a mere opinion on the non-causal connection between
duodenal ulcer and the nature of Magalona's employment.lawphil.net
WHEREFORE, the appealed resolution of the Workmen's Compensation Commission en banc and the Commissioner's
decision are hereby reversed, and the award of the hearing officer granting claimant P2,745.60 as death benefits;
P200.00 as burial expenses; P1,645.60 as medical expenses; and P138.25 as attorney's fees, is affirmed. No costs. So
ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ.,concur.
G.R. No. L-9878, U.S. v. Molina
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
DECISION
December 24, 1914
G.R. No. L-9878
THE UNITED STATES, plaintiff-appellee,
vs.
FRANK TUPASI MOLINA, defendant-appellant.
Julio Borbon Villamor for appellant.Office of the Solicitor-General Corpus for appellee.
JOHNSON, J .:
On the 6th day of February, 1914, the prosecuting attorney of the Province of Ilocos Sur filed a complaint against the defendant
charging him with the crime of perjury, alleged to have been committed as follows:
The said Frank Tupasi Molina, the above-named defendant, did on September 10, 1912, in the municipality of Tayum of the Province
of Ilocos Sur, P. I., for the purpose of gaining admission, as in fact he did, owing to the deceit he practiced, as will be hereinafter
related, to the examinations for the municipal police service in the Province of Ilocos Sur, which were held in the municipality of
Vigan, said province, on or about January 18, 1913, willfully, unlawfully, and criminally take a false oath by affirming and asserting
in an oath that he knew to be false, in an examination application which he himself filled out and signed, that prior to the said date, to
wit, September 10, 1912, he had never been indicted, tried, or sentenced for the violation of any law, ordinance, or regulation in any
court, when he knew at the time he took that oath and signed his examination application, as he knows at the present time, that he had
been twice indicted for disturbing the public peace, and for injurias graves, and sentenced to pay a fine and undergo imprisonment
therefor, by the justice of the peace court of Tayum and the Court of First Instance of Ilocos Sur.
The defendant made the false declaration previously mentioned after he had sworn before Lucas Magno, notary public, authorized by
law to administer oaths, that he would state the truth; and said false declaration made under the oath taken by the defendant, as above
stated, concerned a fact of such importance that without it he would not have been admitted to said examinations prescribed for the
municipal police service. In violation of the law. (Sec. 3, Act No. 1697 .)
After hearing the evidence adduced during the trial of the cause, the Honorable Francisco Santamaria, judge, found the defendant
guilty of the crime charged, and sentenced him to be imprisoned for a period of two months and to pay a fine of P100, in case of
insolvency to suffer subsidiary imprisonment in accordance with the provisions of the law, and to pay the costs. The defendant was
further sentenced to be disqualified from holding any public office or from giving testimony in any court in the Philippine Islands until
such time as the sentence against him is reversed. From that sentence the defendant appealed to this court and made the following
assignments of error:
1. The trial court erred in holding section 3 of Act No. 1697 to be applicable in this case.
2. The trial court manifestly erred in sentencing the appellant for violation of section 3 of Act No. 1697, when the prosecution did not
present any evidence demonstrating that he had willfully and corruptly sworn or taken an oath.
3. The trial court erred in not sustaining the defense set up by the appellant Tupasi with reference to the construction he placed upon
the fifth question of Exhibit A of the prosecution.
4. The trial court erred also in holding that the words "which he does not believe to be true," used in Act No. 1697, are equivalent to
the term "knowingly," used in section 31 of Act No. 1761.
5. The trial court erred in not acquitting the defendant.
It appears from the record that on the 10th day of September, 1912, the defendant signed a petition to be permitted to take the
examination for the position of municipal policeman. Said petition was signed by the defendant and sworn to by him before a notary
public. Said petition contained a number of questions which the applicant was required to answer. Among other questions we find that
No. 5 was as follows:
Have you ever been indicted, tried, or sentenced in any court for violation of any law, ordinance, or regulations, or have you ever been
tried or sentenced for violation of regulations of the Army, Navy, of the Constabulary, in any court martial of the Army or of the
Constabulary, or in any other court?
To said question the defendant answered: "No, sir; I cannot remember any."
During the trial of the cause the prosecuting attorney presented Exhibits B, C, and D.
Exhibit B shows that one Francisco Tupasi and others, on the 8th day of February, 1911, had been arrested by an order of the justice
of the peace of the municipality of Tayum, Province of Ilocos Sur, and charged with disturbing the public peace, were found guilty,
and sentenced, on the 20th day of February, 1911, to be imprisoned for a period of fifteen days, and each to pay a fine of 25 pesetas,
and to pay the costs.
Exhibit C shows that Francisco Tupasi, on the 18th day of May, 1911, had been arrested and taken before the justice of the peace of
the municipality of Tayum, Province of Ilocos Sur, charged with the crime of "injurias graves," and was sentenced on the 22d day of
May, 1911, to be imprisoned for a period of fifteen days and to pay a fine of 75 pesetas and the costs.
Exhibit D is the certificate of the clerk of the Court of First Instance of the Province of Ilocos Sur and shows that the Honorable
Dionisio Chanco, on the 26th day of April, 1911, in an appealed case for disturbing the public peace, sentenced the said Francisco
Tupasi and others to pay a fine of 60 pesetas, in case of insolvency to suffer subsidiary imprisonment, and to pay the costs.
Exhibit A was the sworn petition presented by the defendant for permission to take the examination. Said petition was signed by
Frank Tupasi y Molina. It was shown during the trial of the cause, by the admission of the defendant himself, that he was the same
person accused and sentenced in Exhibits B, C, and D. It was argued that the defendant signed said application in the name of "Frank
Tupasi y Molina" when he had theretofore been known as "Francisco Tupasi," for the purpose of avoiding identity. The defendant said
that "Francisco" was the same as "Frank" and that he had adopted the name of "Frank" instead of "Francisco." The answers to the
questions in said application were made in English.
With reference to the first assignment of error, that the lower court committed an error in applying section 3 of Act No. 1697 to the
facts in the present case, it may be said that said article provides that:
Any person who, having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the Philippine
Islands authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony,
declaration, deposition or certificate by him subscribed is true, willfully and contrary to such oath states or subscribes any material
matter which he does not believe to be true, is guilty or perjury, and shall be punished, etc.
Act No. 2169 of the Philippine Legislature, which is an Act to provide for the reorganization, government, and inspection of municipal
police of the municipalities or provinces and subprovinces organized under Act No. 83 , provides for the reorganization of the
municipal police of the municipalities or provinces and subprovinces organized underAct No. 83.
Said Act further provides that, subject to the approval of the Secretary of Commerce and Police, the Director of Constabulary shall
prepare general regulations for the good government, discipline, and inspection of the municipal police, "compliance wherewith shall
be obligatory for all members of the organization."
Said Act further provides for an examining board for the municipal police. It further provides that, subject to the approval of the
Secretary of Commerce and Police, the Director of Constabulary shall prepare an examination manual, prescribing, at the same time,
suitable rules for the conduct of the examination.
Said Act (No. 2169) also provides for the time and place for holding said examinations.
Section 9 of said Act provides that: "To be eligible for examination, a candidate shall have the following requirements: . . . (6) Have
no criminal record."
In accordance with the requirements of said law, the Director of Constabulary prepared an examination manual, prescribing at the
same time rules for conducting examinations, which examination manual was approved by the Secretary of Commerce and Police, and
thereby was given the force of law. Said manual prescribed a form in blank, known as "Municipal Form No. 11," which form each
applicant was required to fill, in order to be permitted to take said examination. Said application required the applicant to swear to the
facts stated therein. We have, therefore, a law which authorizes the administration of an oath in the present case.
Of course, the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the
law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be
extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they are valid. A violation
of a regulation prescribed by an executive officer of the Government in conformity with and based upon a statute authorizing such
regulation, constitutes an offense and renders the offender liable to punishment in accordance with the provisions of law. (United
States vs. Bailey, 9 Pet., 238, 252, 254, 256; Caha vs. United States, 152 U. S., 211, 218; United States vs. Eaton, 144 U. S., 677.)
In the very nature of things in many cases it becomes impracticable for the legislative department of the Government to provide
general regulations for the various and varying details for the management of a particular department of the Government. It therefore
becomes convenient for the legislative department of the Government, by law, in a most general way, to provide for the conduct,
control, and management of the work of the particular department of the Government; to authorize certain persons, in charge of the
management, control, and direction of the particular department, to adopt certain rules and regulations providing for the detail of the
management and control of such department. Such regulations have uniformly been held to have the force of law, whenever they are
found to be in consonance and in harmony with the general purposes and objects of the law. Many illustrations might be given. For
instance, the Civil Service Board is given authority to examine applicants for various positions within the Government service. The
law generally provides the conditions in a most general way, authorizing the chief of such Bureau to provide rules and regulations for
the management of the conduct of examinations, etc. The law provides that the Collector of Customs shall examine persons who
become applicant to act as captains of ships for the coastwise trade, providing at the same time that the Collector of Customs shall
establish rules and regulations for such examinations. Such regulations, once established and found to be in conformity with the
general purposes of the law, are just as binding upon all of the parties, as if the regulations had been written in the original law itself.
(United States vs. Grimaud, 220 U. S., 506; Williamson vs. United States, 207 U. S., 425; United States vs. United Verde Copper Co.,
196 U. S., 207.)
By reference to Exhibit A, the application made and sworn to by the defendant, we find that the oath was taken before a notary public,
a person qualified to administer an oath, in accordance with the provisions of law.
The defendant, in support of his first assignment of error, argues that the purpose ofAct No. 1697 was not intended to cover cases like
the present. He argues that said Act was an Act only authorizing the appointment of commissioners, to make official investigations,
fixing their powers, for the payment of witness fees, and for the punishment of perjury in official investigations. The same question
was presented to this court in the case of United States vs. Concepcion (13 Phil. Rep., 424). In that case the court decided against the
contention of the defendant in the present case. It is true that the title of said Act (No. 1697) does not seem to indicate that said law
contained a provision punishing the crime of perjury generally. Reading the title alone, it would seem to be a law punishing the crime
of perjury in particular cases. The law (Act No. 1697) is a general law. It is not a private or local law. In the United States the
constitutions in the different States generally provide that the title of a law shall indicate the general purpose of the law. There seems
to be no provision in the Philippine Islands that the title of a general law shall contain a statement of the subject matter of the law.
Section 5 of the Act of Congress of July 1, 1902, provides:
That no private or local bill which may be enacted into law shall embrace more than one subject, and that subject shall be expressed in
the title of the bill.
We held in the case of United States vs. Concepcion, supra, that said Act of Congress did not apply to general laws, and that said
section 3 was a provision punishing the crime of perjury generally. (U. S. vs. De Chaves, 14 Phil. Rep., 565; U. S. vs. Estra?a, 16 Phil.
Rep., 520; U. S. vs. Fonseca, 20 Phil. Rep., 191.)
In the case of United States vs. Dumlao (R. G., No. 8721, not reported) this court held the defendant guilty of the crime of perjury,
under facts exactly analogous to those in this case, under the provisions of section 3 of Act No. 1697. We find no reason, either in law
or in the argument of the appellant in the present case, to modify or reverse our conclusions in that case (No. 8721).

With reference to the second assignment of error, the appellant alleged that the lower court committed an error in finding that he had
committed the crime of perjury voluntarily and corruptly. There is nothing in the record which shows that he did not present to the
proper authorities Exhibit A voluntarily. It is difficult to understand, in view of the fact that the defendant had theretofore been
convicted of two different offenses and in one of them by two courts, how he could, within a few months thereafter, make a sworn
statement that he "did not have a criminal record," unless he answered said question No. 5 in the manner indicated in said application
for the express purpose of deceiving the authority to which said application was presented.
With reference to the third assignment of error, it may be said that the language of question No. 5 seems to be perfectly clear. The
defendant admitted that he could read and understand Spanish. It is to be noted that at the very beginning of said application there are
three paragraphs devoted to instructions to the applicant, which he should have read and no doubt did. Said instructions were sufficient
to indicate to the defendant that if there were any questions which he did not fully understand, he should have acquired a full
understanding of the same before answering them. If there was any fault in understanding said question No. 5, it was wholly due to his
own negligence.
With reference to the fourth assignment of error, the appellant contends that the lower court committed an error in holding that the
phrase "which he does not believe to be true," found in section 3 of Act No. 1697, is equivalent to the word "knowingly," used in other
laws. The lower court cited the case of U. S. vs. Tin Masa (17 Phil. Rep., 463) in support of his conclusion. Said section 3, in effect,
provides that any person who takes an oath before a competent tribunal, officer or person, in any case in which a law of the Philippine
Islands authorizes an oath, that he will testify, etc., or that any written testimony, declaration, etc., by him subscribed is true, and
thereafter willfully and contrary to such oath states or subscribes any material matter, "which he does not believe to be true," is guilty
of perjury. Under said section, three things are necessary, in order to constitute the crime of perjury:
1. The person must have taken an oath, in a case where the law authorizes an oath, before a competent person, or a person authorized
to administer an oath;
2. That the person who has taken the oath will testify, declare, dispose, or certify truly, or that any written testimony, declaration,
deposition or certificate by him subscribed is true;
3. That he willfully and contrary to such oath states or subscribes any material matter, "which he does not believe to be true."
It is difficult to understand how a person can state, under oath, that a fact is true or subscribe a document, asserting that the same is
true, which he does not believe to be true. If, under his oath, he declares that said facts are true, we must conclude that he believed that
they were true. If, as a matter of fact, they were not true, and he had full knowledge of the fact that they were not true, then his
declaration that they were true would certainly be a sworn statement that a certain fact was true which he did not believe to be true
and, therefore, he must have made a false statement knowingly. Without attempting to show or assert that the phrase "which he does
not believe to be true" is equivalent to the word "knowingly," as the lower court held, we are of the opinion that whoever makes a
statement or subscribes a document, under the circumstances mentioned in said section 3, which is false and which he, at the time he
makes the same does not believe to be true, is guilty of the crime of perjury. In other words, under the circumstances mentioned in
said section, if one swears positively that a fact is true, which he does not believe to be true, and it turns out that it is false, he is guilty
of the crime of perjury. No one should swear positively that a fact is true or subscribe a document asserting that the facts stated therein
are true, unless he at least believes that they are true at the time he takes such oath or subscribes such document. It can scarcely be
believed that the defendant in the present case believed that the answer to said question No. 5 was true. He must have signed or
answered said question not only believing that it was not true, but, as a matter of fact, signed the same knowing that the answer was
false.
With reference to the fifth assignment of error, we are of the opinion that the evidence adduced during the trial of the cause clearly
shows that the defendant is guilty of the crime charged and therefore the sentence of the lower court should be and is hereby affirmed
with costs.
Arellano, C.J., Torres, Carson and Araullo, JJ., concur.
Separate Opinions
MORELAND, J ., dissenting:
I dissent. The case of United States vs. George (228 U. S., 14), is decisive of this, holding that an indictment for perjury can not be
based on an affidavit not authorized or required by any law of the United States. There is no law of the Philippine Islands which
authorizes or requires the affidavit which is the basis of the charge of perjury in this case. (U. S. vs. Panlilio, 28 Phil. Rep., 608.)

Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 101279 August 6, 1992
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment, and JOSE N. SARMIENTO, as
Administrator of the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.
De Guzman, Meneses & Associates for petitioner.

GRIO-AQUINO, J .:
This petition for prohibition with temporary restraining order was filed by the Philippine Association of Service Exporters
(PASEI, for short), to prohibit and enjoin the Secretary of the Department of Labor and Employment (DOLE) and the
Administrator of the Philippine Overseas Employment Administration (or POEA) from enforcing and implementing DOLE
Department Order No. 16, Series of 1991 and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, temporarily
suspending the recruitment by private employment agencies of Filipino domestic helpers for Hong Kong and vesting in the
DOLE, through the facilities of the POEA, the task of processing and deploying such workers.
PASEI is the largest national organization of private employment and recruitment agencies duly licensed and authorized
by the POEA, to engaged in the business of obtaining overseas employment for Filipino landbased workers, including
domestic helpers.
On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong
Kong, DOLE Secretary Ruben D. Torres issued Department Order No. 16, Series of 1991, temporarily suspending the
recruitment by private employment agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo). The DOLE
itself, through the POEA took over the business of deploying such Hong Kong-bound workers.
In view of the need to establish mechanisms that will enhance the protection for Filipino domestic helpers
going to Hong Kong, the recruitment of the same by private employment agencies ishereby temporarily
suspended effective 1 July 1991. As such, the DOLE through the facilities of the Philippine Overseas
Employment Administration shall take over the processing and deployment of household workers bound
for Hong Kong, subject to guidelines to be issued for said purpose.
In support of this policy, all DOLE Regional Directors and the Bureau of Local Employment's regional
offices are likewise directed to coordinate with the POEA in maintaining a manpower pool of prospective
domestic helpers to Hong Kong on a regional basis.
For compliance.(Emphasis ours; p. 30, Rollo.)
Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, dated July 10,
1991, providing GUIDELINES on the Government processing and deployment of Filipino domestic helpers to Hong Kong
and the accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers.
Subject: Guidelines on the Temporary Government Processing and Deployment of Domestic Helpers to
Hong Kong.
Pursuant to Department Order No. 16, series of 1991 and in order to operationalize the temporary
government processing and deployment of domestic helpers (DHs) to Hong Kong resulting from the
temporary suspension of recruitment by private employment agencies for said skill and host market, the
following guidelines and mechanisms shall govern the implementation of said policy.
I. Creation of a joint POEA-OWWA Household Workers Placement Unit (HWPU)
An ad hoc, one stop Household Workers Placement Unit [or HWPU] under the supervision of the POEA
shall take charge of the various operations involved in the Hong Kong-DH industry segment:
The HWPU shall have the following functions in coordination with appropriate units and other entities
concerned:
1. Negotiations with and Accreditation of Hong Kong Recruitment Agencies
2. Manpower Pooling
3. Worker Training and Briefing
4. Processing and Deployment
5. Welfare Programs
II. Documentary Requirements and Other Conditions for Accreditation of Hong Kong Recruitment
Agencies or Principals
Recruitment agencies in Hong Kong intending to hire Filipino DHs for their employers may negotiate with
the HWPU in Manila directly or through the Philippine Labor Attache's Office in Hong Kong.
xxx xxx xxx
X. Interim Arrangement
All contracts stamped in Hong Kong as of June 30 shall continue to be processed by POEA until 31 July
1991 under the name of the Philippine agencies concerned. Thereafter, all contracts shall be processed
with the HWPU.
Recruitment agencies in Hong Kong shall submit to the Philippine Consulate General in Hong kong a list
of their accepted applicants in their pool within the last week of July. The last day of acceptance shall be
July 31 which shall then be the basis of HWPU in accepting contracts for processing. After the exhaustion
of their respective pools the only source of applicants will be the POEA manpower pool.
For strict compliance of all concerned. (pp. 31-35, Rollo.)
On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing
of employment contracts of domestic workers for Hong Kong.
TO: All Philippine and Hong Kong Agencies engaged in the recruitment of Domestic helpers for Hong
Kong
Further to Memorandum Circular No. 30, series of 1991 pertaining to the government processing and
deployment of domestic helpers (DHs) to Hong Kong, processing of employment contractswhich have
been attested by the Hong Kong Commissioner of Labor up to 30 June 1991 shall be processed by the
POEA Employment Contracts Processing Branch up to 15 August 1991 only.
Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the Philippines shall recruit
under the new scheme which requires prior accreditation which the POEA.
Recruitment agencies in Hong Kong may apply for accreditation at the Office of the Labor Attache,
Philippine Consulate General where a POEA team is posted until 31 August 1991. Thereafter, those who
failed to have themselves accredited in Hong Kong may proceed to the POEA-OWWA Household
Workers Placement Unit in Manila for accreditation before their recruitment and processing of DHs shall
be allowed.
Recruitment agencies in Hong Kong who have some accepted applicants in their pool after the cut-off
period shall submit this list of workers upon accreditation. Only those DHs in said list will be allowed
processing outside of the HWPU manpower pool.
For strict compliance of all concerned. (Emphasis supplied, p. 36, Rollo.)
On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the aforementioned DOLE and
POEA circulars and to prohibit their implementation for the following reasons:
1. that the respondents acted with grave abuse of discretion and/or in excess of their rule-making
authority in issuing said circulars;
2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair
and oppressive; and
3. that the requirements of publication and filing with the Office of the National Administrative Register
were not complied with.
There is no merit in the first and second grounds of the petition.
Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment and placement
activities.
Art. 36. Regulatory Power. The Secretary of Labor shall have the power to restrict and regulatethe
recruitment and placement activities of all agencies within the coverage of this title [Regulation of
Recruitment and Placement Activities] and is hereby authorized to issue orders and promulgate rules and
regulations to carry out the objectives and implement the provisions of this title. (Emphasis ours.)
On the other hand, the scope of the regulatory authority of the POEA, which was created by Executive Order No. 797 on
May 1, 1982 to take over the functions of the Overseas Employment Development Board, the National Seamen Board,
and the overseas employment functions of the Bureau of Employment Services, is broad and far-ranging for:
1. Among the functions inherited by the POEA from the defunct Bureau of Employment Services was the
power and duty:
"2. To establish and maintain a registration and/or licensing system to regulate private
sector participation in the recruitment and placement of workers, locally and overseas, . .
." (Art. 15, Labor Code, Emphasis supplied). (p. 13, Rollo.)
2. It assumed from the defunct Overseas Employment Development Board the power and duty:
3. To recruit and place workers for overseas employment of Filipino contract workers on
a government to government arrangement and in such other sectors as policy may
dictate . . . (Art. 17, Labor Code.) (p. 13, Rollo.)
3. From the National Seamen Board, the POEA took over:
2. To regulate and supervise the activities of agents or representatives of shipping
companies in the hiring of seamen for overseas employment; and secure the best
possible terms of employment for contract seamen workers and secure compliance
therewith. (Art. 20, Labor Code.)
The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not unconstitutional, unreasonable
and oppressive. It has been necessitated by "the growing complexity of the modern society" (Solid Homes, Inc. vs.
Payawal, 177 SCRA 72, 79). More and more administrative bodies are necessary to help in the regulation of society's
ramified activities. "Specialized in the particular field assigned to them, they can deal with the problems thereof with more
expertise and dispatch than can be expected from the legislature or the courts of justice" (Ibid.).
It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment and deployment
of Filipino landbased workers for overseas employment. A careful reading of the challenged administrative issuances
discloses that the same fall within the "administrative and policing powers expressly or by necessary implication
conferred" upon the respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred by
Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of Appeals, 24 SCRA 898). To
"restrict" means "to confine, limit or stop" (p. 62, Rollo) and whereas the power to "regulate" means "the power to protect,
foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of the utility
and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218).
The Solicitor General, in his Comment, aptly observed:
. . . Said Administrative Order [i.e., DOLE Administrative Order No. 16] merely restricted the scope or
area of petitioner's business operations by excluding therefrom recruitment and deployment of domestic
helpers for Hong Kong till after the establishment of the "mechanisms" that will enhance the protection of
Filipino domestic helpers going to Hong Kong. In fine, other than the recruitment and deployment of
Filipino domestic helpers for Hongkong, petitioner may still deploy other class of Filipino workers either for
Hongkong and other countries and all other classes of Filipino workers for other countries.
Said administrative issuances, intended to curtail, if not to end, rampant violations of the rule against
excessive collections of placement and documentation fees, travel fees and other charges committed by
private employment agencies recruiting and deploying domestic helpers to Hongkong. [They are
reasonable, valid and justified under the general welfare clause of the Constitution, since the recruitment
and deployment business, as it is conducted today, is affected with public interest.
xxx xxx xxx
The alleged takeover [of the business of recruiting and placing Filipino domestic helpers in Hongkong] is
merely a remedial measure, and expires after its purpose shall have been attained. This is evident from
the tenor of Administrative Order No. 16 that recruitment of Filipino domestic helpers going to Hongkong
by private employment agencies are hereby "temporarily suspendedeffective July 1, 1991."
The alleged takeover is limited in scope, being confined to recruitment of domestic helpers going to
Hongkong only.
xxx xxx xxx
. . . the justification for the takeover of the processing and deploying of domestic helpers for Hongkong
resulting from the restriction of the scope of petitioner's business is confined solely to the unscrupulous
practice of private employment agencies victimizing applicants for employment as domestic helpers for
Hongkong and not the whole recruitment business in the Philippines. (pp. 62-65, Rollo.)
The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch
of Government.
Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication and filing in the Office of
the National Administrative Register as required in Article 2 of the Civil Code, Article 5 of the Labor Code and Sections
3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide:
Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the
Official Gazatte, unless it is otherwise provided. . . . (Civil Code.)
Art. 5. Rules and Regulations. The Department of Labor and other government agencies charged with
the administration and enforcement of this Code or any of its parts shall promulgate the necessary
implementing rules and regulations. Such rules and regulations shall become effective fifteen (15)
days after announcement of their adoption in newspapers of general circulation. (Emphasis supplied,
Labor Code, as amended.)
Sec. 3.Filing. (1) Every agency shall file with the University of the Philippines Law Center, three (3)
certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are
not filed within three (3) months shall not thereafter be the basis of any sanction against any party or
persons. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.)
Sec. 4.Effectivity. In addition to other rule-making requirements provided by law not inconsistent with
this Book, each rule shall become effective fifteen (15) days from the date of filing as above
provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to
public health, safety and welfare, the existence of which must be expressed in a statement accompanying
the rule. The agency shall take appropriate measures to make emergency rules known to persons who
may be affected by them. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987).
Once, more we advert to our ruling in Taada vs. Tuvera, 146 SCRA 446 that:
. . . Administrative rules and regulations must also be published if their purpose is to enforce or implement
existing law pursuant also to a valid delegation. (p. 447.)
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the so-
called letters of instructions issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties. (p. 448.)
We agree that publication must be in full or it is no publication at all since its purpose is to inform the
public of the content of the laws. (p. 448.)
For lack of proper publication, the administrative circulars in question may not be enforced and implemented.
WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department Order No. 16, Series of
1991, and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, by the public respondents is hereby
SUSPENDED pending compliance with the statutory requirements of publication and filing under the aforementioned laws
of the land.
SO ORDERED.
Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Medialdea, Regalado, Davide, Jr., Romero, Nocon and
Bellosillo, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-59229 August 22, 1991
HIJOS DE F. ESCAO INC., and PIER 8 ARRASTRE AND STEVEDORING SERVICES, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL ORGANIZATION OF WORKINGMEN (NOWM) PSSLU-
TUCP and ROLANDO VILLALOBOS, respondents.
Beltran, Beltran &Beltran for petitioners.
Bautista, Santiago & Associates for private respondents.

FELICIANO, J .:p
Petitioners seek to set aside the Decision of the National Labor Relations Commission ("NLRC") dated 11 November
1981, which affirmed the Decision of the Labor Arbiter dated 28 February 1980.
Private respondent National Organization of Workingmen ("NOWM") PSSLU-TUCP is a labor organization that counts
among its members a majority of the laborers of petitioner Pier 8 Arrastre & Stevedoring Services, Inc. ("PIER 8 A&S")
consisting, among others, of stevedores, dockworkers, sweepers and forklift operators (hereinafter collectively referred to
as "the stevedores"). On 31 July 1978, NOWM PSSLU-TUCP and about 300 stevedores filed with the then Ministry of
Labor and Employment ("MOLE") a complaint
1
for unfair labor practice ULP and illegal dismissal against PIER 8 A&S.
On 8 September 1978, NOWM PSSLU-TUCP amended its complaint to include the monetary claims of the stevedores for
overtime compensation, legal holiday pay, emergency cost of living allowance, 13th month pay, night shift differential pay,
and the difference between the salaries they received and that prescribed under the minimum wage law. The complaint
was also amended to implead petitioner Hijos de F. Escao, Inc. (Escao) as respondent before the MOLE.
2

The MOLE Director in the National Capital Region certified for compulsory arbitration only the claims for illegal dismissal
and ULP Considering that NOWM PSSLU-TUCP wanted to include as well the other issues it had raised in the amended
complaint, it filed a motion for reconsideration. The motion was denied because money claims, according to the MOLE
Director, should be brought against Escao and PIER 8 A&S in a separate complaint.
On the basis of the position papers submitted by the parties and the annexes attached thereto, the case was considered
submitted for resolution. On 28 February 1980, the Labor Arbiter rendered a Decision
3
with the following dispositive
portion:
WHEREFORE, consonant with the foregoing premises, the respondents Hijos de F. Escao and Pier 8
Arrastre and Stevedoring Services, Inc. are hereby found guilty of committing acts of unfair labor practice
and are ordered to jointly and severally reinstate all of the petitioners named in the amended complaint,
with payment of full backwages counted from the time they were illegally dismissed which was on August
10, 1978 up to March 27, 1979, inclusive, when the petitioners admitted having received return to work
notice from the respondent but refused to comply in view of the pendency of the present case, based on
their individual rate at the time of their dismissal or on the minimum wage then prevailing whichever is
more beneficial to them.
For purposes of this decision, the Socio-Economic Analyst of this branch is hereby directed to compute
the backwages of the individual petitioners as mandated herein, and to submit his report within ten 10
days from receipt hereof which shall form part of this award.
SO ORDERED.
Petitioners appealed to the NLRC which, however, affirmed the Decision of the Labor Arbiter.
The instant Petition for certiorari imputes grave abuse of discretion to the NLRC in upholding the finding of the Labor
Arbiter that the stevedores are employees not only of PIER 8 A&S but also of Escao. Petitioners also assail that portion
of the Decision which directed them to reinstate the dismissed stevedores with the obligation to pay backwages from 10
August 1978 to 27 March 1979.
In his Decision, the Labor Arbiter took the view that PIER 8 A&S was a labor only contractor and held that Escao was the
principal employer of the stevedores. For that reason, the Labor Arbiter adjudged the petitioners solidarily liable for
payment of backwages to the stevedores as well as for reinstatement.
While petitioner PIER 8 A&S does not dispute that the stevedores were its employees, petitioner Escao denies the
existence of an employer-employee relationship between it and the stevedores. Escao therefore contends that liability, if
any, should attach only to PIER 8 A&S.
PIER 8 A&S is a corporation providing Arrastre and stevedoring services to vessels docked at Pier 8 of the Manila North
Harbor. Prior to the incorporation of PIER 8 A&S two (2) stevedoring companies had been servicing vessels docking at
Pier 8. One of these was the Manila Integrated Services, Inc. MISI which was servicing Escao vessels, then berthing at
Pier 8. The other was the San Nicolas Stevedoring and Arrastre Services, Inc. (SNSASI) which was servicing Compania
Maritima vessels. Aside, of course, from MISI and SNSASI there were individual contractors known as the "cabos" who
were operating in Pier 8.
On 11 July 1974, the Philippine Port Authority ("PPA") was created pursuant to the policy of the State to implement an
integrated program of port development for the entire country.
4
Towards this end, the PPA issued Administrative Order
No. 1377 specifically adopting the policy of "one pier, one Arrastre and/or stevedoring company." MISI and SNSASI
merged to form the Pier 8 Arrastre and Stevedoring Services, Inc.
Sometime in June 1978, Escao had transferred berth to Pier 16 with the approval of the PPA. PIER 8 A&S then started
to encounter problems; it found its business severely reduced with only Compania Maritima vessels to service. Even if it
had wanted to continue servicing the vessels of Escao at Pier 16, that was simply not possible as there was another
company exclusively authorized to handle and render Arrastre and stevedoring services at Pier 16.
Because of its resulting manpower surplus, PIER 8 A&S altered the work schedule of its stevedores by rotating them. The
rotation scheme was resisted by the stevedores, especially those formerly assigned to service Escao vessels. It appears
that the employees formerly belonging to MISI continued to service Escao vessels in like manner that those employees
formerly belonging to SNSASI continued to service Compania Maritima vessels, although MISI and SNSASI had already
merged to form PIER 8 A&S The affected stevedores boycotted Pier 8 leading to their severance from employment by
PIER 8 A&S on 10 August 1978. Their refusal to work continued even after they were served with a return-to-work order.
The stevedores claim that since they had long been servicing Escao vessels, i.e. from the time Escao was exclusively
serviced by MISI until the time MISI was merged with SNSASI to form PIER 8 A&S they should also be considered as
employees of Escao. Escao disclaimed any employment relationship with the stevedores. In its Position Paper, Escao
alleged that the stevedores are included in the payroll of PIER 8 A&S and that the SSS and Medicare contributions of the
stevedores are paid by PIER 8 A&S as well.
It is firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be
determined by examination of certain factors or aspects of that relationship. These include: (a) the manner of selection
and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of the power
of dismissal; and (d) the presence or absence of a power to control the putative employee's conduct.
5

The Court notes that in finding against PIER 8 A&S and Escao the Labor Arbiter relied solely on the position paper of the
parties. The record of the case is bare of evidence tending to support such allegations; what is found in the record instead
are the self-serving statements from both parties. It is not clear to the Court from examination of the record which entity
paid the salaries of the stevedores. While the stevedores attached to their amended complaint a list of their daily wages
set forth opposite their individual names under the heading "Hijos de F. Escao Inc. and/or Pier 8 Arrastre and
Stevedoring Services, Inc.
6
apparently to show that they are paid for their services by either or both of petitioners, they
did not submit direct evidence, e.g., copies of payrolls and remittances to the SSS and Medicare, establishing this fact.
Further, the stevedores failed to substantiate their allegation that the supervisors of Escao had control over them while
discharging their (stevedores') duties. On the contrary, their Position Paper submitted to the Labor Arbiter disclosed that
the supervisors of Escao "merely supervised" them.
The record includes letters written by the National President of NOWM PSSLU-TUC to which the stevedores belong-
relating to collective bargaining and other operating matters, were all addressed to the management of PIER 8 A&S
indicating that they recognized PIER 8 A&S as their employer. Specifically, in the letter dated 21 May 1977, the
stevedores proposed that PIER 8 A&S recognize their union as the sole and exclusive representative of the stevedores
for the purpose of collective bargaining. They also sought to submit for collective bargaining with PIER 8 A&S such other
labor standard issues as wage increases, 13th month pay and vacation and sick leave pay.
7

The stevedores, however, now contend that PIER 8 A&S is not an independent contract but a labor only contractor. In
their Amended Complaint and Position Paper, the stevedores alleged that:
(1) They perform their duties or work assignments under the close supervision of supervisors of
respondent Hijos de F. Escao Inc.;
(2) The machineries, equipment, tools and other facilities complainants used, while in the performance of
their jobs, are owned by respondent Hijos de F. Escao, Inc.;
(3) The jobs they were performing from the time they were first employed, until their dismissals, are
principal phases of respondent's operations; and
(4) The so-called Pier 8 Arrastre & Stevedoring Services, Inc. is a mere middleman; its vital role is purely
one of supplying workers to respondent Hijos de F. Escao, Inc. in short, a mere recruiting agent. Plainly,
said contractor can be categorized as an agent of respondent Hijos de F. Escao, Inc. as it performs
activities directly related to the principal business of said Hijos de F. Escao, Inc.
Although the record does not show that the stevedores had submitted any evidence to fortify their claim that PIER 8 A&S
is a labor only contractor, the Labor Arbiter simply conceded that claim to be factual. The Labor Arbiter added that the
business of PIER 8 A&S is "desirable and indispensable in the business of Hijos de F. Escao and without [the
stevedores], its vessels could not be operated."
The Court is unable to agree with the conclusion reached by the Labor Arbiter, particularly that portion where the Labor
Arbiter supposed stevedoring to be an indispensable part of the business of Escao. Escao is a corporation engaged in
inter-island shipping business, being the operator of the Escao Shipping Lines. It was not alleged, nor has it been shown,
that Escao or any other shipping company is also engaged in Arrastre and stevedoring services. Stevedoring is not
ordinarily included in the business of transporting goods, it (stevedoring) being a special kind of service which involves the
loading unloading of cargo on or from a vessel on port. It consists of the handling of cargo from the hold of the ship to the
dock, in case of pier-side unloading, or to a barge, in case of unloading at sea. The loading on a ship of outgoing cargo is
also part of stevedoring work.
8
Arrastre, upon the other hand, involves the handling of cargo deposited on the wharf or
between the establishment of the consignee or shipper and the ships tackle.
9
Considering that a shipping company is not
normally or customarily engaged in stevedoring and arrastre activities either for itself or other vessels, it contracts with
other companies offering those services. The employees, however, of the stevedoring and/or arrastre company should not
be deemed the employees of the shipping company, in the absence of any showing, that the arrastre and/or stevedoring
company in fact acted as an agent only of the shipping company. No such showing was made in this case.
We turn next to the stevedores' contention that PIER 8 A&S is guilty of ULP. In this respect, the Labor Arbiter had found
that:
Now comes the issue of unfair labor practice. This Labor Arbiter believes that respondents are guilty as
charged. The unfair labor practice acts of the respondents started when they came to know that the
petitioners have organized themselves and affiliated with the NOWM Subsequent acts of the respondents
like requiring the petitioners to disaffiliate with the NOWM and affiliate with the General Maritime
Stevedores Union and later on to Independent Workers Union, requiring them to sign applications for
membership therein, they were threatened and coerced, are all acts of unfair labor practices. Thereafter,
the petitioners' working schedules were rotated when the respondent Hijos de F. Escao transferred to
Pier 16 through the alleged approval of the Philippine Port Authority and later on the said petitioners were
left without work, were all in furtherance of such unfair labor practice acts. ...
10

Both the Constitution and the Labor Code guarantee to the stevedores a right to self-organization. It was unlawful for
PIER 8 A&S to deprive them of that right by its undue interference. The Constitution (Article III, Section 7) expressly
recognizes the right of employees, whether of the public or the private sector, to form unions. Article 248 of the Labor
Code provides:
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self- organization;
(b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or its organizations or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization.
xxx xxx xxx
(Emphasis supplied.)
Not only was PIER 8 A&S guilty of ULP; it was also liable for illegal dismissal. PIER 8 A&S did not obtain prior clearance
from the MOLE before it dismissed the stevedores, as required by the law then in force which read:
Section 1. Requirement for shutdown or dismissal. No employer may shut down his establishment or
dismiss any of his employees with at least one year of service during the last two years, whether the
service is broken or continuous, without prior clearance issued therefor in accordance with this Rule. Any
provision in a collective bargaining agreement dispensing with the clearance requirement shall be null
and void.
Section 2. Shutdown or dismissal without clearance. Any shutdown or dismissal without prior clearance
shall be conclusively presumed to be a termination of employment without a just cause. The Regional
Director shall, in such case, order the immediate reinstatement of the employee and the payment of his
wages from the time of the shutdown or dismissal until the time of reinstatement.
11

B.P. Blg. 130 amended the Labor Code on 4 September 1981 by abolishing the requirement of prior clearance from the
MOLE but since the dismissal of the stevedores was effected prior to the promulgation of B.P. Blg. 130, PIER 8 A&S was
then bound to comply with the old law. The Court, interpreting Sections 1 and 2 above quoted, has consistently held that a
dismissal without said clearance shall be conclusively presumed a termination without just cause.
12
The record is bare of
any evidence that could compel the Court to overturn the factual findings of the Labor Arbiter on this point.
WHEREFORE, considering the absence of an employer-employee relationship between Hijos de F. Escao, Inc. and
private respondents, the Decision of the Labor Arbiter dated 28 February 1980 in NLRC Case No. RB-IV-2326-79 and the
Decision of the NLRC dated 11 November 1981 are hereby MODIFIED so that only Pier 8 Arrastre & Stevedoring
Services, Inc. shall be liable for reinstatement and payment of backwages. As so modified, both Decisions are hereby
AFFIRMED. No costs.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA
NOGUERA,respondents-appellees.

SARMIENTO , J .:
The petitioners invoke the provisions on human relations of the Civil Code in this appeal by certiorari. The facts are
beyond dispute:
xxx xxx xxx
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees) entered into on Oct.
19, 1960 by and between Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc.,
represented by Mr. Eliseo Canilao as party of the second part, and hereinafter referred to as appellants,
the Tourist World Service, Inc. leased the premises belonging to the party of the first part at Mabini St.,
Manila for the former-s use as a branch office. In the said contract the party of the third part held herself
solidarily liable with the party of the part for the prompt payment of the monthly rental agreed on. When
the branch office was opened, the same was run by the herein appellant Una 0. Sevilla payable to Tourist
World Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go
to Lina Sevilla and 3% was to be withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to have been
informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the
branch office was anyhow losing, the Tourist World Service considered closing down its office. This was
firmed up by two resolutions of the board of directors of Tourist World Service, Inc. dated Dec. 2, 1961
(Exhibits 12 and 13), the first abolishing the office of the manager and vice-president of the Tourist World
Service, Inc., Ermita Branch, and the second,authorizing the corporate secretary to receive the properties
of the Tourist World Service then located at the said branch office. It further appears that on Jan. 3, 1962,
the contract with the appellees for the use of the Branch Office premises was terminated and while the
effectivity thereof was Jan. 31, 1962, the appellees no longer used it. As a matter of fact appellants used
it since Nov. 1961. Because of this, and to comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch office, and, finding the premises locked, and,
being unable to contact Lina Sevilla, he padlocked the premises on June 4, 1962 to protect the interests
of the Tourist World Service. When neither the appellant Lina Sevilla nor any of her employees could
enter the locked premises, a complaint was filed by the herein appellants against the appellees with a
prayer for the issuance of mandatory preliminary injunction. Both appellees answered with counterclaims.
For apparent lack of interest of the parties therein, the trial court ordered the dismissal of the case without
prejudice.
The appellee Segundina Noguera sought reconsideration of the order dismissing her counterclaim which
the court a quo, in an order dated June 8, 1963, granted permitting her to present evidence in support of
her counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and after the issues
were joined, the reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina
Sevilla were jointly heard following which the court a quo ordered both cases dismiss for lack of merit, on
the basis of which was elevated the instant appeal on the following assignment of errors:
I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE OF PLAINTIFF-APPELLANT
MRS. LINA O. SEVILLA'S COMPLAINT.
II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT MRS. LINA 0. SEVILA'S
ARRANGEMENT (WITH APPELLEE TOURIST WORLD SERVICE, INC.) WAS ONE MERELY OF
EMPLOYER-EMPLOYEE RELATION AND IN FAILING TO HOLD THAT THE SAID ARRANGEMENT
WAS ONE OF JOINT BUSINESS VENTURE.
III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA IS
ESTOPPED FROM DENYING THAT SHE WAS A MERE EMPLOYEE OF DEFENDANT-APPELLEE
TOURIST WORLD SERVICE, INC. EVEN AS AGAINST THE LATTER.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES HAD NO RIGHT TO EVICT
APPELLANT MRS. LINA O. SEVILLA FROM THE A. MABINI OFFICE BY TAKING THE LAW INTO
THEIR OWN HANDS.
V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL APPELLEE NOGUERA'S
RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S FORCIBLE DISPOSSESSION OF THE A.
MABINI PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT APPELLANT MRS. LINA O. SEVILLA
SIGNED MERELY AS GUARANTOR FOR RENTALS.
On the foregoing facts and in the light of the errors asigned the issues to be resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone line at the branch office on
Ermita;
2. Whether or not the padlocking of the office by the Tourist World Service was actionable or not; and
3. Whether or not the lessee to the office premises belonging to the appellee Noguera was appellees
TWS or TWS and the appellant.
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered into by and
between her and appellee TWS with offices at the Ermita branch office and that she was not an employee
of the TWS to the end that her relationship with TWS was one of a joint business venture appellant made
declarations showing:
1. Appellant Mrs. Lina 0. Sevilla, a prominent figure and wife of an eminent eye, ear and
nose specialist as well as a imediately columnist had been in the travel business prior to
the establishment of the joint business venture with appellee Tourist World Service, Inc.
and appellee Eliseo Canilao, her compadre, she being the godmother of one of his
children, with her own clientele, coming mostly from her own social circle (pp. 3-6 tsn.
February 16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease agreement dated 19 October 1960
(Exh. 'A') covering the premises at A. Mabini St., she expressly warranting and holding
[sic] herself 'solidarily' liable with appellee Tourist World Service, Inc. for the prompt
payment of the monthly rentals thereof to other appellee Mrs. Noguera (pp. 14-15, tsn.
Jan. 18,1964).
3. Appellant Mrs. Sevilla did not receive any salary from appellee Tourist World Service,
Inc., which had its own, separate office located at the Trade & Commerce Building; nor
was she an employee thereof, having no participation in nor connection with said
business at the Trade & Commerce Building (pp. 16-18 tsn Id.).
4. Appellant Mrs. Sevilla earned commissions for her own passengers, her own bookings
her own business (and not for any of the business of appellee Tourist World Service, Inc.)
obtained from the airline companies. She shared the 7% commissions given by the airline
companies giving appellee Tourist World Service, Lic. 3% thereof aid retaining 4% for
herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the expenses of maintaining the A. Mabini St.
office, paying for the salary of an office secretary, Miss Obieta, and other sundry
expenses, aside from desicion the office furniture and supplying some of fice furnishings
(pp. 15,18 tsn. April 6,1965), appellee Tourist World Service, Inc. shouldering the rental
and other expenses in consideration for the 3% split in the co procured by appellant Mrs.
Sevilla (p. 35 tsn Feb. 16,1965).
6. It was the understanding between them that appellant Mrs. Sevilla would be given the
title of branch manager for appearance's sake only (p. 31 tsn. Id.), appellee Eliseo
Canilao admit that it was just a title for dignity (p. 36 tsn. June 18, 1965- testimony of
appellee Eliseo Canilao pp. 38-39 tsn April 61965-testimony of corporate secretary
Gabino Canilao (pp- 2-5, Appellants' Reply Brief)
Upon the other hand, appellee TWS contend that the appellant was an employee of the appellee Tourist
World Service, Inc. and as such was designated manager.
1

xxx xxx xxx
The trial court
2
held for the private respondent on the premise that the private respondent, Tourist World Service, Inc.,
being the true lessee, it was within its prerogative to terminate the lease and padlock the premises.
3
It likewise found the
petitioner, Lina Sevilla, to be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts
of her employer.
4
The respondent Court of Appeal
5
rendered an affirmance.
The petitioners now claim that the respondent Court, in sustaining the lower court, erred. Specifically, they state:
I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN
HOLDING THAT "THE PADLOCKING OF THE PREMISES BY TOURIST WORLD SERVICE INC. WITHOUT THE
KNOWLEDGE AND CONSENT OF THE APPELLANT LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O. SEVILLA
OR ANY OF HER EMPLOYEES AND WITHOUT INFORMING COUNSEL FOR THE APPELLANT (SEVILIA), WHO
IMMEDIATELY BEFORE THE PADLOCKING INCIDENT, WAS IN CONFERENCE WITH THE CORPORATE
SECRETARY OF TOURIST WORLD SERVICE (ADMITTEDLY THE PERSON WHO PADLOCKED THE SAID OFFICE),
IN THEIR ATTEMP AMICABLY SETTLE THE CONTROVERSY BETWEEN THE APPELLANT (SEVILLA) AND THE
TOURIST WORLD SERVICE ... (DID NOT) ENTITLE THE LATTER TO THE RELIEF OF DAMAGES" (ANNEX "A" PP.
7,8 AND ANNEX "B" P. 2) DECISION AGAINST DUE PROCESS WHICH ADHERES TO THE RULE OF LAW.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN
DENYING APPELLANT SEVILLA RELIEF BECAUSE SHE HAD "OFFERED TO WITHDRAW HER COMP PROVIDED
THAT ALL CLAIMS AND COUNTERCLAIMS LODGED BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX "A" P. 8)
III
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN
DENYING-IN FACT NOT PASSING AND RESOLVING-APPELLANT SEVILLAS CAUSE OF ACTION FOUNDED ON
ARTICLES 19, 20 AND 21 OF THE CIVIL CODE ON RELATIONS.
IV
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN
DENYING APPEAL APPELLANT SEVILLA RELIEF YET NOT RESOLVING HER CLAIM THAT SHE WAS IN JOINT
VENTURE WITH TOURIST WORLD SERVICE INC. OR AT LEAST ITS AGENT COUPLED WITH AN INTEREST
WHICH COULD NOT BE TERMINATED OR REVOKED UNILATERALLY BY TOURIST WORLD SERVICE INC.
6

As a preliminary inquiry, the Court is asked to declare the true nature of the relation between Lina Sevilla and Tourist
World Service, Inc. The respondent Court of see fit to rule on the question, the crucial issue, in its opinion being "whether
or not the padlocking of the premises by the Tourist World Service, Inc. without the knowledge and consent of the
appellant Lina Sevilla entitled the latter to the relief of damages prayed for and whether or not the evidence for the said
appellant supports the contention that the appellee Tourist World Service, Inc. unilaterally and without the consent of the
appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World Service, Inc.
7
Tourist
World Service, Inc., insists, on the other hand, that Lina SEVILLA was a mere employee, being "branch manager" of its
Ermita "branch" office and that inferentially, she had no say on the lease executed with the private respondent, Segundina
Noguera. The petitioners contend, however, that relation between the between parties was one of joint venture, but
concede that "whatever might have been the true relationship between Sevilla and Tourist World Service," the Rule of
Law enjoined Tourist World Service and Canilao from taking the law into their own hands,
8
in reference to the padlocking
now questioned.
The Court finds the resolution of the issue material, for if, as the private respondent, Tourist World Service, Inc.,
maintains, that the relation between the parties was in the character of employer and employee, the courts would have
been without jurisdiction to try the case, labor disputes being the exclusive domain of the Court of Industrial Relations,
later, the Bureau Of Labor Relations, pursuant to statutes then in force.
9

In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general,
we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to be used in reaching such end."
10
Subsequently,
however, we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employer-
employee relationship.
11

The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World
Service, Inc., either as to the result of the enterprise or as to the means used in connection therewith. In the first place,
under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for rental
payments, an arrangement that would be like claims of a master-servant relationship. True the respondent Court would
later minimize her participation in the lease as one of mere guaranty,
12
that does not make her an employee of Tourist
World, since in any case, a true employee cannot be made to part with his own money in pursuance of his employer's
business, or otherwise, assume any liability thereof. In that event, the parties must be bound by some other relation, but
certainly not employment.
In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the same was run by the
herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare brought in on the effort of
Mrs. Lina Sevilla.
13
Under these circumstances, it cannot be said that Sevilla was under the control of Tourist World
Service, Inc. "as to the means used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities.
It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in commissions from
airline bookings, the remaining 3% going to Tourist World. Unlike an employee then, who earns a fixed salary usually, she
earned compensation in fluctuating amounts depending on her booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's employee. As we
said, employment is determined by the right-of-control test and certain economic parameters. But titles are weak
indicators.
In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence, accepting Lina Sevilla's own,
that is, that the parties had embarked on a joint venture or otherwise, a partnership. And apparently, Sevilla herself did not
recognize the existence of such a relation. In her letter of November 28, 1961, she expressly 'concedes your [Tourist
World Service, Inc.'s] right to stop the operation of your branch office
14
in effect, accepting Tourist World Service, Inc.'s
control over the manner in which the business was run. A joint venture, including a partnership, presupposes generally a
of standing between the joint co-venturers or partners, in which each party has an equal proprietary interest in the capital
or property contributed
15
and where each party exercises equal rights in the conduct of the business.
16
furthermore, the
parties did not hold themselves out as partners, and the building itself was embellished with the electric sign "Tourist
World Service, Inc.
17
in lieu of a distinct partnership name.
It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the private respondent,
Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency. It is the essence of
this contract that the agent renders services "in representation or on behalf of another.
18
In the case at bar, Sevilla
solicited airline fares, but she did so for and on behalf of her principal, Tourist World Service, Inc. As compensation, she
received 4% of the proceeds in the concept of commissions. And as we said, Sevilla herself based on her letter of
November 28, 1961, pre-assumed her principal's authority as owner of the business undertaking. We are convinced,
considering the circumstances and from the respondent Court's recital of facts, that the ties had contemplated a principal
agent relationship, rather than a joint managament or a partnership..
But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with the intent of the
parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the agency having been created for
mutual interest, of the agent and the principal.
19
It appears that Lina Sevilla is a bona fidetravel agent herself, and as
such, she had acquired an interest in the business entrusted to her. Moreover, she had assumed a personal obligation for
the operation thereof, holding herself solidarily liable for the payment of rentals. She continued the business, using her
own name, after Tourist World had stopped further operations. Her interest, obviously, is not to the commissions she
earned as a result of her business transactions, but one that extends to the very subject matter of the power of
management delegated to her. It is an agency that, as we said, cannot be revoked at the pleasure of the principal.
Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to damages.
As we have stated, the respondent Court avoided this issue, confining itself to the telephone disconnection and
padlocking incidents. Anent the disconnection issue, it is the holding of the Court of Appeals that there is 'no evidence
showing that the Tourist World Service, Inc. disconnected the telephone lines at the branch office.
20
Yet, what cannot be
denied is the fact that Tourist World Service, Inc. did not take pains to have them reconnected. Assuming, therefore, that it
had no hand in the disconnection now complained of, it had clearly condoned it, and as owner of the telephone lines, it
must shoulder responsibility therefor.
The Court of Appeals must likewise be held to be in error with respect to the padlocking incident. For the fact that Tourist
World Service, Inc. was the lessee named in the lease con-tract did not accord it any authority to terminate that contract
without notice to its actual occupant, and to padlock the premises in such fashion. As this Court has ruled, the petitioner,
Lina Sevilla, had acquired a personal stake in the business itself, and necessarily, in the equipment pertaining thereto.
Furthermore, Sevilla was not a stranger to that contract having been explicitly named therein as a third party in charge of
rental payments (solidarily with Tourist World, Inc.). She could not be ousted from possession as summarily as one would
eject an interloper.
The Court is satisfied that from the chronicle of events, there was indeed some malevolent design to put the petitioner,
Lina Sevilla, in a bad light following disclosures that she had worked for a rival firm. To be sure, the respondent court
speaks of alleged business losses to justify the closure '21 but there is no clear showing that Tourist World Ermita Branch
had in fact sustained such reverses, let alone, the fact that Sevilla had moonlit for another company. What the evidence
discloses, on the other hand, is that following such an information (that Sevilla was working for another company), Tourist
World's board of directors adopted two resolutions abolishing the office of 'manager" and authorizing the corporate
secretary, the respondent Eliseo Canilao, to effect the takeover of its branch office properties. On January 3, 1962, the
private respondents ended the lease over the branch office premises, incidentally, without notice to her.
It was only on June 4, 1962, and after office hours significantly, that the Ermita office was padlocked, personally by the
respondent Canilao, on the pretext that it was necessary to Protect the interests of the Tourist World Service. "
22
It is
strange indeed that Tourist World Service, Inc. did not find such a need when it cancelled the lease five months earlier.
While Tourist World Service, Inc. would not pretend that it sought to locate Sevilla to inform her of the closure, but
surely, it was aware that after office hours, she could not have been anywhere near the premises. Capping these series of
"offensives," it cut the office's telephone lines, paralyzing completely its business operations, and in the process, deprivi ng
Sevilla articipation therein.
This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa it had perceived to be
disloyalty on her part. It is offensive, in any event, to elementary norms of justice and fair play.
We rule therefore, that for its unwarranted revocation of the contract of agency, the private respondent, Tourist World
Service, Inc., should be sentenced to pay damages. Under the Civil Code, moral damages may be awarded for "breaches
of contract where the defendant acted ... in bad faith.
23

We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury done to Lina Sevilla from its
brazen conduct subsequent to the cancellation of the power of attorney granted to her on the authority of Article 21 of the
Civil Code, in relation to Article 2219 (10) thereof
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage.
24

ART. 2219. Moral damages
25
may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the same damages in a
solidary capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has been shown that she had
connived with Tourist World Service, Inc. in the disconnection and padlocking incidents. She cannot therefore be held
liable as a cotortfeasor.
The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as exemplary damages,
25
and
P5,000.00 as nominal
26
and/or temperate
27
damages, to be just, fair, and reasonable under the circumstances.
WHEREFORE, the Decision promulgated on January 23, 1975 as well as the Resolution issued on July 31, 1975, by the
respondent Court of Appeals is hereby REVERSED and SET ASIDE. The private respondent, Tourist World Service, Inc.,
and Eliseo Canilao, are ORDERED jointly and severally to indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as
and for moral damages, the sum of P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as and for
nominal and/or temperate damages.
Costs against said private respondents.
SO ORDERED.
Yap (Chairman), Melencio-Herrera, Paras and Padilla, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16600 December 27, 1961
ILOILO CHINESE COMMERCIAL SCHOOL, petitioner,
vs.
LEONORA FABRIGAR and THE WORKMEN'S COMPENSATION COMMISSION, respondents.
Luis G. Hofilea for petitioner.
J. T. de Leon for respondents.
PAREDES, J .:
As a result of the death of Santiago Fabrigar, on June 28, 1956, his heirs in the person of Leonora Fabrigar (common-law
wife) and their children, filed a claim for compensation with the Workmen's Compensation Commission, Case No. 1085,
W.C.C., entitled "Leonora Fabrigar, et al., Claimants, vs. Iloilo Chinese Commercial School, Respondent." In this claim, it
was alleged that the cause of death was " pulmonary tuberculosis contracted during and as a result of his employment as
janitor." The Hearing Officer of the WCC denied the claim and dismissed the case, finding that the claimant failed to prove
the casual effect of employment and death; nothing was shown that the disease was contracted in line of duty; that
whatever evidence claimant presented about the cause of death was only a mere suggestion that progressively
developed from tuberculosis with heart trouble to a sudden fatal turn, ending up for the cause of "beriberi adult" at the time
of death, as per certification of Sanitary Inspector Dr. P. E. Labitoria, of Dao, Capiz (Exhibits C & 4).
The heirs of Santiago Fabrigar appealed the decision with the Workmen's Compensation Commission which, on
November 12, 1959, rendered judgment reversing the decision of its Hearing Officer, making the following findings of
facts:
That Santiago Fabrigar had been employed from 1947 to March 12, 1956, as a janitor-messenger of the respondent Iloilo
Chinese Commercial School, his work consisting of sweeping and scrubbing the floors, cleaning the classrooms and the
school premises, and other janitorial chores; on March 11, 1956, preparatory to graduation day, he carried desks and
chairs from the classrooms to the auditorium, set the curtains and worked harder and faster than usual; that although he
felt shortness of breath and did not feel very well that day, he continued working at the request of the overseer of
respondent, that on the following day he reported for work, but on March 13, he spat blood and stopped working; that from
April 29, 1956 to May 15, 1956, he was under treatment by Dr. Quirico Villareal "for far advanced pulmonary tuberculosis
and for heart disease"; and that previous to said treatment, he was attended by Dr. Jaranilla for pulmonary tuberculosis.
The Commission concluded that the short period of intervention between his last day of work (March 13, 1956) when he
spat blood and his death on June 28, 1956, due to pulmonary tuberculosis, indicated that he had been suffering from such
disease even during the time he was employed by the respondent and considering the strenuous work he performed, his
employment as janitor aggravated his pre-existing illness; that although here is a discrepancy between the cause of death
"beriberi adult," as appearing in the death Certificate and the testimony of Dr. Villareal, the latter deserves more credence,
because the information (cause of death) was given by the sanitary inspector who did not, in any way, examine the
deceased before or after his death. The Commission, therefore, ordered the respondent Chinese Commercial School,
Inc., in said case
1. To pay to the claimant, for and in behalf of her minor children by the deceased, namely, Carlito, Gloria, Rosita
and Ernesto, all surnamed Fabrigar, the amount of TWO THOUSAND FOUR HUNDRED NINETY SIX and 00/00
Pesos (P2,496.00) as Death benefits; and
2. To pay to the Commission the amount of P25.00 as fees pursuant to Section 55 of Act 3428, as amended.
The above decision is now before Us for Review on a Writ of Certiorari, after the motion for reconsideration had been
denied, petitioner alleging that the Commission erred:
1. In disregarding completely the evidentiary value of the death certificate of the attending physician which was
presented as evidence by both claimants and respondent (Exhibits C & 4) to prove the cause of death;
2. In finding that the cause of death of said Santiago Fabrigar was tuberculosis and was contracted during and as
a result of the nature of his employment;
3. In holding that the herein petitioner was the employer of the deceased Santiago Fabrigar; and
4. In not holding that the herein petitioner is exempt from the scope of the Workmen's Compensation
Law.lawphil.net
Petitioner contends that the preponderance of evidence on the matters involved in this case, militates in its favor.
Considering the doctrine that the Commission, like the Court of Industrial Relations, is bound not by the rule of
preponderance of evidence as in ordinary civil cases, but by the rule of substantial evidence (Ang Tibay vs. CIR, 69 Phil.
635; Phil. Newspaper Guild vs. Evening News, 47 Off. Gaz. No. 12, p. 6188; Secs. 43 & 46 Rep. Act No. 772, W.C. Act),
petitioner's pretension is without merit. Substantial evidence supports the decision of the Commission. While seemingly
there exists an inconsistency in the cause of death, as appearing in the death certificate by Dr. Labitoria and in Dr.
Villareal's diagnosis, it is a fact found by the Commission, that the Sanitary Inspector did not examine the deceased
before and after his death. "Undoubtedly," says the Commission, "the information that he died of beriberi adult, as
appearing in the death certificate was given because it appears that the deceased had also edema of the extremities
(swollen legs)." The evidence of record sustains the following findings of the Commission, is Fabrigar's cause of death to
wit
The short period of time intervening between his last day of work (March 13, 1956) when he spat blood and his
death June 28, 1956 due to pulmonary tuberculosis indicates that he had been suffering from the disease even
during the time that he was employed by the respondent. Considering the strenuous work that he performed while
in the service of the respondents and the unusually long hours of work he rendered (6:00 p.m. to 1:30 p.m. and
from 2:00 p.m. to 6:00 p.m. or 7:00 p.m.) beyond the normal and legal working hours, we find that his
employment aggravated his pre-existing illness and brought about his death. Moreover, our conclusion finds
support in the fact that immediately preceding his last day of work with the respondent, he had an unusually hard
day lifting desks and other furnitures and assisting in the preparations for the graduation exercises of the school.
Considering also his complaints during that day (March 11), among which was "shortness of breath", we may also
say that his work affected an already existing heart ailment.
We find no plausible reason for altering or disturbing the above factual findings of the Commission, in the present appeal
by certiorari.
It is claimed that actually the deceased was not an employee of the petitioner, but by the Iloilo Chinese Chamber
of Commerce which was the one that furnished the janitor service in the premises of its buildings, including the part
thereof occupied by the petitioner; that the Chamber of Commerce paid the salaries of janitors, including the deceased;
that the petitioner could not afford to pay rentals of its premises and janitor due to limited finances depended largely on
funds raised among its Board of Directors, the Chinese Chamber of Commerce and Chinese nationals who helped the
school. In other words, it is pretended that the deceased was not an employee of the school but of the Chinese Chamber
of Commerce which should be the one responsible for the compensation of the deceased. On one hand, according to the
Commission, there is substantial proof to the effect that Fabrigar was employed by and rendered service for the petitioner
and was an employee within the purview of the Workmen's Compensation Law. On the other hand, the most important
test of employer-employee relation is the power to control the employee's conduct. The records disclose that the
person in charge (encargado) of the respondent school supervised the deceased in his work and had control
over the manner he performed the same.
It is finally contended that petitioner is an institution devoted solely for learning and is not an industry within the meaning
of the Workmen's Compensation Law. Consequently, it is argued, it is exempt from the scope of the same law.
Considering that this factual question has not been properly put in issue before the Commission, it may not now be
entertained in this appeal for the first time (Atlantic Gulf, etc. vs. CIR, et al., L-16992, Dec. 23, 1961, citing International Oil
Factory Union v. Hon. Martinez, et al., L-15560, Dec. 31, 1960). The decision of the Commission does not show that the
matter was taken up. We are at a loss to state whether the issue was raised in the motion for reconsideration filed with the
Commission, because the said motion is not found in the record before us. And the resolution to the motion for
reconsideration does not touch this question.
IN VIEW HEREOF, the appeal interposed by the petitioner is dismissed, and the decision appealed from is affirmed, with
costs against the herein petitioner.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and De Leon, JJ.,concur.
Padilla, J., took no part.
SECOND DIVISION
[G.R. No. 116960. April 2, 1996]
BERNARDO JIMENEZ and JOSE JIMENEZ, as Operators of JJs TRUCKING, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, PEDRO JUANATAS and FREDELITO JUANATAS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE NLRC, GENERALLY RESPECTED; EXCEPT WHEN
AT ODDS WITH THE LABOR ARBITER. - The review of labor cases elevated to us on certiorari is confined to
questions of jurisdiction or grave abuse of discretion. As a rule, this Court does not review supposed errors in the
decision of the NLRC which raise factual issues, because factual findings of agencies exercising quasi-judicial
functions are accorded not only respect but even finality, aside from the consideration that the Court is essentially not
a trier of facts. However, in the case at bar, a review of the records thereof with an assessment of the facts is
necessary since the factual findings of the NLRC and the labor arbiter are at odds with each other.
2. ID.; ID.; BURDEN OF PROOF; THE DEBTOR WHO PLEADS AFFIRMATIVE ALLEGATION OF PAYMENT OF
OBLIGATION MUST PROVE THE SAME; WHEN THE BURDEN SHIFTS TO THE CREDITOR. - As a general rule,
one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general
rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.
The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. When
the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it has
been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor.
Where the debtor introduces some evidence of payment, the burden of going forward with the evidence - as distinct
from the general burden of proof- shifts to the creditor, who is then under a duty of producing some evidence to show
non-payment. In the instant case, the right of respondent to be paid a commission is not disputed by petitioners.
Although private respondents admit receipt of partial payment, petitioners still have to present proof of full payment.
Where the defendant sued for a debt admits that the debt was originally owed, and pleads payment in whole or in
part, it is incumbent upon him to prove such payment. That a plaintiff admits that some payments have been made
does not change the burden of proof. The defendant still has the burden of establishing payments beyond those
admitted by plaintiff. The positive testimony of a creditor may be sufficient of itself to show non-payment, even when
met by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to show
payment, but, where his testimony is contradicted by the other party or by a disinterested witness, the issue may be
determined against the debtor since he has the burden of proof. The testimony of the debtor creating merely an
inference of payment will not be regarded as conclusive on that issue. Hence, for failure to present evidence to prove
payment, petitioners defaulted in their defense and in effect admitted the allegations of private respondents.
3. ID.; ID.; RULES OF ADMISSIBILITY; DOCUMENTS NOT PROPERLY ACCOMPLISHED HAS NO PROBATIVE
VALUE. - The testimony of petitioners which merely denied the claim of private respondents, unsupported by
documentary evidence, is not sufficient to establish payment. Although petitioners submitted a notebook showing the
alleged vales of private respondents for the year 1990, the same is inadmissible and cannot be given probative value
considering that it is not properly accomplished, is undated and unsigned, and is thus uncertain as to its origin and
authenticity.
4. LABOR LAW AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATIONSHIP; ELEMENTS; NOT
PRESENT IN CASE AT BAR. - In determining the existence of an employer-employee relationship, the elements
that are generally considered are the following: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, with the control test
assuming primacy in the overall consideration. In the case at bar, the aforementioned elements are not present.
APPEARANCES OF COUNSEL
Fernandez law Office for petitioners.
Alejandro M. Villamil for private respondents.
D E C I S I O N
REGALADO, J .:
This petition for certiorari seeks the annulment of the decision of respondent National Labor Relations Commission
(NLRC), dated May 27, 1994, as well as its resolution, datedAugust 8, 1994, denying petitioners motion for
reconsideration,
1
which assailed decision affirmed with modifications the adverse decision of the labor arbiter against
herein petitioners.
On June 29, 1990, herein private respondents Pedro and Fredelito Juanatas, father and son, filed a claim for unpaid
wages/commissions, separation pay and damages against JJ s Trucking and/or Dr. Bernardo Jimenez. Said
respondents, as complainants therein, alleged that in December, 1987, they were hired by herein petitioner Bernardo
Jimenez as driver! mechanic and helper, respectively, in his trucking firm, JJ Trucking. They were assigned to a ten-
wheeler truck to haul soft drinks of Coca-Cola Bottling Company and paid on commission basis, initially fixed at 17% but
later increased to 20% in 1988.
Private respondents further alleged that for the years 1988 and 1989 they received only a partial commission of
P84,000.00 from petitioners total gross income of almost P1,000,000.00 for the said two years. Consequently, with their
commission for that period being computed at 20% of said income, there was an unpaid balance to them of P106,211.86;
that until March, 1990 when their services were illegally terminated, they were further entitled to P15,050.309 which,
excluding the partial payment of P7,000.00, added up to a grand total of P114,261.86 due and payable to them; and that
petitioners refusal to pay their aforestated commission was a ploy to unjustly terminate them.
Disputing the complaint, petitioners contend that respondent Fredelito Juanatas was not an employee of the firm but
was merely a helper of his father Pedro; that all commissions for 1988 and 1989, as well as those up to March, 1990,
were duly paid; and that the truck driven by respondent Pedro Juanatas was sold to one Winston Flores in 1991 and,
therefore, private respondents were not illegally dismissed.
2

After hearings duly conducted, and with the submission of the parties position/supporting papers, Labor Arbiter
Roque B. de Guzman rendered a decision dated March 9, 1993, with this decretal portion:
WHEREFORE, decision is hereby issued ordering respondents JJs Trucking and/or Dr. Bernardo Jimenez to pay jointly and
severally complainant Pedro Juanatas a separation pay of FIFTEEN THOUSAND FIFTY (P15,050.00) PESOS, plus attorneys fee
equivalent to ten percent (10%) of the award.
The complaint of Fredelito Juanatas is hereby dismissed for lack of merit.
3

On appeal filed by private respondents, the NLRC modified the decision of the labor arbiter and disposed as follows:
PREMISES CONSIDERED, the Decision of March 9, 1993 is hereby MODIFIED, to wit:
1. Complainant Fredelito Juanatas is hereby declared respondents employee and shares in (the) commission and separation pay
awarded to complainant Pedro Juanatas, his father.
2. Respondent JJs Trucking and Dr. Bernardo Jimenez are jointly and severally liable to pay complainants their unpaid
commissions in the total amount of Eighty Four Thousand Three Hundred Eighty Seven Pesos and 05/100 (P84,387.05).
3. The award of attorneys fees is reduced accordingly to eight thousand four hundred thirty eight pesos and 70/100 (P8,438.70).
4. The other findings stand affirmed.
4

Petitioners motion for reconsideration having been denied thereafter in public respondents resolution dated August
8, 1994,
5
petitioners have come to us in this recourse, raising for resolution the issues as to whether or not respondent
NLRC committed grave abuse of discretion in ruling (a) that private respondents were not paid their commissions in full,
and (b) that respondent Fredelito Juanatas was an employee of JJs Trucking.
The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave abuse of
discretion.
6
As a rule, this Court does not review supposed errors in the decision of the NLRC which raise factual issues,
because factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even
finality,
7
aside from the consideration that the Court is essentially not a trier of facts. However, in the case at bar, a review
of the records thereof with an assessment of the facts is necessary since the factual findings of the NLRC and the labor
arbiter are at odds with each other.
8

On the first issue, we find no reason to disturb the findings of respondent NLRC that the entire amount of
commissions was not paid, this by reason of the evident failure of herein petitioners to present evidence that full payment
thereof has been made. It is a basic rule in evidence that each party must prove his affirmative allegations. Since the
burden of evidence lies with the party who asserts an affirmative allegation, the plaintiff or complainant has to prove his
affirmative allegation, in the complaint and the defendant or respondent has to prove the affirmative allegations in his
affirmative defenses and counterclaim. Considering that petitioners herein assert that the disputed commissions have
been paid, they have the bounden duty to prove that fact.
As a general rule, one who pleads payment has the burden of proving it.
9
Even where the plaintiff must allege non-
payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove
non-payment.
10
The debtor has the burden of showing with legal certainty that the obligation has been discharged by
payment.
11

When the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it
has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the
creditor.
12
Where the debtor introduces some evidence of payment, the burden of going forward with the evidence - as
distinct from the general burden of proof - shifts to the creditor, who is then under a duty of producing some evidence to
show non-payment.
13

In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent to 17%, later
increased to 20%, of the gross income is not disputed by petitioners. Although private respondents admit receipt of partial
payment, petitioners still have to present proof of full payment. Where the defendant sued for a debt admits that the debt
was originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such payment. That a
plaintiff admits that some payments have been made does not change the burden of proof. The defendant still has the
burden of establishing payments beyond those admitted by plaintiff.
14

The testimony of petitioners which merely denied the claim of private respondents, unsupported by documentary
evidence, is not sufficient to establish payment. Although petitioners submitted a notebook showing the alleged vales of
private respondents for the year 1990,
15
the same is inadmissible and cannot be given probative value considering that it
is not properly accomplished, is undated and unsigned, and is thus uncertain as to its origin and authenticity.
16

The positive testimony of a creditor may be sufficient of itself to show non-payment, even when met by indefinite
testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to show payment, but, where his
testimony is contradicted by the other party or by a disinterested witness, the issue may be determined against the debtor
since he has the burden of proof. The testimony of the debtor creating merely an inference of payment will not be
regarded as conclusive on that issue.
17

Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense and in effect admitted
the allegations of private respondents.
With respect to the second issue, however, we agree with petitioners that the NLRC erred in holding that the son,
Fredelito, was an employee of petitioners.
We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that
are generally considered are the following: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control the employees conduct,
18
with the control test assuming primacy
in the overall consideration.
In the case at bar, the aforementioned elements are not present. The agreement was between petitioner JJs
Trucking and respondent Pedro Juanatas. The hiring of a helper was discretionary on the part of Pedro. Under their
contract, should he employ a helper, he would be responsible for the latters compensation. With or without a helper,
respondent Pedro Juanatas was entitled to the same percentage of commission. Respondent Fredelito Juanatas was
hired by his father, Pedro, and the compensation he received was paid by his father out of the latters commission.
Further, Fredelito was not subject to the control and supervision of and dismissal by petitioners but of and by his father.
Even the Solicitor General, in his comment, agreed with the finding of the labor arbiter that Fredelito was not an
employee of petitioners, to wit:
Public respondent committed grave abuse of discretion in holding that said private respondent is an employee of JJs Trucking on the
ground that, citing Article 281 of the Labor Code, Fredelitos functions as helper was (sic) necessary and desirable to respondents
trucking business.
In the first place, Article 281 of the Labor Code does not refer to the basic factors that must underlie every existing employer-
employee relationship, the absence of any of which will negate such existence. It refers instead to the qualifications of (A)n employee
who is allowed to work after a probationary period and who, as a consequence, shall be considered a regular employee. Secondly,
the test in determining the existence of an employee-employer relationship is not the necessity and/or desirability of ones functions in
relation to an employers business, but (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct. The latter is the most important element (Singer Sewing Machine
Company vs. Drilon, 193 SCRA 270, 275; Deferia vs. NLRC, 194 SCRA 531, 525; Ecal vs. NLRC, 224, 228; Hijos De F. Escano,
Inc. vs. NLRC, 224 SCRA 781, 785). The aforequoted pertinent findings of the Labor Arbiter indicate (that) the foregoing
requirements do not exist between petitioner and private respondent Fredelito Juanatas. Thus, the labor arbiter stated that respondent
Fredelito Juanatas was never hired by petitioners. Instead the formers services were availed of by respondent Pedro Juanatas his
father, who, at the same time, supervised and controlled his work and paid his commissions. Respondent NLRCs ruling did not
traverse these findings of the labor arbiter.
19

WHEREFORE, the judgment of respondent National Labor Relations Commission is hereby AFFIRMED, with the
MODIFICATION that paragraph 1 thereof, declaring Fredelito Juanatas an employee of petitioners and entitled to share in
the award for commission and separation pay, is hereby DELETED.
SO ORDERED.
Romero, Puno and Mendoza, JJ., concur.
Torres, Jr. J., on leave.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 114787 June 2, 1995
MAM REALTY DEVELOPMENT CORPORATION and MANUEL CENTENO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and CELSO B. BALBASTRO respondents.

VITUG, J .:
A prime focus in the instant petition is the question of when to hold a director or officer of a corporation solidarily obligated
with the latter for a corporate liability.
The case originated from a complaint filed with the Labor Arbiter by private respondent Celso B. Balbastro against herein
petitioners, MAM Realty Development Corporation ("MAM") and its Vice President Manuel P. Centeno, for wage
differentials, "ECOLA," overtime pay, incentive leave pay, 13th month pay (for the years 1988 and 1989), holiday pay and
rest day pay. Balbastro alleged that he was employed by MAM as a pump operator in 1982 and had since performed such
work at its Rancho Estate, Marikina, Metro Manila. He earned a basic monthly salary of P1,590.00 for seven days of work
a week that started from 6:00 a.m. to up until 6:00 p.m. daily.
MAM countered that Balbastro had previously been employed by Francisco Cacho and Co., Inc., the developer of Rancho
Estates. Sometime in May 1982, his services were contracted by MAM for the operation of the Rancho Estates' water
pump. He was engaged, however, not as an employee, but as a service contractor, at an agreed fee of P1,590.00 a
month. Similar arrangements were likewise entered into by MAM with one Rodolfo Mercado and with a security guard of
Rancho Estates III Homeowners' Association. Under the agreement, Balbastro was merely made to open and close on a
daily basis the water supply system of the different phases of the subdivision in accordance with its water rationing
scheme. He worked for only a maximum period of three hours a day, and he made use of his free time by offering
plumbing services to the residents of the subdivision. He was not at all subject to the control or supervision of MAM for, in
fact, his work could so also be done either by Mercado or by the security guard. On 23 May 1990, prior to the filing of the
complaint, MAM executed a Deed of Transfer,
1
effective 01 July 1990, in favor of the Rancho Estates Phase III
Homeowners Association, Inc., conveying to the latter all its rights and interests over the water system in the subdivision.
In a decision, dated 23 December 1991, the Labor Arbiter dismissed the complaint for lack of merit.
On appeal to it, respondent National Labor Relations Commission ("NLRC") rendered judgment (a) setting aside the
questioned decision of the Labor Arbiter and (b) referring the case, pursuant to Article 218(c) of the Labor Code, to Arbiter
Cristeta D. Tamayo for further hearing and submission of a report within 20 days from receipt of the Order.
2
On 21 March
1994, respondent Commissioner, after considering the report of Labor Arbiter Tamayo, ordered:
WHEREFORE, the respondents are hereby directed to pay jointly and severally complainant the sum of
P86,641.05 as above-computed.
3

The instant petition asseverates that respondent NLRC gravely abused its discretion, amounting to lack or excess
of jurisdiction, (1) in finding that an employer-employee relationship existed between petitioners and private
respondent and (2) in holding petitioners jointly and severally liable for the money claims awarded to private
respondent.
Once again, the matter of ascertaining the existence of an employer-employee relationship is raised. Repeatedly, we have
said that this factual issue is determined by:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee with respect to the result of the work to be done and to
the means and methods by which the work is to be accomplished.
We see no grave abuse of discretion on the part of NLRC in finding a full satisfaction, in the case at bench, of
the criteria to establish that employer-employee relationship. The power of control, the most important feature of
that relationship and, here, a point of controversy, refers merely to the existence of the power and not to the
actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the
employee; it is enough that the former has a right to wield the power.
4
It is hard to accede to the contention of
petitioners that private respondent should be considered totally free from such control merely because the work
could equally and easily be done either by Mercado or by the subdivision's security guard. Not without any
significance is that private respondent's employment with MAM has been registered by petitioners with the Social
Security System.
5

It would seem that the money claims awarded to private respondent were computed from 06 March 1988 to 06 March
1991,
6
the latter being the date of the filing of the complaint. The NLRC might have missed the transfer by MAM of the
water system to the Homeowners Association on 01 July 1990, a matter that would appear not to be in dispute.
Accordingly, the period for the computation of the money claims should only be for the period from 06 March 1988 to 01
July 1990 (when petitioner corporation could be deemed to have ceased from the activity for which private respondent
was employed), and petitioner corporation should, instead, be made liable for the employee's separation pay equivalent to
one-half (1/2) month pay for every year of
service.
7
While the transfer was allegedly due to MAM's financial constraints, unfortunately for petitioner corporation,
however, it failed to sufficiently establish that its business losses or financial reverses were serious enough that possibly
can warrant an exemption under the law.
8

We agree with petitioners, however, that the NLRC erred in holding Centeno jointly and severally liable with MAM. A
corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by
them, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent.
True, solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in
the following cases:
9

1. When directors and trustees or, in appropriate cases, the officers of a corporation
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons.
10

2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge
thereof, did not forthwith file with the corporate secretary his written objection thereto.
11

3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and
solidarily liable with the Corporation.
12

4 When a director, trustee or officer is made, by specific provision of law, personally liable for his
corporate action.
13

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or in bad faith.
14

In the case at Bench, there is nothing substantial on record that can justify, prescinding from the foregoing, petitioner
Centeno's solidary liability with the corporation.
An extra note. Private respondent avers that the questioned decision, having already become final and executory, could
no longer be reviewed by this Court. The petition before us has been filed under Rule 65 of the Rules of Court, there
being no appeal, or any other plain, speedy and adequate remedy in the ordinary course of law from decisions of the
National Labor Relations Commission; it is a relief that is open so long as it is availed of within a reasonable time.
WHEREFORE, the order of 21 March 1994 is MODIFIED. The case is REMANDED to the NLRC for a re-computation of
private respondent's monetary awards, which, conformably with this opinion, shall be paid solely by petitioner MAM Realty
Development Corporation. No special pronouncement on costs.
SO ORDERED.
Feliciano, Romero, Melo and Francisco, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.

NARVASA, J .:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered
into a contract
1
by which:
1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities
in accordance with the existing rules and regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of
Commissions" of the contract to "constitute a part of the consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and
those which may from time to time be promulgated by it, ..." were made part of said contract.
The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the
acts prohibited to him, and the modes of termination of the agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time,
place and means of soliciting insurance. Nothing herein contained shall therefore be construed to create
the relationship of employee and employer between the Agent and the Company. However, the Agent
shall observe and conform to all rules and regulations which the Company may from time to time
prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or indirectly,
rebates in any form, or from making any misrepresentation or over-selling, and, in general, from doing or
committing acts prohibited in the Agent's Manual and in circulars of the Office of the Insurance
Commissioner.
TERMINATION. The Company may terminate the contract at will, without any previous notice to the
Agent, for or on account of ... (explicitly specified causes). ...
Either party may terminate this contract by giving to the other notice in writing to that effect. It shall
become ipso facto cancelled if the Insurance Commissioner should revoke a Certificate of Authority
previously issued or should the Agent fail to renew his existing Certificate of Authority upon its expiration.
The Agent shall not have any right to any commission on renewal of premiums that may be paid after the
termination of this agreement for any cause whatsoever, except when the termination is due to disability
or death in line of service. As to commission corresponding to any balance of the first year's premiums
remaining unpaid at the termination of this agreement, the Agent shall be entitled to it if the balance of the
first year premium is paid, less actual cost of collection, unless the termination is due to a violation of this
contract, involving criminal liability or breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other compensations
shall be valid without the prior consent in writing of the Company. ...
Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to
implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while
concurrently fulfilling his commitments under the first contract with the Company.
2

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao
sued the Company in a civil action and this, he was later to claim, prompted the latter to terminate also his engagement
under the first contract and to stop payment of his commissions starting April 1, 1980.
3

Basiao thereafter filed with the then Ministry of Labor a complaint
4
against the Company and its president. Without
contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid thereunder,
plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor and that the Company had no obligation to him for unpaid
commissions under the terms and conditions of his contract.
5

The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had
established an employer-employee relationship between him and the Company, and this conferred jurisdiction on the
Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions "...
equivalent to the balance of the first year's premium remaining unpaid, at the time of his termination, of all the insurance
policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees.
6

This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission.
7
Hence, the present
petition for certiorari and prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue
of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive
jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code,
8
or, contrarily, as the Company
would have it, that under said contract Basiao's status was that of an independent contractor whose claim was thus
cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it
and Basiao, is drawn from the terms of the contract they had entered into, which, either expressly or by necessary
implication, made Basiao the master of his own time and selling methods, left to his judgment the time, place and means
of soliciting insurance, set no accomplishment quotas and compensated him on the basis of results obtained. He was not
bound to observe any schedule of working hours or report to any regular station; he could seek and work on his prospects
anywhere and at anytime he chose to, and was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the
respondents contend that they do not constitute the decisive determinant of the nature of his engagement, invoking
precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent
contractor is control, that is, whether or not the party who engages the services of another has the power to control the
latter's conduct in rendering such services. Pursuing the argument, the respondents draw attention to the provisions of
Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company may from time
to time prescribe ...," as well as to the fact that the Company prescribed the qualifications of applicants for insurance,
processed their applications and determined the amounts of insurance cover to be issued as indicative of the control,
which made Basiao, in legal contemplation, an employee of the Company.
9

It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case ofViana vs. Alejo
Al-Lagadan
10

... In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the power to control the employees' conduct although the latter is the
most important element (35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly recent.
11
Indeed, it is without question a valid test of the
character of a contract or agreement to render service. It should, however, be obvious that not every form of control that
the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be
accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the
term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is
not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party
hired and eschews any intervention whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix
the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the
result, create no employer-employee relationship unlike the second, which address both the result and the means used to
achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the
business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations
between insurer and insured but also to the internal affairs of the insurance company.
12
Rules and regulations governing
the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is,
therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in
selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules
which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and
approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the
schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods
or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee
relationship between him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors,
instead of employees of the parties for whom they worked. In Mafinco Trading Corporation vs. Ople,
13
the Court ruled that
a person engaged to sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his own
workers, sell according to his own methods subject only to prearranged routes, observing no working hours fixed by the
other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a peddler's
discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an independent
contractor.
In Investment Planning Corporation of the Philippines us. Social Security System
14
a case almost on all fours with the
present one, this Court held that there was no employer-employee relationship between a commission agent and an
investment company, but that the former was an independent contractor where said agent and others similarly placed
were: (a) paid compensation in the form of commissions based on percentages of their sales, any balance of
commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put
up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the
agreement with the company and termination of their services for certain causes; (d) not required to report for work at any
time, nor to devote their time exclusively to working for the company nor to submit a record of their activities, and who,
finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC,
15
it was held that one who had been engaged by a rice miller to buy and sell rice and
palay without compensation except a certain percentage of what he was able to buy or sell, did work at his own pleasure
without any supervision or control on the part of his principal and relied on his own resources in the performance of his
work, was a plain commission agent, an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and
conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that any
such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively
controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing,
the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract
leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-
five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status under
the contract of July 2, 1968, not the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a
commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an
ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without
jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of
private respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is dismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.
G.R. No. L-15639, Industrial, Commercial and Agricultural Workers Organization (ICAWO) v. Bautista et al., 7 SCRA 907
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
April 30, 1963
G.R. No. L-15639
INDUSTRIAL, COMMERCIAL AND AGRICULTURAL WORKERS ORGANIZATION (ICAWO), petitioner,
vs.
JOSE S. BAUTISTA, BALTAZAR M. VILLANUEVA, Judges of the CIR, BIENVENIDO TAN, Judge of the Court of First
Instance of Manila; DANIEL EVANGELISTA and EDGARDO LEDESMA, respondents.
H. Velez and M. A. Anas for petitioner.
Claro M. Recto for respondents Daniel Evangelista and Edgardo Ledesma.
Tuason and Magbanua for respondents Judges of the Court of Industrial Relations.
REGALA, J .:
This is an appeal from the resolution of the Court of Industrial Relations in Case No. 590-ULP, dismissing the complaint filed by
petitioning union against respondents Martha Enterprises, Inc., Daniel Evangelista, Edgardo Ledesma, Alejandro Dionio, Knights of
Labor, Teofilo Bernal and Joaquin Enriquez, Jr.
The complaint charged that respondents violated the right of their employees to self-organization under the Industrial Peace Act
(Republic Act No. 875) by questioning them about their union activities and affiliation; by inflicting bodily harm on some of them; by
threatening to dismiss employees on account of their membership in petitioning union; by requiring employees to join the Knights of
Labor as a condition of their continued employment and by laying off members of the petitioner for refusing to join the Knights of
Labor.
After trial, the Honorable Arsenio I. Martinez found respondent company guilty of having dismissed employees and of having refused
to re-employ them upon its reopening on account of their union activities and accordingly ordered the company to pay backwages to
the workers concerned from the day of their dismissal up to the time the operation of the Bulingan Logging Camp of the Martha
Enterprises, Inc. was transferred to Emiliano Bautista. The Court of Industrial Relations found the other charges to be groundless and
therefore dismissed the same.
Both parties moved for a reconsideration of the decision. By a 3 to 2 vote, the Court of Industrial Relations in banc reversed the
decision of Judge Martinez and dismissed the complaint. The resolution of the said court en banc is now before Us for review on
petition of the union.
In brief, the Court of Industrial Relations found the facts to be as follows:
On September 1, 1954, the company laid off 21 temporary laborers, the dismissal to take effect on September 30, 1954, in view of the
restriction imposed by the Bureau of Forestry on the amount of timber that the company could cut.
On September 15, 1954, the company laid off 55 more laborers, the dismissal to take effect on October 15, 1954, on which latter date
the company closed its Bulingan Logging Camp for the following reasons appearing on Exhibits "1", "1-A-1" to "1-A-48" and "1-B"
to "1-B-38":
1) Our recent survey of the area revealed that the total forested stand now remaining would no longer warrant and justify large-scale
logging operation;
2) The forested area left for exploitation is very rugged terrain, making operation difficult and costly;
3) The farther that we go inside the area the longer hauling time is required, thus greatly reducing our productive capacity, while on
the other hand, more roads require additional expenses;
4) Costs in fuels, materials, equipment spare parts and accessories have risen;
5) Orders from abroad for export logs have greatly declined;
6) In line with the Bureau of Forestry's policy of forest conservation, our annual timber quota allowed us for the year 1953-1954 has
been reduced to 20,000 cubic meters, and may be further reduced for the year 1954-1955;
7) The Bureau of Forestry has also directed us to operate on a selective logging-method, another factor which directly lowered our
production.
On November 3, 1954, the company resumed operation of its Bulingan Logging Camp. When some members of the petitioning union
applied for re-employment, the company refused them on account of the closed shop proviso of a collective bargaining agreement
which it had entered into on October 15, 1954 with the Knights of Labor. The closed shop agreement made membership in the Knights
of Labor a condition for employment in the company. The Court of Industrial Relations found that, although the collective bargaining
agreement was signed on October 15, 1954, yet negotiations for the same had been held since August, 1954. The court therefore held
that "under such circumstances, it is clear that the company had no ulterior motive in entering into agreement with the Knights of
Labor. So that the closed shop agreement being valid in accordance with the provision of Republic Act No. 875, Section 4(a), it cannot
be said that the refusal of the company to employ laborers, who are not members of the Knights of Labor, is a discriminatory act
punishable by law."
The Court of Industrial Relations also found from the evidence that Federico Lozada, president of the petitioning union, arrived on
September 10, 1954 and not on September 5, 1954 as believed by Judge Martinez. It therefore concluded that
... on September 1, 1954, when the respondent company decided to dismiss from the service temporary laborers as shown in Exhibit
"3" and on September 15, 1954, as stated in Exhibit "2" (Earlier in its resolution, the CIR found that the company had decided to close
its logging camp as early as September 6), the president of the complainant union, Federico Lozada, had not even arrived at the
Bulingan Logging Camp to organize the complainant union and consequently the workers at said camp were not yet members thereof.
Evidently, therefore, they could not have been dismissed because of union membership or activities.
On appeal, petitioner contends:
1. That respondent company signed the collective bargaining agreement on October 15, 1954 (the same day that it closed its Bulingan
Logging Camp) precisely to prevent the re-employment of its members when the company reopened on November 3, 1954. Petitioner
argues that the closed shop agreement could not be made to apply to its members without doing violence to their right to self-
organization as guaranteed by the Industrial Peace Act.
[[
1
]]

2. That the resolution of the Court of Industrial Relations en banc, reversing the decision of Judge Martinez, is "without legal and
factual basis to stand on, hence, such resolution Annex 'B' is not supported by substantial evidence."
Both contentions of the petitioner are without merit.
To begin with, petitioner does not show in what way the majority resolution reversing the decision of Judge Martinez is not supported
by substantial evidence so as to warrant us in reviewing the facts of this case. All it does is to quote a portion of the dissenting opinion
of Judge Martinez who, in order to defend his decision, tried to review the evidence. We take the findings of fact of the Court of
Industrial Relations in banc to be conclusive in the absence of a showing that the same have no support in evidence in line with the
rule that this Court will not review findings of fact of the Court of Industrial Relations "as long as the same are supported by
evidence." (National Development Co. v. Court of Industrial Relations, et al., G.R. No.L-15422, November 30, 1962; Philippine
Newspaper Guild v. Evening News, Inc., 86 Phil. 303). This is so because the Court of Industrial Relations is governed by the rule of
substantial evidence rather than by the rule of preponderance of evidence as in ordinary civil cases. (Iloilo Chinese Commercial
School v. Fabrigar, et al., G.R. No. L-16600, December 27, 1961)
Here, the Court of Industrial Relations found from the evidence that Federico Lozada arrived at the Bulingan Logging Camp to
organize petitioning union on September 10, 1954, whereas the lay-off of laborers was decided upon by the company as early as
September 1 and 6, 1954. Obviously, therefore, the lay-off could not have been due to the membership of the employees in the
petitioning union. On the other hand, it was found by the court that the lay-off on September 1 and 15 was prompted by economic
reasons which forced the company to close its logging camp on October 15, 1954.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court,
without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts.
Since the closure of the logging camp and the lay-off of the employees were for valid reasons, petitioning union can not complain that
the application of the closed shop agreement to its members when they sought re-employment upon the reopening of the camp on
November 3, 1954 was discriminatory. In Freeman Shirt Mfg. Co. Inc., et al. v. Court of Industrial Relations, et al., G.R. No. L-16561,
January 28, 1961, We held as follows:
The closed-shop agreement authorized under sec. 4, subsec. 2(4) of the Industrial Peace Act above quoted should, however, apply only
to persons to be hired or to employees who are not yet members of any labor organization. It is inapplicable to those already in the
service who are members of a minority union. To hold otherwise, i.e., that the employees in a company who are members of a
minority union may be compelled to disaffiliate from their union and join the majority or contracting union, would render nugatory the
right of all employees to self-organization and to form, join or assist labor organization of their own choosing, a right guaranteed by
the Industrial Peace Act (sec. 3, Republic Act No. 875) as well as by the Constitution (Art. III, sec. 1[6]).
This ruling was reiterated recently in Findlay Miller Timber Co. v. PLASLU and Court of Industrial Relations, et al., G.R. Nos. L-
18217-22, September 29, 1962.
Since the members of the petitioning union who applied for employment on November 3, 1954 (when the company resumed
operations) were laid off for some valid reason, they stood on equal footing with any other persons who were applying for
employment. As to the application of the closed shop agreement to them, therefore, there can be no objection. The Court of
Industrial Relations committed no error in upholding the refusal of the company to re-employ members of the petitioning
union unless they joined the Knights of Labor.
WHEREFORE, the resolution dated October 9, 1958 of the Court of Industrial Relations is hereby affirmed, without pronouncement
as to costs.
Bengzon, C.J., Bautista Angelo, Labrador, Paredes, Dizon and Makalintal, JJ., concur.
Padilla, J., took no part.
Reyes, J.B.L., reserves his vote.
Separate Opinions
BARRERA, J ., dissenting:
I dissent, because it seems to me that the temporary closing of the Bulingan Logging Camp and the signing of the collective
bargaining agreement with a close-shop clause, precisely on the same date, October 15, 1954, were resorted to in order to do away
with those laborers who did not desire to affiliate with the Knights of Labor. The reasons for the supposed closing of the Camp on
October 15, 1954, if true, could not have disappeared in 19 days to justify the resumption of operation on November 3, 1954. The
temporary closing appears not to have been in good faith and seems to have been thought of knowing that, without it, the old
employees could not have been affected by the close-shop clause. If the discontinuance of operation is genuine, then why enter into a
collective bargaining agreement precisely on the date of the suspension of operation when there would be no work and hence no need
of laborers?
The discrimination seems clear to me.
Concepcion, J., concurs.
Footnotes
[[
1
]]
Section 3 of Republic Act No. 875 provides that "Employees shall have the right to self-organization and to form, join or assist
labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and
to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. ..."

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-30592 February 25, 1982
PHILIPPINE FISHING BOAT OFFICERS AND ENGINEERS UNION, SAMAHAN NG MANGDARAGAT SA FILIPINAS,
FRANCISCO VISAYAS AND AMBROCIO BERGADO, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS, SAN DIEGO FISHERY ENTERPRISES, INC., BARTOLOME A. SAN DIEGO
AND ANATOLIO LLIDO, respondents.

TEEHANKEE, J .:
In this petition for review by certiorari, petitioners seek the reversal of the decision of the now defunct Court of Industrial
Relations dismissing their complaint of unfair labor practices against respondents San Diego Fishery Enterprises, Inc.,
Bartolome A. San Diego and Anatolio Llido. Petitioners Francisco Visayas and Ambrocio Bergado, who were dismissed
by respondent corporation likewise pray that they be granted backwages from the date of their dismissal on May 9, 1958.
Respondent San Diego Fishery Enterprises, Inc. is a domestic corporation engaged in deep-sea fishing and respondents
Bartolome A. San Diego and Anatolio Llido are the manager and an employee thereof while petitioners Philippine Fishing
Boat Officers and Engineers Union and Samahan ng Mangdaragat sa Filipinas are duly registered labor unions.
Petitioners Francisco Visayas and Ambrocio Bergado were the President and Treasurer, respectively, of the first named
union. The Philippine Fishing Boat Officers and Engineers Union is composed of officers and engineers, while Samahan
ng Mangdaragat sa Filipinas is composed of crew members, in the employ of respondent corporation.
On charges instituted by herein petitioners, the prosecution staff of respondent court, after conducting a preliminary
investigation filed a complaint for unfair labor practices against herein respondents. The complaint shows that petitioners
unions sent letters of demands and proposals to respondent corporation on May 6, 1958 and June 12, 1958 but
respondent corporation failed to answer the said letters within the reglementary period as provided for in Section 14 of
Republic Act No. 875 and also refused to talk with representatives of petitioners- unions. It also appears that on May 9,
1958, respondent corporation, through its manager Bartolome A. San Diego dismissed petitioners Visayas and Bergado
because of their union activities and their refusal to resign from the Philippine Fishing Boat Officers and Engineers Union
and join the union being organized by respondents San Diego and Llido. Consequently, on or about June 24, 1958,
petitioners unions declared a strike.
In their answer, respondents denied all the substantial allegations of the complaint and maintained that complainants do
not constitute representative groups for collective bargaining purposes and therefore the strike declared by the employees
was not legal. Respondents likewise denied that petitioners Visayas and Bergado were employees of the corporation.
What transpired during the hearing of the case can well be seen from the appealed decision. Petitioners introduced
evidence that Visayas and Bergado had continuously been employed by respondent San Diego Fishery Enterprises, Inc.
since April 1952 and September 1956, respectively. In the course of their employment, they joined the Philippine Fishing
Boat Officers and Engineers Union and were duly elected, respectively, as its vice-president and treasurer. On May 6.
1958 and June 12, 1958, petitioners-unions sent letters of demand to respondent corporation which remained
unanswered inspite of the lapse of the reglementary period provided in Section 14, Republic Act 8 5. Sometime thereafter,
respondent San Diego, with the cooperation and assistance of Llido started gathering information on the employees'
affiliations with the two complaining unions. This was heightened when on May 8 and 9, 1958 respondent San Diego
allegedly called into his office petitioners Visayas and Bergado and interrogated, coerced and required them to resign
from their union and to cooperate with the company by joining the union being organized by respondents San Diego and
Llido. When they refused to heed the demands of the management, Visayas and Bergado were dismissed. As an offshoot
of their dismissal, the two unions staged a strike and threw, picketlines in the premises of the respondent corporation.
Respondent corporation in turn tried to establish its defense that there is no employer-employee relationship between
petitioners Visayas and Bergado and the company in view of the peculiar feature of the fishing industry i.e., the regular dry
docking of fishing vessels to make them seaworthy; the repairs that must be made from time to time or the delay in the
trips because of scarcity of ice. Respondents alleged that the contract of employment invariably lasts only for the duration
of each fishing trip and terminates on the return of the vessel to its home port; and that the moment the crew members
disembark, they are no longer considered employees of the company.
Since the record indicated that individual petitioners were not on board any of the company's fishing vessels at the time of
their dismissal, respondent court ruled in its decision of October 3, 1968 that there existed no employer-employee
relationship between the parties and therefore respondents could not be held liable for unfair labor practices.
Petitioners timely filed a motion for reconsideration of the decision but respondent court, in an en banc resolution found
the motion to be without merit, besides the fact that the arguments of petitioners' counsel were 'not duly verified." Hence,
this appeal by certiorari, which the Court finds to be meritorious.
It is settled that tenure of employment is not considered as the test of employment. All that is required is hiring.
1
For it not
the continuity of employment that renders the employer responsible, but whether the work of the laborer is part of the
regular business or occupation of the employer.
2
In the case at bar, the employer-employee relationship is merely
suspended during the time the vessels are dry docked or undergoing repairs or being loaded with the necessary
provisions for the next fishing trip. All these activities form part of the regular operation of the company's fishing business.
Thus, in the analogous case of Manila Hotel Co. vs. CIR,
3
the Court held that:
Where the nature of the employees' relationship with the hotel is such that during off season they are
temporarily laid off and during summer season they are reemployed, or their services may be needed,
their status is that of regular seasonal employees. They are not strictly speaking separated from the
service but are merely on leave of absence without pay until they are reemployed. Their employment
relationship is never severed but merely suspended As such these employees can be considered as in
the regular employment of the hotel .
The temporary suspension of the business due to some foreseeable events, say, the scarcity of ice for the fishing trips or
when the fishing vessels cannot go out to sea due to repairs or strong typhoons does not sever the employer-employee
relationship between the parties. Under similar circumstances, the Court likewise held in Industrial Commercial-
Agricultural Worker's Organization vs. CIR,
4
that:
... The cessation of the Central's milling activities at the end of the season is certainly not permanent or
definitive; it is a foreseeable suspension of work, and both Central and laborers reason to expect that
such activities will be resumed, as they are in fact resumed, when sugar cane ripe for milling is available.
There is, therefore, merely a temporary cessation of the manufacturing process due to passing shortage
of raw materials that by itself alone, is not sufficient, in the absence of other justified reasons, to sever the
employment or labor relationship between the parties, since the shortage is not permanent. The proof of
this assertion is the undenied fact that many of the petitioner members of the ICAWO Union have been
laboring for the Central, and reengaged for many seasons without interruption. Nor does the Central
interrupt completely its operations in the interval between milling seasons; the office and sales force are
maintained, precisely because operations are to be later resumed.
That during the temporary layoff the laborers are considered free to seek other employment is natural,
since the laborers are not being paid, yet must find means of support. A period during which the Central is
forced to suspend or cease operation for a time (whether by reason of lack of cane or by some accident
to its machinery) should not mean starvation for employees and their families. Of course, the stopping of
the milling at the end of the season, and before the next sugar crop is ready, being regular and foreseen
by both parties to the labor relation, no compensation is expected nor demanded during the seasonal
layoff.
The Court holds, therefore, that the employer- employee relationship existed between the parties notwithstanding
evidence to the fact that petitioners Visayas and Bergado, even during the time that they worked with respondent
company alternated their employment on different vessels when they were not assigned on the company's vessels. For,
as was stressed in the above-quoted case of Industrial-Commercial-Agricultural Workers Organization vs. CIR, "that
during the temporary layoff the laborers are considered free to seek other employment is natural, since the laborers are
not being paid, yet must find means of support" and such temporary cessation of operations "should not mean starvation
for employees and their families." The fact that on the date of the individuals petitioners dismissal on May 9, 1958, they
were not on board any of the company's fishing vessels does not exonerate respondents from the charge of unjust
dismissal.
It was shown that at the time of the dismissal of said petitioners Visayas and Bergado, respondent San Diego was not the
general manager of the corporation. The power to hire and dismiss employees was then exercised by Enrique Diaz, who
approved or disapproved contracts of employment as acting general manager of respondent corporation. Respondent
court ruled that even assuming that respondents San Diego and Llido coerced the officers and engineers regarding their
union affiliations under threat of dismissal, no evidence existed to warrant a conclusion that San Diego was acting for and
in behalf of respondent firm as an employer. Respondent court thus ruled that since respondent San Diego was not, at the
time of petitioners' dismissal, the general manager and president of respondent corporation but merely a stockholder, he
had no power to hire and dismiss employees and any act imputed to him, even if assumed to be true, could not bind the
corporation. Whatever be the case, the Court has found the dismissal of petitioners to be unjustified, and it is not San
Diego nor Diaz who are herein held personally liable but respondent corporation itself as the employer.
Moreover, respondent corporation is undeniably a family corporation and Bartolome A. San Diego is one of the
incorporators and directors. In Emilio Cano Enterprises, Inc. vs. CIR,
5
the Court ruled that where the incorporators and
directors belong to a single family, the corporation and its members can be considered as one in order to avoid its being
used as an instrument to commit injustice, and held that
A judgment of unfair labor practice rendered against two individuals in their capacity as officials of the
corporation may be made against the property of said corporation, notwithstanding the fact that the
corporation was not a partv to the unfair labor practice charged, it appearing that the corporation is a
closed family corporation where the incorporators and directors belong to a single family. This is an
instance where the corporation and its members can be considered, and to hold such entity liable for the
acts of its members is not to ignore the legal fiction but merely to give meaning to the principle that such
fiction cannot be invoked if it is used as a shield to further an end subversive of justice.
The fact that the hiring and dismissal of employees was exercised by Enrique Diaz, the acting general manager of
respondent corporation, does not alter the employer-employee relationship between the parties and mean that he
personally was the employer. It is obvious that respondent corporation is the statutory employer of petitioners.
6
The
intervention of Enrique Diaz, in this case, was merely that of an agent or intermediary between the owner of the fishing
boat and the members of its crew. In short, Diaz was merely the person charged by respondent corporation to recruit its
officers and crew members to work on its vessels in pursuance of its regular fishing business.
7

The Court finds as totally unjustifiable respondent court's dismissal of petitioners' motion for reconsideration on the flimsy
ground that the arguments filed by their new counsel were not duly verified." Such defect was merely formal and did not
affect the validity and efficacy of the pleading and the arguments submitted. The most respondent court could have done
was to require such formal verification.
8
The Rules of Court (Rule 1, Sec. 2) prescribe a general directive that procedural
rules be liberallv construed or interpreted in order to promote their objective and to assist the parties in obtaining just,
speedy and inexpensive determination of their cases.
9
As stated by the now Chief Justice in Firestone Filipinas
Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, et al.
10
it is "the well-settled doctrine
that in labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of a procedural misstep, the
Idea being that its power be exercised according to justice and equity and substantial merits of the controversy. We find
that "respondents committed unfair labor practices in their refusal to answer the proposals of the petitioners-unions and to
bargain with them, coupled with the unlawful dismissal of petitioners Francisco Visayas and Ambrocio Bergado.
Accordingly, the decision under review is set aside and respondent San Diego Fishery Enterprises, Inc. is ordered to
cease and desist from further commission of such acts, and to pay petitioners Francisco Visayas and Ambrocio Bergado
backwages for a period of five (5) years without qualification and deduction, computed on the basis of their average yearly
earnings at the time of their unlawful dismissal on May 9, 1958.
11
This decision is immediately executory. With costs
against respondent company.SO ORDERED.
Guerrero, Makasiar, Fernandez, Melencio-Herrera and Plana, JJ., concur.




National Housing Corp. v. Juco, 134 SCRA 172 (1985)

F: Juco was an employee of the NHA. He filed a complaint for illegal dismissal w/ MOLE but his case was dismissed by
the labor arbiter on the ground that the NHA is a govt-owned corp. and jurisdiction over its employees is vested in the
CSC. On appeal, the NLRC reversed the decision and remanded the case to the labor arbiter for further proceedings.
NHA in turn appealed to the SC

ISSUE: Are employees of the National Housing Corporation, a GOCC without original charter, covered by the Labor Code
or by laws and regulations governing the civil service?

HELD: Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil Service embraces every branch, agency,
subdivision and instrumentality of the Government, including every government owned and controlled corporation.
The inclusion of GOCC within the embrace of the civil service shows a deliberate effort at the framers to plug an earlier
loophole which allowed GOCC to avoid the full consequences of the civil service system. All offices and firms of the
government are covered.
This consti provision has been implemented by statute PD 807 is unequivocal that personnel of GOCC belong to the civil
service and subject to civil service requirements.
"Every" means each one of a group, without exception. This case refers to a GOCC. It does not cover cases involving
private firms taken over by the government in foreclosure or similar proceedings.

xxx
For purposes of coverage in the Civil Service, employees of govt- owned or controlled corps. whether created by special
law or formed as subsidiaries are covered by the Civil Service Law, not the Labor Code, and the fact that pvt. corps.
owned or controlled by the govt may be created by special charter does not mean that such corps. not created by special
law are not covered by the Civil Service.
xxx
The infirmity of the resp's position lies in its permitting the circumvention or emasculation of Sec. 1, Art. XII-B [now Art IX,
B, Sec. 2 (1)] of the Consti. It would be possible for a regular ministry of govt to create a host of subsidiary corps. under
the Corp. Code funded by a willing legislature. A govt-owned corp. could create several subsidiary corps. These
subsidiary corps. would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free
from the strict accountability required by the Civil Service Dec. and the regulations of the COA. Their incomes would not
be subject to the competitive restraint in the open market nor to the terms and conditions of civil service employment.
Conceivably, all govt-owned or controlled corps. could be created, no longer by special charters, but through incorp. under
the general law. The Constitutional amendment including such corps. in the embrace of the civil service would cease to
have application. Certainly, such a situation cannot be allowed

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-69870 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,
vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND
EMPLOYMENT, MANILA AND EUGENIA C. CREDO, respondents.
G.R. No. 70295 November 29,1988
EUGENIA C. CREDO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L.
PEREZ,respondents.
The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.
Melchor R. Flores for petitioner Eugenia C. Credo.

PADILLA, J .:
Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division, National Labor
Relations Commission in Case No. 11-4944-83 dated 28 November 1984 and its resolution dated 16 January 1985
denying motions for reconsideration of said decision.
Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation which
provides security guards as well as messengerial, janitorial and other similar manpower services to the Philippine National
Bank (PNB) and its agencies. She was first employed with NASECO as a lady guard on 18 July 1975. Through the years,
she was promoted to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records, on 10 March
1980.
1

Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of Finance and
Special Project and Evaluation Department of NASECO, stemming from her non-compliance with Lloren's memorandum,
dated 11 October 1983, regarding certain entry procedures in the company's Statement of Billings Adjustment. Said
charges alleged that Credo "did not comply with Lloren's instructions to place some corrections/additional remarks in the
Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to explain further the said
instructions, [Credo] showed resentment and behaved in a scandalous manner by shouting and uttering remarks of
disrespect in the presence of her co-employees."
2

On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to explain
her side before Perez and NASECO's Committee on Personnel Affairs in connection with the administrative charges filed
against her. After said meeting, on the same date, Credo was placed on "Forced Leave" status for 1 5 days, effective 8
November 1983.
3

Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint, docketed as Case No.
114944-83, with the Arbitration Branch, National Capital Region, Ministry of Labor and Employment, Manila, against
NASECO for placing her on forced leave, without due process.
4

Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on Personnel Affairs
deliberated and evaluated a number of past acts of misconduct or infractions attributed to her.
5
As a result of this
deliberation, said committee resolved:
1. That, respondent [Credo] committed the following offenses in the Code of Discipline, viz:
OFFENSE vs. Company Interest & Policies
No. 3 Any discourteous act to customer, officer and employee of client company or officer of the
Corporation.
OFFENSE vs. Public Moral
No. 7 Exhibit marked discourtesy in the course of official duties or use of profane or insulting language
to any superior officer.
OFFENSE vs. Authority
No. 3 Failure to comply with any lawful order or any instructions of a superior officer.
2. That, Management has already given due consideration to respondent's [Credo] scandalous actuations
for several times in the past. Records also show that she was reprimanded for some offense and did not
question it. Management at this juncture, has already met its maximum tolerance point so it has decided
to put an end to respondent's [Credo] being an undesirable employee.
6

The committee recommended Credo's termination, with forfeiture of benefits.
7

On 1 December 1983, Credo was called again to the office of Perez to be informed that she was being charged with
certain offenses. Notably, these offenses were those which NASECO's Committee on Personnel Affairs already resolved,
on 22 November 1983 to have been committed by Credo.
In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was made to explain her side
in connection with the charges filed against her; however, due to her failure to do so,
8
she was handed a Notice of
Termination, dated 24 November 1983, and made effective 1 December 1983.
9
Hence, on 6 December 1983, Credo filed
a supplemental complaint for illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for
her dismissal and lack of opportunity to be heard.
10

After both parties had submitted their respective position papers, affidavits and other documentary evidence in support of
their claims and defenses, on 9 May 1984, the labor arbiter rendered a decision: 1) dismissing Credo's complaint, and 2)
directing NASECO to pay Credo separation pay equivalent to one half month's pay for every year of service.
11

Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28 November 1984,
rendered a decision: 1) directing NASECO to reinstate Credo to her former position, or substantially equivalent position,
with six (6) months' backwages and without loss of seniority rights and other privileges appertaining thereto, and 2)
dismissing Credo's claim for attorney's fees, moral and exemplary damages. As a consequence, both parties filed their
respective motions for reconsideration,
12
which the NLRC denied in a resolution of 16 January 1985.
13

Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave abuse of discretion the
dispositive portion of the 28 November 1984 decision which ordered Credo's reinstatement with backwages.
14
Petitioners
contend that in arriving at said questioned order, the NLRC acted with grave abuse of discretion in finding that: 1)
petitioners violated the requirements mandated by law on termination, 2) petitioners failed in the burden of proving that the
termination of Credo was for a valid or authorized cause, 3) the alleged infractions committed by Credo were not proven
or, even if proved, could be considered to have been condoned by petitioners, and 4) the termination of Credo was not for
a valid or authorized cause.
15

On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion the dispositive portion of
the 28 November 1984 decision which dismissed her claim for attorney's fees, moral and exemplary damages and limited
her right to backwages to only six (6) months.
16

As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law provides that:
Section 2.Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written
notice stating the particular acts or omission constituting the grounds for his dismissal.
xxx xxx xxx
Section 5.Answer and Hearing. The worker may answer the allegations stated against him in the
notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the
worker ample opportunity to be heard and to defend himself with the assistance of his representative, if
he so desires.
Section 6.Decision to dismiss. The employer shall immediately notify a worker in writing of a decision
to dismiss him stating clearly the reasons therefor.
17

These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written notices of
dismissal before a termination of employment can be legally effected. These are the notice which apprises the employee
of the particular acts or omissions for which his dismissal is sought and the subsequent notice which informs the
employee of the employer's decision to dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to labor
18
(which
encompasses the right to security of tenure) and the broader dictates of procedural due process necessarily mandate that
notice of the employer's decision to dismiss an employee, with reasons therefor, can only be issued after the employer
has afforded the employee concerned ample opportunity to be heard and to defend himself.
In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal. Although she was
apprised and "given the chance to explain her side" of the charges filed against her, this chance was given so
perfunctorily, thus rendering illusory Credo's right to security of tenure. That Credo was not given ample opportunity to be
heard and to defend herself is evident from the fact that the compliance with the injunction to apprise her of the charges
filed against her and to afford her a chance to prepare for her defense was dispensed in only a day. This is not effective
compliance with the legal requirements aforementioned.
The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was dated 24
November 1983 and made effective 1 December 1983 shows that NASECO was already bent on terminating her services
when she was informed on 1 December 1983 of the charges against her, and that any hearing which NASECO thought of
affording her after 24 November 1983 would merely be pro forma or an exercise in futility.
Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures in the company's
Statement of Billings Adjustment did not warrant the severe penalty of dismissal of the NLRC correctly held that:
... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November 1983 that, "In the
process of her testimony/explanations she again exhibited a conduct unbecoming in front of NASECO
Officers and argued to Mr. S. S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact
that she was inside the office of the Acctg. General Manager." Let it be noted, however, that the Report
did not even describe how the so called "conduct unbecoming" or "discourteous manner" was done by
complainant. Anent the "sarcastic" argument of complainant, the purported transcript
19
of the meeting
held on 7 November 1983 does not indicate any sarcasm on the part of complainant. At the most,
complainant may have sounded insistent or emphatic about her work being more complete than the work
of Ms. de Castro, yet, the complaining officer signed the work of Ms. de Castro and did not sign hers.
As to the charge of insubordination, it may be conceded, albeit unclear, that complainant failed to place
same corrections/additional remarks in the Statement of Billings Adjustments as instructed. However,
under the circumstances obtaining, where complainant strongly felt that she was being discriminated
against by her superior in relation to other employees, we are of the considered view and so hold, that a
reprimand would have sufficed for the infraction, but certainly not termination from services.
20

As this Court has ruled:
... where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to
be visited with a consequence so severe. It is not only because of the law's concern for the working man.
There is, in addition, his family to consider. Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner.
21

Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful causes for dismissal
Credo's previous and repeated acts of insubordination, discourtesy and sarcasm towards her superior officers, alleged to
have been committed from 1980 to July 1983.
22

If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by NASECO. For
instance, sometime in 1980, when Credo allegedly "reacted in a scandalous manner and raised her voice" in a discussion
with NASECO's Acting head of the Personnel Administration
23
no disciplinary measure was taken or meted against her.
Nor was she even reprimanded when she allegedly talked 'in a shouting or yelling manner" with the Acting Manager of
NASECO's Building Maintenance and Services Department in 1980
24
or when she allegedly "shouted" at NASECO's
Corporate Auditor "in front of his subordinates displaying arrogance and unruly behavior" in 1980, or when she allegedly
shouted at NASECO's Internal Control Consultant in 1981.
25
But then, in sharp contrast to NASECO's penchant for
ignoring the aforesaid acts of misconduct, when Credo committed frequent tardiness in August and September 1983, she
was reprimanded.
26

Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven, NASECO's condonation
thereof is gleaned from the fact that on 4 October 1983, Credo was given a salary adjustment for having performed in the
job "at least [satisfactorily]"
27
and she was then rated "Very Satisfactory"
28
as regards job performance, particularly in
terms of quality of work, quantity of work, dependability, cooperation, resourcefulness and attendance.
Considering that the acts or omissions for which Credo's employment was sought to be legally terminated were
insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent the reason which gave rise to [the
employee's] separation from employment, there is no intention on the part of the employer to dismiss the employee
concerned."
29
And, as a result of having been wrongfully dismissed, Credo is entitled to three (3) years of backwages
without deduction and qualification.
30

However, while Credo's dismissal was effected without procedural fairness, an award of exemplary damages in her favor
can only be justified if her dismissal was effected in a wanton, fraudulent, oppressive or malevolent manner.
31
A judicious
examination of the record manifests no such conduct on the part of management. However, in view of the attendant
circumstances in the case, i.e., lack of due process in effecting her dismissal, it is reasonable to award her moral
damages. And, for having been compelled to litigate because of the unlawful actuations of NASECO, a reasonable award
for attorney's fees in her favor is in order.
In NASECO's comment
32
in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to order Credo's
reinstatement. NASECO claims that, as a government corporation (by virtue of its being a subsidiary of the National
Investment and Development Corporation (NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB),
which in turn is a government owned corporation), the terms and conditions of employment of its employees are governed
by the Civil Service Law, rules and regulations. In support of this argument, NASECO cites National Housing Corporation
vs. JUCO,
33
where this Court held that "There should no longer be any question at this time that employees of
government-owned or controlled corporations are governed by the civil service law and civil service rifles and regulations."
It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect, that is, to
cases that arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to Credo and other
employees similarly situated, because under the same 1973 Constitution ,but prior to the ruling in National Housing
Corporation vs. Juco, this Court had recognized the applicability of the Labor Code to, and the authority of the NLRC to
exercise jurisdiction over, disputes involving terms and conditions of employment in government owned or controlled
corporations, among them, the National Service Corporation (NASECO).
Furthermore, in the matter of coverage by the civil service of government-owned or controlled corporations, the 1987
Constitution starkly varies from the 1973 Constitution, upon which National Housing Corporation vs. Juco is based. Under
the 1973 Constitution, it was provided that:
The civil service embraces every branch, agency, subdivision, and instrumentality of the Government,
including every government-owned or controlled corporation. ...
35

On the other hand, the 1987 Constitution provides that:
The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original charter.
36
(Emphasis supplied)
Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National Housing .
Corporation case in the following manner
The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section
1, Article XII-B of the constitution. It would be possible for a regular ministry of government to create a
host of subsidiary corporations under the Corporation Code funded by a willing legislature. A government-
owned corporation could create several subsidiary corporations. These subsidiary corporations would
enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the
strict accountability required by the Civil Service Decree and the regulations of the Commission on Audit.
Their incomes would not be subject to the competitive restrains of the open market nor to the terms and
conditions of civil service employment. Conceivably, all government-owned or controlled corporations
could be created, no longer by special charters, but through incorporations under the general law. The
Constitutional amendment including such corporations in the embrace of the civil service would cease to
have application. Certainly, such a situation cannot be allowed to exist.
37

appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces
government-owned or controlled corporations with original charter; and, therefore, by clear implication, the Civil Service
does not include government-owned or controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general corporation law.
The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and meaning in the
use of the phrase "with original charter." Thus
THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized.
MR. ROMULO. I beg the indulgence of the Committee. I was reading the wrong
provision.
I refer to Section 1, subparagraph I which reads:
The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government,
including government-owned or controlled corporations.
My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the Commissioner please state
his previous question?
MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under the Civil
Service Commission, says: "including government-owned or controlled corporations.'
Does that include a corporation, like the Philippine Airlines which is government-owned or
controlled?
MR. FOZ. I would like to throw a question to the Commissioner. Is the Philippine Airlines
controlled by the government in the sense that the majority of stocks are owned by the
government?
MR. ROMULO. It is owned by the GSIS. So, this is what we might call a tertiary
corporation. The GSIS is owned by the government. Would this be covered because the
provision says "including government-owned or controlled corporations."
MR. FOZ. The Philippine Airlines was established as a private corporation. Later on, the
government, through the GSIS, acquired the controlling stocks. Is that not the correct
situation?
MR. ROMULO. That is true as Commissioner Ople is about to explain. There was
apparently a Supreme Court decision that destroyed that distinction between a
government-owned corporation created under the Corporation Law and a government-
owned corporation created by its own charter.
MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs. Juco to the
effect that all government corporations irrespective of the manner of creation, whether by
special charter or by the private Corporation Law, are deemed to be covered by the civil
service because of the wide-embracing definition made in this section of the existing
1973 Constitution. But we recall the response to the question of Commissioner Ople that
our intendment in this provision is just to give a general description of the civil service.
We are not here to make any declaration as to whether employees of government-owned
or controlled corporations are barred from the operation of laws, such as the Labor Code
of the Philippines.
MR. ROMULO. Yes.
MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name has been
mentioned by both sides.
MR. ROMULO. I yield part of my time.
THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized.
MR. OPLE. In connection with the coverage of the Civil Service Law in Section 1 (1), may
I volunteer some information that may be helpful both to the interpellator and to the
Committee. Following the proclamation of martial law on September 21, 1972, this issue
of the coverage of the Labor Code of the Philippines and of the Civil Service Law almost
immediately arose. I am, in particular, referring to the period following the coming into
force and effect of the Constitution of 1973, where the Article on the Civil Service was
supposed to take immediate force and effect. In the case of LUZTEVECO, there was a
strike at the time. This was a government-controlled and government-owned corporation.
I think it was owned by the PNOC with just the minuscule private shares left. So, the
Secretary of Justice at that time, Secretary Abad Santos, and myself sat down, and the
result of that meeting was an opinion of the Secretary of Justice which became binding
immediately on the government that government corporations with original charters,
such as the GSIS, were covered by the Civil Service Law and corporations spun off
from the GSIS, which we called second generation corporations functioning as
private subsidiaries, were covered by the Labor Code. Samples of such second
generation corporations were the Philippine Airlines, the Manila Hotel and the Hyatt. And
that demarcation worked very well. In fact, all of these companies I have mentioned as
examples, except for the Manila Hotel, had collective bargaining agreements. In the
Philippine Airlines, there were, in fact, three collective bargaining agreements; one, for
the ground people or the PALIA one, for the flight attendants or the PASAC and one for
the pilots of the ALPAC How then could a corporation like that be covered by the Civil
Service law? But, as the Chairman of the Committee pointed out, the Supreme Court
decision in the case of NHA vs. Juco unrobed the whole thing. Accordingly, the Philippine
Airlines, the Manila Hotel and the Hyatt are now considered under that decision covered
by the Civil Service Law. I also recall that in the emergency meeting of the Cabinet
convened for this purpose at the initiative of the Chairman of the Reorganization
Commission, Armand Fabella, they agreed to allow the CBA's to lapse before applying
the full force and effect of the Supreme Court decision. So, we were in the awkward
situation when the new government took over. I can agree with Commissioner Romulo
when he said that this is a problem which I am not exactly sure we should address in the
deliberations on the Civil Service Law or whether we should be content with what the
Chairman said that Section 1 (1) of the Article on the Civil Service is just a general
description of the coverage of the Civil Service and no more.
Thank you, Mr. Presiding Officer.
MR. ROMULO. Mr. Presiding Officer, for the moment, I would be satisfied if the
Committee puts on records that it is not their intent by this provision and the phrase
"including government-owned or controlled corporations" to cover such companies as the
Philippine Airlines.
MR. FOZ. Personally, that is my view. As a matter of fact, when this draft was made, my
proposal was really to eliminate, to drop from the provision, the phrase "including
government- owned or controlled corporations."
MR. ROMULO. Would the Committee indicate that is the intent of this provision?
MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can make such a
statement in the face of an absolute exclusion of government-owned or controlled
corporations. However, this does not preclude the Civil Service Law to prescribe different
rules and procedures, including emoluments for employees of proprietary corporations,
taking into consideration the nature of their operations. So, it is a general coverage but it
does not preclude a distinction of the rules between the two types of enterprises.
MR. FOZ. In other words, it is something that should be left to the legislature to decide.
As I said before, this is just a general description and we are not making any declaration
whatsoever.
MR. MONSOD. Perhaps if Commissioner Romulo would like a definitive understanding of
the coverage and the Gentleman wants to exclude government-owned or controlled
corporations like Philippine Airlines, then the recourse is to offer an amendment as to the
coverage, if the Commissioner does not accept the explanation that there could be a
distinction of the rules, including salaries and emoluments.
MR. ROMULO. So as not to delay the proceedings, I will reserve my right to submit such
an amendment.
xxx xxx xxx
THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.
MR. ROMULO. On page 2, line 5, I suggest the following amendment after
"corporations": Add a comma (,) and the phrase EXCEPT THOSE EXERCISING
PROPRIETARY FUNCTIONS.
THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
SUSPENSION OF SESSION
MR. MONSOD. May we have a suspension of the session?
THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.
It was 7:16 p.m.
RESUMPTION OF SESSION
At 7:21 p.m., the session was resumed.
THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to now read as
follows: "including government-owned or controlled corporations WITH ORIGINAL CHARTERS." The
purpose of this amendment is to indicate that government corporations such as the GSIS and SSS, which
have original charters, fall within the ambit of the civil service. However, corporations which are
subsidiaries of these chartered agencies such as the Philippine Airlines, Manila Hotel and Hyatt are
excluded from the coverage of the civil service.
THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," what
exactly do we mean?
MR. ROMULO. We mean that they were created by law, by an act of Congress, or by
special law.
MR. FOZ. And not under the general corporation law.
MR. ROMULO. That is correct. Mr. Presiding Officer.
MR. FOZ. With that understanding and clarification, the Committee accepts the
amendment.
MR. NATIVIDAD. Mr. Presiding officer, so those created by the general corporation law
are out.
MR. ROMULO. That is correct:
38

On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in place at the
time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted subsidiary of the NIDC, in
turn a subsidiary of the PNB, the NASECO is a government-owned or controlled corporation without original charter.
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion in Gomez vs.
Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687, 2694; also published in 78 Phil. 221) on
the effectivity of the principle of social justice embodied in the 1935 Constitution, said:
Certainly, this principle of social justice in our Constitution as generously conceived and so tersely
phrased, was not included in the fundamental law as a mere popular gesture. It was meant to (be) a vital,
articulate, compelling principle of public policy. It should be observed in the interpretation not only of
future legislation, but also of all laws already existing on November 15, 1935. It was intended to change
the spirit of our laws, present and future. Thus, all the laws which on the great historic event when the
Commonwealth of the Philippines was born, were susceptible of two interpretations strict or liberal,
against or in favor of social justice, now have to be construed broadly in order to promote and achieve
social justice. This may seem novel to our friends, the advocates of legalism but it is the only way to give
life and significance to the above-quoted principle of the Constitution. If it was not designed to apply to
these existing laws, then it would be necessary to wait for generations until all our codes and all our
statutes shall have been completely charred by removing every provision inimical to social justice, before
the policy of social justice can become really effective. That would be an absurd conclusion. It is more
reasonable to hold that this constitutional principle applies to all legislation in force on November 15,
1935, and all laws thereafter passed.
WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with modifications. Petitioners
in G.R. No. 69870, who are the private respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to
her former position at the time of her termination, or if such reinstatement is not possible, to place her in a substantially
equivalent position, with three (3) years backwages, from 1 December 1983, without qualification or deduction, and
without loss of seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral
damages and P5,000.00 for attorney's fees.
If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No. 69870, who are
the private respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in addition to her backwages and
damages as above described, separation pay equivalent to one-half month's salary for every year of service, to be
computed on her monthly salary at the time of her termination on 1 December 1983.
SO ORDERED.
Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and
Regalado, JJ., concur.
Narvasa, J., is on leave.
Gutierrez, Jr., J., in the result.
Separate Opinions
CRUZ, J ., concurring:
While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once again my disappointment
over still another avoidable ambiguity in the 1987 Constitution.
It is clear now from the debates of the Constitutional Commission that the government-owned or controlled corporations
included in the Civil Service are those with legislative charters. Excluded are its subsidiaries organized under the
Corporation Code.
If that was the intention, the logical thing, I should imagine, would have been to simply say so. This would have avoided
the suggestion that there are corporations with duplicate charters as distinguished from those with original charters.
All charters are original regardless of source unless they are amended. That is the acceptable distinction. Under the
provision, however, the charter is still and always original even if amended as long it was granted by the legislature.
It would have been clearer, I think, to say "including government owned or controlled corporations with legislative
charters." Why this thought did not occur to the Constitutional Commission places one again in needless puzzlement.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 100947 May 31, 1993
PNOC ENERGY DEVELOPMENT CORPORATION and MARCELINO TONGCO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MANUEL S. PINEDA, respondents.
Alikpala, Gomez & Associates Law Office for petitioners.
Filomeno A. Zieta for private respondent.

NARVASA, C.J .:
The applicability to private respondent Manuel S. Pineda of Section 66 of the Election Code is what is chiefly involved in
the case at bar. Said section reads as follows:
Sec. 66. Candidates holding appointive office or position. Any person holding a public appointive office
or position, including active members of the Armed Forces of the Philippines, and officers and employees
in government-owned or controlled corporations, shall be considered ipso facto resigned from his office
upon the filing of his certificate of candidacy.
Manuel S. Pineda was employed with the Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC), as
subsidiary of the Philippine National Oil Co., from September 17, 1981, when he was hired as clerk, to January 26, 1989,
when his employment was terminated. The events leading to his dismissal from his job are not disputed.
In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and
Construction Department, at Tongonan Geothermal Project, Ormoc City, Pineda decided to run for councilor of the
Municipality of Kananga, Leyte, in the local elections scheduled in January, 1988, and filed the corresponding certificate of
candidacy for the position. Objection to Pineda's being a candidate while retaining his job in the PNOC-EDC was shortly
thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte. The mayor communicated with the PNOC-EDC thru
Engr. Ernesto Patanao, Resident Manager, Tongonan Geothermal Project to express the view that Pineda could not
actively participate in politics unless he officially resigned from PNOC-EDC.
1
Nothing seems to have resulted from this
protest.
The local elections in Leyte, scheduled for January, 1988, were reset to and held on February 1, 1988. Pineda was
among the official candidates voted for, and eventually proclaimed elected to, the office of councilor. Some vacillation
appears to have been evinced by Pineda at about this time. On February 8, 1988, he wrote to the COMELEC Chairman,
expressing his desire to withdraw from the political contest on account of what he considered to be election
irregularities;
2
and on March 19, 1988, he wrote to the Secretary of Justice seeking legal opinion on the question, among
others, of whether or not he was "considered automatically resigned upon . . . filing of . . . (his) certificate of candidacy,"
and whether or not, in case he was elected, he could "remain appointed to any corporate offspring of a government-
owned or controlled corporation."
3
Nevertheless, Pineda took his oath of office in June, 1988 as councilor-elect of the
Municipality of Kananga, Leyte.
4
And despite so qualifying as councilor, and assuming his duties as such, he continued
working for PNOC-EDC as the latter's Geothermal Construction Secretary, Engineering and Construction Department, at
Tongonan Geothermal Project, Ormoc City.
On June 7, 1988, Marcelino M. Tongco, Department Manager of the Engineering and Construction Department, PNOC-
EDC, addressed an inquiry to the latter's Legal Department regarding the status of Manuel S. Pineda as employee in view
of his candidacy for the office of municipal councilor.
5
In response, the Legal Department rendered an opinion to the
effect that Manuel S. Pineda should be considered ipso facto resigned upon the filing of his Certificate of Candidacy in
November, 1987, in accordance with Section 66 of the Omnibus Election Code.
6

Pineda appealed the PNOC-EDC Legal Department's ruling to N.C. Vasquez, the Vice-President of PNOC-EDC, on July
14, 1988. In his letter of appeal,
7
he invoked a "court ruling in the case of Caagusan and Donato vs. PNOC-Exploration
Corp. . . . (to the effect that) while the government-owned or controlled corporations are covered by the Civil Service Law
(as is taken to mean in Sec. 66 of the Omnibus Election Code of 1985) (sic), the subsidiaries or corporate offsprings are
not." In the same letter he declared his wish to continue resign from his position as councilor/member of the Sangguniang
Bayan.
He also wrote a letter dated October 1, 1988 to the Department of Local Government inquiring about the status of his
employment with PNOC-EDC in relation to his election as member of the Sangguniang Bayan. He was advised by DLG
Undersecretary Jacinto T. Rubillo, Jr., by letter dated March 31, 1989, that there was no legal impediment to his
continuing in his employment with PNOC-EDC while holding at the same time the elective position of municipal councilor.
Cited as basis by Undersecretary Rubillo was Section 2(1) Article IX-B of the 1987 Constitution and this Court's ruling
in NASECO vs. NLRC, 168 SCRA 122. Undersecretary Rubillo went on to say that Pineda could receive his per diems as
municipal councilor as well as the corresponding representation and transportation allowance [RATA] "provided the
PNOC-EDC charter does not provide otherwise and public shall not be prejudiced."
8

The PNOC-EDC did not, however, share the Undersecretary's views. On January 26, 1989, the PNOC-EDC, through
Marcelino Tongco (Manager, Engineering and Construction Department), notified Manuel S. Pineda in writing (1) that after
having given him "ample time" to make some major adjustments before . . . separation from the company," his
employment was being terminated pursuant to Section 66 of the Omnibus Election Code, effective upon receipt of notice,
and (2) that he was entitled to "proper compensation" for the services renderedby him from the time he filed his certificate
of candidacy until his actual separation from the service.
9

On October 16, 1989, Pineda lodged a complaint for illegal dismissal in the Regional Arbitration Branch No. VIII,
NLRC, Tacloban City. Impleaded as respondents were the PNOC-EDC and the Manager of its Engineering and
Construction Department, Marcelino M. Tongco.
10

After due proceedings, Labor Arbiter Araceli H. Maraya, to whom the case was assigned, rendered a decision on
December 28, 1990,
11
declaring Manuel S. Pineda's dismissal from the service illegal, and ordering his reinstatement to
his former position without loss of seniority rights and payment of full back wages corresponding to the period from his
illegal dismissal up to the time of actual reinstatement. The Arbiter pointed out that the ruling relied upon by PNOC-EDC
to justify Pineda's dismissal from the service, i.e., NHA v. Juco,
12
had already been abandoned; and that "as early as
November 29, 1988," the governing principle laid down by case law in light of Section 2 (1), Article IX-B of the 1987
Constitution
13
has been that government-owned or controlled corporations incorporated under the Corporation Code,
the general law as distinguished from those created by special charter are not deemed to be within the coverage of
the Civil Service Law, and consequently their employees, like those of the PNOC-EDC, are subject to the provisions of the
Labor Code rather than the Civil Service Law.
14

The PNOC-EDC filed an appeal with the National Labor Relations Commission. The latter dismissed the appeal for lack
of merit in a decision dated April 24, 1991.
15
PNOC-EDC sought reconsideration;
16
its motion was denied by the
Commission in a Resolution dated June 21, 1991.
17

It is this decision of April 24, 1991 and the Resolution of June 21, 1991 that the PNOC-EDC seeks to be annulled and set
aside in the special civil action for certiorari at bar. It contends that the respondent Commission gravely abused its
discretion:
1) when it ruled that Manuel S. Pineda was not covered by the Civil Service Rules when he filed his
candidacy for the 1988 local government elections in November 1987;
2) when it ruled that Pineda was not covered by the Omnibus Election Code at the time he filed his
certificate of candidacy for the 1988 local elections;
3) when it ruled that Pineda was illegally dismissed despite the fact that he was considered automatically
resigned pursuant to Section 66 of the Omnibus Election Code; and
4) when it ruled that Pineda could occupy a local government position and be simultaneously employed in
a government-owned or controlled corporation, a situation patently violative of the constitutional
prohibition on additional compensation.
Acting on the petition, this Court issued a temporary restraining order enjoining the respondent NLRC from implementing
or enforcing its decision and resolution dated April 24, 1991 and June 21, 1991, respectively.
In the comment required of him by the Court, the Solicitor General expressed agreement with the respondent
Commission's holding that Manuel Pineda had indeed been illegally separated from his employment in the PNOC-EDC; in
other words, that his running for public office and his election thereto had no effect on his employment with the PNOC-
EDC, a corporation not embraced within the Civil Service.
Petitioner PNOC-EDC argues that at the time that Pineda filed his certificate of candidacy for municipal councilor in
November, 1987, the case law "applicable as far as coverage of government-owned or controlled corporations are
concerned . . . ( was to the following effect):
18

As correctly pointed out by the Solicitor General, the issue of jurisdiction had been resolved in a string of
cases starting with the National Housing Authority vs. Juco (134 SCRA 172) followed byMetropolitan
Waterworks and Sewerage System vs. Hernandez (143 SCRA 602) and the comparatively recent case
of Quimpo vs. Sandiganbayan (G.R. No. 72553, Dec. 2, 1986) in which this Court squarely ruled that
PNOC subsidiaries, whether or not originally created as government-owned or controlled corporations are
governed by the Civil Service Law.
This doctrine, petitioner further argues, was not "automatically reversed" by the 1987 Constitution because not "amended
or repealed by the Supreme Court or the Congress;"
19
and this Court's decision in November, 1988, inNational Service
Corporation vs. NLRC, supra
20
abandoning the Juco ruling "cannot be given retroactive effect . . . (in view of ) the
time-honored principle . . . that laws (judicial decisions included) shall have no retroactive effect, unless the contrary is
provided (Articles 4 and 8 of the New Civil Code of the Philippines)."
Section 2 (1), Article IX of the 1987 Constitution provides as follows:
The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original charters.
Implicit in the provision is that government-owned or controlled corporations without original charters i.e., organized
under the general law, the Corporation Code are not comprehended within the Civil Service Law. So has this Court
construed the provision.
21

In National Service Corporation (NASECO), et al. v. NLRC, et al., etc.,
22
decided on November 29, 1988, it was ruled
that the 1987 Constitution "starkly varies" from the 1973 charter upon which the Juco doctrine rested in that unlike
the latter, the present constitution qualifies the term, "government-owned or controlled corporations," by the phrase, "with
original charter;" hence, the clear implication is that the Civil Service no longer includes government-owned or controlled
corporations without original charters, i.e., those organized under the general corporation law.
23
NASECO further ruled
that the Jucoruling should not apply retroactively, considering that prior to its promulgation on January 17, 1985, this Court
had expressly recognized the applicability of the Labor Code to government-owned or controlled corporations.
24

Lumanta, et al. v. NLRC, et al.,
25
decided on February 8, 1989, made the same pronouncement: that Juco had been
superseded by the 1987 Constitution for implicit in the language of Section 2 (1), Article IX thereof, is the proposition that
government-owned or controlled corporations without original charter do not fall under the Civil Service Law but under the
Labor Code.
And in PNOC-EDC v. Leogardo, etc., et al.,
26
promulgated on July 5, 1989, this Court ruled that conformably with the
apparent intendment of the NASECO case, supra, since the PNOC-EDC, a government-owned or controlled company
had been incorporated under the general Corporation Law, its employees are subject to the provisions of the Labor Code.
It is thus clear that the Juco doctrine prevailing at the time of the effectivity of the fundamental charter in 1987 i.e., that
government-owned or controlled corporations were part of the Civil Service and its employees subject to Civil Service
laws and regulations,
27
regardless of the manner of the mode of their organization or incorporation is no longer good
law, being at "stark variance," to paraphrase NASECO, with the 1987 Constitution. In other words, and contrary to the
petitioner's view, as of the effectivity of the 1987 Constitution, government-owned or controlled corporations without
original charters, or, as Mr. Justice Cruz insists in his concurring opinion in NASECO v. NLRC,
28
a legislative charter (i.e.,
those organized under the Corporation Code), ceased to pertain to the Civil Service and its employees could no longer be
considered as subject to Civil Service Laws, rules or regulations.
The basic question is whether an employee in a government-owned or controlled corporations without an
original charter (and therefore not covered by Civil Service Law) nevertheless falls within the scope of Section 66
of the Omnibus Election Code, viz.:
Sec. 66. Candidates holding appointive office or position. Any person holding a public appointive office
or position, including active members of the Armed Forces of the Philippines, and officers and employees
in government-owned or controlled corporations, shall be considered ipso facto resigned from his office
upon the filing of his certificate of candidacy.
When the Congress of the Philippines reviewed the Omnibus Election Code of 1985, in connection with its deliberations
on and subsequent enactment of related and repealing legislation i.e., Republic Acts Numbered 7166: "An Act
Providing for Synchronized National and Local Elections and for Electoral Reforms, Authorizing Appropriations Therefor,
and for Other Purposes" (effective November 26, 1991), 6646: "An Act Introducing Additional Reforms in the Electoral
System and for Other Purposes" (effective January 5, 1988) and 6636: "An Act Resetting the Local Elections, etc.,
(effective November 6, 1987), it was no doubt aware that in light of Section 2 (1), Article IX of the 1987 Constitution: (a)
government-owned or controlled corporations were of two (2) categories those with original charters, and those
organized under the general law and (b) employees of these corporations were of two (2) kinds those covered by
the Civil Service Law, rules and regulations because employed in corporations having original charters, and those not
subject to Civil Service Law but to the Labor Code because employed in said corporations organized under the general
law, or the Corporation Code. Yet Congress made no effort to distinguish between these two classes of government-
owned or controlled corporations or their employees in the Omnibus Election Code or subsequent related statutes,
particularly as regards the rule that any employee "in government-owned or controlled corporations, shall be
considered ipso facto resigned from his office upon the filing of his certificate of candidacy."
29

Be this as it may, it seems obvious to the Court that a government-owned or controlled corporation does not lose its
character as such because not possessed of an original charter but organized under the general law. If a corporation's
capital stock is owned by the Government, or it is operated and managed by officers charged with the mission of fulfilling
the public objectives for which it has been organized, it is a government-owned or controlled corporation even if organized
under the Corporation Code and not under a special statute; and employees thereof, even if not covered by the Civil
Service but by the Labor Code, are nonetheless "employees in government-owned or controlled corporations," and come
within the letter of Section 66 of the Omnibus Election Code, declaring them "ipso facto resigned from . . . office upon the
filing of . . . (their) certificate of candidacy."
What all this imports is that Section 66 of the Omnibus Election Code applies to officers and employees in government-
owned or controlled corporations, even those organized under the general laws on incorporation and therefore not having
an original or legislative charter, and even if they do not fall under the Civil Service Law but under the Labor Code. In
other words, Section 66 constitutes just cause for termination of employment in addition to those set forth in the Labor
Code, as amended.
The conclusions here reached make unnecessary discussion and resolution of the other issues raised in this case.
WHEREFORE, the petition is GRANTED; the decision of public respondent National Labor Relations Commission dated
April 24, 1991 and its Resolution dated June 21, 1991 are NULLIFIED AND SET ASIDE; and the complaint of Manuel S.
Pineda is DISMISSED. No costs.
SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.




Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. L-58494 July 5, 1989
PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION, petitioner,
vs.
HON. VICENTE T. LEOGARDO, DEPUTY MINISTER OF LABOR AND VICENTE D. ELLELINA, respondents.
MELENCIO-HERRERA, J .:
Through this Petition for Certiorari, Philippine National Oil Company-Energy Development Corporation (PNOC-EDC)
seeks to declare null and void, for lack of jurisdiction, the Order of public respondent, the Deputy Minister of Labor,
sustaining his jurisdiction over the instant controversy.
Petitioner PNOC-EDC is a subsidiary of the Philippine National Oil Company (PNOC). On 20 January 1978, it filed with
the Ministry of Labor and Employment, Regional Office No. VII, Cebu City (MOLE), a clearance application to dismiss/
terminate the services of private respondent, Vicente D. Ellelina, a contractual employee.
The application for clearance was premised on Ellelina's alleged commission of a crime (Alarm or Public Scandal) during
a Christmas party on 19 December 1977 at petitioner's camp in Uling, Cebu, when, because of the refusal of the raffle
committee to give him the prize corresponding to his lost winning ticket, he tried to grab the armalite rifle of the PC Officer
outside the building despite the warning shots fired by the latter.
Clearance to dismiss was initially granted by MOLE but was subsequently revoked and petitioner was ordered to reinstate
Ellelina to his former position, without loss of seniority rights, and with backwages from I February 1978 up to his actual
reinstatement.
Petitioner appealed to the Minister of Labor who, acting through public respondent, affirmed, on 14 August 1981, the
appealed Order. Hence, this Petition predicated substantially on the following grounds:
1. Under Article 277 of the Labor Code, the Ministry of Labor and Employment has no jurisdiction over petitioner because
it is a government-owned or controlled corporation;
2. Ellelina's dismissal is valid and just because it is based upon the commission of a crime.
On the other hand, public respondent contends:
(a) While the petitioner is a subsidiary of the PNOC, it is still covered by the Labor Code and, therefore, within the
jurisdiction of the Ministry of Labor inasmuch as petitioner was organized as a private corporation under the Corporation
Law and registered with the Securities and Exchange Commission;
(b) Petitioner is estopped from assailing the Labor Department's jurisdiction, having subjected itself to the latter when it
filed the application for clearance to terminate Ellelina's services; and
(c) Dismissal is too harsh a penalty.
The issues that confront us, therefore, are (1) whether or not public respondent committed grave abuse of discretion in
holding that petitioner is governed by the Labor Code; and (2) whether or not Ellelina's dismissal was justified.
Under the laws then in force, employees of government-owned and/or controlled corporations were governed by the Civil
Service Law and not by the Labor Code. Thus, Article 277 of the Labor Code (PD 442) then provided:
The terms and conditions of employment of all government employees, including employees of government- owned and
controlled corporations shall be governed by the Civil Service Law, rules and regulations ... .
In turn, the 1973 Constitution provided:
The Civil Service embraces every branch, agency, subdivision and instrumentality of the government, including
government-owned or controlled corporations.
In National Housing Corporation vs. Juco (L-64313, January 17, 1985, 134 SCRA 172), we laid down the doctrine that
employees of government-owned and/or controlled corporations, whether created by special law or formed as subsidiaries
under the general Corporation Law, are governed by the Civil Service Law and not by the Labor Code.
However, the above doctrine has been supplanted by the present Constitution, which provides:
The Civil Service embraces all branches, subdivisions, instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original charters. (Article IX-B, Section 2 [1])
Thus, under the present state of the law, the test in determining whether a government-owned or controlled corporation is
subject to the Civil Service Law is the manner of its creation such that government corporations created by special charter
are subject to its provisions while those incorporated under the general Corporation Law are not within its coverage.
In NASECO vs. NLRC (G.R. No. 69870, November 29,1988), we had occasion to apply the present Constitution in
deciding whether or not the employees of NASECO (a subsidiary of the NIDC, which is in turn a subsidiary wholly-owned
by the PNB, a government-owned corporation) are covered by the Civil Service Law or the Labor Code notwithstanding
that the case arose at the time when the 1973 Constitution was still in effect. We held that the NLRC has jurisdiction over
the employees of NASECO "on the premise that it is the 1987 Constitution that governs because it is the Constitution in
place at the time of decision;" and that being a corporation without an original charter, the employees of NASECO are
subject to the provisions of the Labor Code.
We see no reason to depart from the ruling in the aforesaid case.
We hold, therefore, that the PNOC-EDC having been incorporated under the general Corporation Law, is a government-
owned or controlled corporation whose employees are subject to the provisions of the Labor Code. This is apparently the
intendment in the NASECO case notwithstanding the fact that the NASECO therein was a subsidiary of the PNB, a
government-owned corporation.
In so far as Ellelina is concerned, we hold that the reinstatement ordered by public respondent, without loss of seniority
rights, is proper. However, consistent with the rulings of the Court, backwages should be limited to three years from 1
February 1978. The dismissal ordered by petitioner was a bit too harsh considering the nature of the act which he had
committed and that it was his first offense.
WHEREFORE, the Petition is DISMISSED, and the judgment of respondent public official is hereby AFFIRMED. No costs.
SO ORDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 87676 December 20, 1989
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS DEVELOPMENT COMMITTEE,petitioner,
vs.
THE HON. COURT OF APPEALS and THE NATIONAL PARKS DEVELOPMENT SUPERVISORY ASSOCIATION &
THEIR MEMBERS, respondents.
Bienvenido D. Comia for respondents.

GRIO-AQUINO, J .:
The Regional Trial Court of Manila, Branch III, dismissed for lack of jurisdiction, the petitioner's complaint in Civil Case No.
88- 44048 praying for a declaration of illegality of the strike of the private respondents and to restrain the same. The Court
of Appeals denied the petitioner's petition for certiorari, hence, this petition for review.
The key issue in this case is whether the petitioner, National Parks Development Committee (NPDC), is a government
agency, or a private corporation, for on this issue depends the right of its employees to strike.
This issue came about because although the NPDC was originally created in 1963 under Executive Order No. 30, as the
Executive Committee for the development of the Quezon Memorial, Luneta and other national parks, and later renamed
as the National Parks Development Committee under Executive Order No. 68, on September 21, 1967, it was registered
in the Securities and Exchange Commission (SEC) as a non-stock and non-profit corporation, known as "The National
Parks Development Committee, Inc."
However, in August, 1987, the NPDC was ordered by the SEC to show cause why its Certificate of Registration should
not be suspended for: (a) failure to submit the General Information Sheet from 1981 to 1987; (b) failure to submit its
Financial Statements from 1981 to 1986; (c) failure to register its Corporate Books; and (d) failure to operate for a
continuous period of at least five (5) years since September 27, 1967.
On August 18, 1987, the NPDC Chairman, Amado Lansang, Jr., informed SEC that his Office had no objection to the
suspension, cancellation, or revocation of the Certificate of Registration of NPDC.
By virtue of Executive Order No. 120 dated January 30, 1989, the NPDC was attached to the Ministry (later Department)
of Tourism and provided with a separate budget subject to audit by the Commission on Audit.
On September 10, 1987, the Civil Service Commission notified NPDC that pursuant to Executive Order No. 120, all
appointments and other personnel actions shall be submitted through the Commission.
Meanwhile, the Rizal Park Supervisory Employees Association, consisting of employees holding supervisory positions in
the different areas of the parks, was organized and it affiliated with the Trade Union of the Philippines and Allied Services
(TUPAS) under Certificate No. 1206.
On June 15, 1987, two collective bargaining agreements were entered into between NPDC and NPDCEA (TUPAS local
Chapter No. 967) and NPDC and NPDCSA (TUPAS Chapter No. 1206), for a period of two years or until June 30, 1989.
On March 20, 1988, these unions staged a stake at the Rizal Park, Fort Santiago, Paco Park, and Pook ni Mariang
Makiling at Los Banos, Laguna, alleging unfair labor practices by NPDC.
On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch III, a complaint against the union to declare
the strike illegal and to restrain it on the ground that the strikers, being government employees, have no right to strike
although they may form a union.
On March 24, 1988, the lower court dismissed the complaint and lifted the restraining order for lack of jurisdiction. It held
that the case "properly falls under the jurisdiction of the Department of Labor," because "there exists an employer-
employee relationship" between NPDC and the strikers, and "that the acts complained of in the complaint, and which
plaintiff seeks to enjoin in this action, fall under paragraph 5 of Article 217 of the Labor Code, ..., in relation to Art. 265 of
the same Code, hence, jurisdiction over said acts does not belong to this Court but to the Labor Arbiters of the
Department of Labor." (p. 142, Rollo.).
Petitioner went to the Court of Appeals on certiorari (CA-G.R. SP No. 14204). On March 31, 1989, the Court of appeals
affirmed the order of the trial court, hence, this petition for review. The petitioner alleges that the Court of Appeals erred:
1) in not holding that the NPDC employees are covered by the Civil Service Law; and
2) in ruling that petitioner's labor dispute with its employees is cognizable by the Department of Labor.
We have considered the petition filed by the Solicitor General on behalf of NPDC and the comments thereto and are
persuaded that it is meritorious.
In Jesus P. Perlas, Jr. vs. People of the Philippines, G.R. Nos. 84637-39, August 2, 1989, we ruled that the NPDC is an
agency of the government, not a government-owned or controlled corporation, hence, the Sandiganbayan had jurisdiction
over its acting director who committed estafa. We held thus:
The National Parks Development Committee was created originally as an Executive Committee on
January 14,1963, for the development of the Quezon Memorial, Luneta and other national parks
(Executive Order No. 30). It was later designated as the National Parks Development Committee (NPDC)
on February 7, 1974 (E.O. No. 69). On January 9, 1966, Mrs. Imelda R. Marcos and Teodoro F. Valencia
were designated Chairman and Vice- Chairman respectively (E.O. No. 3). Despite an attempt to transfer it
to the Bureau of Forest Development, Department of Natural Resources, on December 1, 1975 (Letter of
Implementation No. 39, issued pursuant to PD No. 830, dated November 27, 1975), the NPDC has
remained under the Office of the President (E.O. No. 709, dated July 27, 1981).
Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government agency
under the Office of the President and allotments for its maintenance and operating expenses were issued
direct to NPDC (Exh. 10-A Perlas, Item No. 2, 3). (Italics ours.)
Since NPDC is a government agency, its employees are covered by civil service rules and regulations (Sec. 2, Article IX,
1987 Constitution). Its employees are civil service employees (Sec. 14, Executive Order No. 180).
While NPDC employees are allowed under the 1987 Constitution to organize and join unions of their choice, there is as
yet no law permitting them to strike. In case of a labor dispute between the employees and the government, Section 15 of
Executive Order No. 180 dated June 1, 1987 provides that the Public Sector Labor- Management Council, not the
Department of Labor and Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in
holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable by the Department of
Labor and Employment.
WHEREFORE, the petition for review is granted. The decision of the Court of Appeals in CA-G.R. SP No. 14204 is hereby
set aside. The private respondents' complaint should be filed in the Public Sector Labor-Management Council as provided
in Section 15 of Executive Order No. 180. Costs against the private respondents.