G.R. Nos. 178034 & 178117 G R. Nos.
186984-85 Appeal8 and Motion to Reduce Bond9, and posted an appeal bond
October 17, 2013
ANDREW JAMES MCBURNIE, Petitioner,
vs.
EULALIO GANZON, EGI-MANAGERS, INC. and E.
GANZON, INC., Respondents.
RESOLUTION
REYES, J.:
For resolution are the –
1
(1) third motion for reconsideration filed by Eulalio
Ganzon (Ganzon), EGI-Managers, Inc. (EGI) and E.
Ganzon, Inc. (respondents) on March 27, 2012, seeking
a reconsideration of the Court’s Decision2 dated
September 18, 2009 that ordered the dismissal of their
appeal to the National Labor Relations Commission
(NLRC) for failure to post additional appeal bond in the
amount of ₱54,083,910.00; and
(2) motion for reconsideration3 filed by petitioner Andrew
James McBurnie (McBurnie) on September 26, 2012,
assailing the Court en banc’s Resolution4 dated
September 4, 2012 that (1) accepted the case from the
Court’s Third Division and (2) enjoined the
implementation of the Labor Arbiter’s (LA) decision
finding him to be illegally dismissed by the respondents.
Antecedent Facts
The Decision dated September 18, 2009 provides the following
antecedent facts and proceedings –
On October 4, 2002, McBurnie, an Australian national, instituted a
complaint for illegal dismissal and other monetary claims against
the respondents. McBurnie claimed that on May 11, 1999, he
signed a five-year employment agreement5 with the company EGI
as an Executive Vice-President who shall oversee the
management of the company’s hotels and resorts within the
Philippines. He performed work for the company until sometime in
November 1999, when he figured in an accident that compelled
him to go back to Australia while recuperating from his injuries.
While in Australia, he was informed by respondent Ganzon that his
services were no longer needed because their intended project
would no longer push through.
The respondents opposed the complaint, contending that their
agreement with McBurnie was to jointly invest in and establish a
company for the management of hotels. They did not intend to
create an employer-employee relationship, and the execution of
the employment contract that was being invoked by McBurnie was
solely for the purpose of allowing McBurnie to obtain an alien work
permit in the Philippines. At the time McBurnie left for Australia for
his medical treatment, he had not yet obtained a work permit.
In a Decision6 dated September 30, 2004, the LA declared
McBurnie as having been illegally dismissed from employment,
and thus entitled to receive from the respondents the following
amounts: (a) US$985,162.00 as salary and benefits for the
unexpired term of their employment contract, (b) ₱2,000,000.00 as
moral and exemplary damages, and (c) attorney’s fees equivalent
to 10% of the total monetary award.
Feeling aggrieved, the respondents appealed the LA’s Decision to
the NLRC.7 On November 5, 2004, they filed their Memorandum of
1
in the amount of ₱100,000.00. The respondents contended in their
Motion to Reduce Bond, inter alia, that the monetary awards of the
LA were null and excessive, allegedly with the intention of
rendering them incapable of posting the necessary appeal bond.
They claimed that an award of "more than ₱60 Million Pesos to a
single foreigner who had no work permit and who left the country
for good one month after the purported commencement of his
employment" was a patent nullity.10Furthermore, they claimed that
because of their business losses that may be attributed to an
economic crisis, they lacked the capacity to pay the bond of almost
₱60 Million, or even the millions of pesos in premium required for
such bond.
On March 31, 2005, the NLRC denied11 the motion to reduce bond,
explaining that "in cases involving monetary award, an employer
seeking to appeal the [LA’s] decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond in
the amount equivalent to the monetary award x x x."12 Thus, the
NLRC required from the respondents the posting of an additional
bond in the amount of ₱54,083,910.00.
When their motion for reconsideration was denied,13 the
respondents decided to elevate the matter to the Court of Appeals
(CA) via the Petition for Certiorari and Prohibition (With Extremely
Urgent Prayer for the Issuance of a Preliminary Injunction and/or
Temporary Restraining Order)14 docketed as CA-G.R. SP No.
90845.
In the meantime, in view of the respondents’ failure to post the
required additional bond, the NLRC dismissed their appeal in a
Resolution15 dated March 8, 2006. The respondents’ motion for
reconsideration was denied on June 30, 2006.16 This prompted the
respondents to file with the CA the Petition for Certiorari (With
Urgent Prayers for the Immediate Issuance of a Temporary
Restraining Order and a Writ of Preliminary Injunction) 17 docketed
as CA-G.R. SP No. 95916, which was later consolidated with CA-
G.R. SP No. 90845.
CA-G.R. SP Nos. 90845 and 95916
On February 16, 2007, the CA issued a Resolution18 granting the
respondents’ application for a writ of preliminary injunction. It
directed the NLRC, McBurnie, and all persons acting for and under
their authority to refrain from causing the execution and
enforcement of the LA’s decision in favor of McBurnie, conditioned
upon the respondents’ posting of a bond in the amount of
₱10,000,000.00. McBurnie sought reconsideration of the issuance
of the writ of preliminary injunction, but this was denied by the CA
in its Resolution19 dated May 29, 2007.
McBurnie then filed with the Court a Petition for Review on
Certiorari20 docketed as G.R. Nos. 178034 and 178117, assailing
the CA Resolutions that granted the respondents’ application for
the injunctive writ. On July 4, 2007, the Court denied the petition
on the ground of McBurnie’s failure to comply with the 2004 Rules
on Notarial Practice and to sufficiently show that the CA committed
any reversible error.21 A motion for reconsideration was denied with
finality in a Resolution22 dated October 8, 2007.
Unyielding, McBurnie filed a Motion for Leave (1) To File
Supplemental Motion for Reconsideration and (2) To Admit the
Attached Supplemental Motion for Reconsideration, 23 which was
treated by the Court as a second motion for reconsideration, a
prohibited pleading under Section 2, Rule 56 of the Rules of Court.
Thus, the motion for leave was denied by the Court in a
Resolution24 dated November 26, 2007. The Court’s Resolution
dated July 4, 2007 then became final and executory on November
13, 2007; accordingly, entry of judgment was made in G.R. Nos.
178034 and 178117.25
In the meantime, the CA ruled on the merits of CA-G.R. SP No.
90845 and CA-G.R. SP No. 95916 and rendered its
Decision26 dated October 27, 2008, allowing the respondents’
motion to reduce appeal bond and directing the NLRC to give due
course to their appeal. The dispositive portion of the CA Decision
reads:
WHEREFORE, in view of the foregoing, the petition for certiorari
and prohibition docketed as CA GR SP No. 90845 and the petition
for certiorari docketed as CA GR SP No. 95916 are GRANTED.
Petitioners’ Motion to Reduce Appeal Bond is GRANTED.
Petitioners are hereby DIRECTED to post appeal bond in the
amount of ₱10,000,000.00. The NLRC is hereby DIRECTED to
give due course to petitioners’ appeal in CA GR SP No. 95916
which is ordered remanded to the NLRC for further proceedings.
SO ORDERED.27
On the issue28 of the NLRC’s denial of the respondents’ motion to
reduce appeal bond, the CA ruled that the NLRC committed grave
abuse of discretion in immediately denying the motion without
fixing an appeal bond in an amount that was reasonable, as it
denied the respondents of their right to appeal from the decision of
the LA.29 The CA explained that "(w)hile Art. 223 of the Labor Code
requiring bond equivalent to the monetary award is explicit, Section
6, Rule VI of the NLRC Rules of Procedure, as amended,
recognized as exception a motion to reduce bond upon meritorious
grounds and upon posting of a bond in a reasonable amount in
relation to the monetary award."30
31
On the issue of the NLRC’s dismissal of the appeal on the ground
of the respondents’ failure to post the additional appeal bond, the
CA also found grave abuse of discretion on the part of the NLRC,
explaining that an appeal bond in the amount of ₱54,083,910.00
was prohibitive and excessive. Moreover, the appellate court cited
the pendency of the petition for certiorari over the denial of the
motion to reduce bond, which should have prevented the NLRC
from immediately dismissing the respondents’ appeal.32
Undeterred, McBurnie filed a motion for reconsideration. At the
same time, the respondents moved that the appeal be resolved on
the merits by the CA. On March 3, 2009, the CA issued a
Resolution33 denying both motions. McBurnie then filed with the
Court the Petition for Review on Certiorari34 docketed as G.R. Nos.
186984-85.
In the meantime, the NLRC, acting on the CA’s order of remand,
accepted the appeal from the LA’s decision, and in its
Decision35 dated November 17, 2009, reversed and set aside the
Decision of the LA, and entered a new one dismissing McBurnie’s
complaint. It explained that based on records, McBurnie was never
an employee of any of the respondents, but a potential investor in
a project that included said respondents, barring a claim of
dismissal, much less, an illegal dismissal. Granting that there was
a contract of employment executed by the parties, McBurnie failed
to obtain a work permit which would have allowed him to work for
any of the respondents.36 In the absence of such permit, the
employment agreement was void and thus, could not be the
source of any right or obligation.
Court Decision dated September 18, 2009
On September 18, 2009, the Third Division of this Court rendered
its Decision37 which reversed the CA Decision dated October 27,
2008 and Resolution dated March 3, 2009. The dispositive portion
reads:
2
WHEREFORE, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. SP Nos. 90845 and 95916 dated
October 27, 2008 granting respondents’ Motion to Reduce Appeal
Bond and ordering the National Labor Relations Commission to
give due course to respondents’ appeal, and its March 3, 2009
Resolution denying petitioner’s motion for reconsideration, are
REVERSED and SET ASIDE. The March 8, 2006 and June 30,
2006 Resolutions of the National Labor Relations Commission in
NLRC NCR CA NO. 042913-05 dismissing respondents’ appeal for
failure to perfect an appeal and denying their motion for
reconsideration, respectively, are REINSTATED and AFFIRMED.
SO ORDERED.38
The Court explained that the respondents’ failure to post a bond
equivalent in amount to the LA’s monetary award was fatal to the
appeal.39 Although an appeal bond may be reduced upon motion
by an employer, the following conditions must first be satisfied: (1)
the motion to reduce bond shall be based on meritorious grounds;
and (2) a reasonable amount in relation to the monetary award is
posted by the appellant. Unless the NLRC grants the motion to
reduce the cash bond within the 10-day reglementary period to
perfect an appeal from a judgment of the LA, the employer is
mandated to post the cash or surety bond securing the full amount
within the said 10-day period.40 The respondents’ initial appeal
bond of ₱100,000.00 was grossly inadequate compared to the
LA’s monetary award.
The respondents’ first motion for reconsideration 41 was denied by
the Court for lack of merit via a Resolution42dated December 14,
2009.
Meanwhile, on the basis of the Court’s Decision, McBurnie filed
with the NLRC a motion for reconsideration with motion to recall
and expunge from the records the NLRC Decision dated
November 17, 2009.43 The motion was granted by the NLRC in its
Decision44 dated January 14, 2010.45
Undaunted by the denial of their first motion for reconsideration of
the Decision dated September 18, 2009, the respondents filed with
the Court a Motion for Leave to Submit Attached Second Motion
for Reconsideration46 and Second Motion for
Reconsideration,47 which motion for leave was granted in a
Resolution48 dated March 15, 2010. McBurnie was allowed to
submit his comment on the second motion, and the respondents,
their reply to the comment. On January 25, 2012, however, the
Court issued a Resolution49 denying the second motion "for lack of
merit," "considering that a second motion for reconsideration is a
prohibited pleading x x x."50
The Court’s Decision dated September 18, 2009 became final and
executory on March 14, 2012. Thus, entry of judgment51 was made
in due course, as follows:
ENTRY OF JUDGMENT
This is to certify that on September 18, 2009 a decision rendered
in the above-entitled cases was filed in this Office, the dispositive
part of which reads as follows:
xxxx
and that the same has, on March 14, 2012 become final and
executory and is hereby recorded in the Book of Entries of
Judgments.52
The Entry of Judgment indicated that the same was made for the
Court’s Decision rendered in G.R. Nos. 186984-85.
On March 27, 2012, the respondents filed a Motion for Leave to
File Attached Third Motion for Reconsideration, with an attached
Motion for Reconsideration (on the Honorable Court’s 25 January
2012 Resolution) with Motion to Refer These Cases to the
Honorable Court En Banc.53 The third motion for reconsideration is
founded on the following grounds:
I.
THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE
HONORABLE COURT ACTUALLY GRANTED RESPONDENTS’
"MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION."
HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT
THE SUBSEQUENT 25 JANUARY 2012 RESOLUTION CANNOT
DENY THE " SECOND MOTION FOR RECONSIDERATION " ON
THE GROUND THAT IT IS A PROHIBITED PLEADING.
MOREOVER, IT IS RESPECTFULLY CONTENDED THAT THERE
ARE VERY PECULIAR CIRCUMSTANCES AND NUMEROUS
IMPORTANT ISSUES IN THESE CASES THAT CLEARLY
JUSTIFY GIVING DUE COURSE TO RESPONDENTS’ "SECOND
MOTION FOR RECONSIDERATION," WHICH ARE:
II.
THE 10 MILLION PESOS BOND WHICH WAS POSTED IN
COMPLIANCE WITH THE OCTOBER 27, 2008 DECISION OF
THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL
MERITORIOUS CIRCUMSTANCE TO MERIT
RECONSIDERATION OF THIS APPEAL.
III.
THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR
CASES THAT WITH RESPECT TO ARTICLE 223 OF THE LABOR
CODE, THE REQUIREMENTS OF THE LAW SHOULD BE GIVEN
A LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE
SPECIAL MERITORIOUS CIRCUMSTANCES AND ISSUES.
IV. THE LA’S JUDGMENT WAS PATENTLY VOID SINCE IT
AWARDS MORE THAN ₱60 MILLION PESOS TO A SINGLE
FOREIGNER WHO HAD NO WORK PERMIT, AND NO
WORKING VISA.
V.
PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC) IN HIS APPEAL
HEREIN, MAKING THE APPEAL INEFFECTIVE AGAINST THE
NLRC.
VI.
NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER
MCBURNIE IN ITS NOVEMBER 17, 2009 DECISION.
VII.
THE HONORABLE COURT’S 18 SEPTEMBER 2009 DECISION
WAS TAINTED WITH VERY SERIOUS IRREGULARITIES.
VIII.
GR NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY
INCLUDED IN THIS CASE.
IX.
3
THE HONORABLE COURT DID NOT DULY RULE UPON THE
OTHER VERY MERITORIOUS ARGUMENTS OF THE
RESPONDENTS WHICH ARE AS FOLLOWS:
(A) PETITIONER NEVER ATTENDED ANY OF ALL 14
HEARINGS BEFORE THE [LA] (WHEN 2 MISSED
HEARINGS MEAN DISMISSAL).
(B) PETITIONER REFERRED TO HIMSELF AS A
"VICTIM" OF LEISURE EXPERTS, INC., BUT NOT OF
ANY OF THE RESPONDENTS.
(C) PETITIONER’S POSITIVE LETTER TO
RESPONDENT MR. EULALIO GANZON CLEARLY
SHOWS THAT HE WAS NOT ILLEGALLY DISMISSED
NOR EVEN DISMISSED BY ANY OF THE
RESPONDENTS AND PETITIONER EVEN PROMISED
TO PAY HIS DEBTS FOR ADVANCES MADE BY
RESPONDENTS.
(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF
THE RESPONDENTS. PETITIONER PRESENTED
WORK FOR CORONADO BEACH RESORT WHICH IS
[NEITHER] OWNED NOR CONNECTED WITH ANY OF
THE RESPONDENTS.
(E) THE [LA] CONCLUDED THAT PETITIONER WAS
DISMISSED EVEN IF THERE WAS ABSOLUTELY NO
EVIDENCE AT ALL PRESENTED THAT PETITIONER
WAS DISMISSED BY THE RESPONDENTS.
(F) PETITIONER LEFT THE PHILIPPINES FOR
AUSTRALIA JUST 2 MONTHS AFTER THE START OF
THE ALLEGED EMPLOYMENT AGREEMENT, AND
HAS STILL NOT RETURNED TO THE PHILIPPINES AS
CONFIRMED BY THE BUREAU OF IMMIGRATION.
(G) PETITIONER COULD NOT HAVE SIGNED AND
PERSONALLY APPEARED BEFORE THE NLRC
ADMINISTERING OFFICER AS INDICATED IN THE
COMPLAINT SHEET SINCE HE LEFT THE COUNTRY
3 YEARS BEFORE THE COMPLAINT WAS FILED AND
HE NEVER CAME BACK.54
On September 4, 2012, the Court en banc55 issued a
Resolution56 accepting the case from the Third Division. It also
issued a temporary restraining order (TRO) enjoining the
implementation of the LA’s Decision dated September 30, 2004.
This prompted McBurnie’s filing of a Motion for
Reconsideration,57 where he invoked the fact that the Court’s
Decision dated September 18, 2009 had become final and
executory, with an entry of judgment already made by the Court.
Our Ruling
In light of pertinent law and jurisprudence, and upon taking a
second hard look of the parties’ arguments and the records of the
case, the Court has ascertained that a reconsideration of this
Court’s Decision dated September 18, 2009 and Resolutions dated
December 14, 2009 and January 25, 2012, along with the lifting of
the entry of judgment in G.R. No. 186984-85, is in order.
The Court’s acceptance of the
third motion for reconsideration
At the outset, the Court emphasizes that second and subsequent
motions for reconsideration are, as a general rule, prohibited.
Section 2, Rule 52 of the Rules of Court provides that "no second
motion for reconsideration of a judgment or final resolution by the
same party shall be entertained." The rule rests on the basic tenet
of immutability of judgments. "At some point, a decision becomes
final and executory and, consequently, all litigations must come to
an end."58
The general rule, however, against second and subsequent
motions for reconsideration admits of settled exceptions. For one,
the present Internal Rules of the Supreme Court, particularly
Section 3, Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration. ― The Court shall not
entertain a second motion for reconsideration, and any exception
to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of
justice" when the assailed decision is not only legally erroneous,
but is likewise patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to the parties. A
second motion for reconsideration can only be entertained before
the ruling sought to be reconsidered becomes final by operation of
law or by the Court’s declaration.
x x x x (Emphasis ours)
In a line of cases, the Court has then entertained and granted
second motions for reconsideration "in the higher interest of
substantial justice," as allowed under the Internal Rules when the
assailed decision is "legally erroneous," "patently unjust" and
"potentially capable of causing unwarranted and irremediable injury
or damage to the parties." In Tirazona v. Philippine EDS Techno-
Service, Inc. (PET, Inc.),59 we also explained that a second motion
for reconsideration may be allowed in instances of "extraordinarily
persuasive reasons and only after an express leave shall have
been obtained."60 In Apo Fruits Corporation v. Land Bank of the
Philippines,61 we allowed a second motion for reconsideration as
the issue involved therein was a matter of public interest, as it
pertained to the proper application of a basic constitutionally-
guaranteed right in the government’s implementation of its agrarian
reform program. In San Miguel Corporation v. NLRC,62 the Court
set aside the decisions of the LA and the NLRC that favored
claimants-security guards upon the Court’s review of San Miguel
Corporation’s second motion for reconsideration. In Vir-Jen
Shipping and Marine Services, Inc. v. NLRC, et al.,63 the Court en
banc reversed on a third motion for reconsideration the ruling of
the Court’s Division on therein private respondents’ claim for
wages and monetary benefits.
It is also recognized that in some instances, the prudent action
towards a just resolution of a case is for the Court to suspend rules
of procedure, for "the power of this Court to suspend its own rules
or to except a particular case from its operations whenever the
purposes of justice require it, cannot be questioned." 64 In De
Guzman v. Sandiganbayan,65 the Court, thus, explained:
The rules of procedure should be viewed as mere tools designed
to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to
frustrate rather than promote substantial justice, must always be
avoided. Even the Rules of Court envision this liberality. This
power to suspend or even disregard the rules can be so pervasive
and encompassing so as to alter even that which this Court itself
has already declared to be final, as we are now compelled to do in
this case. x x x.
xxxx
The Rules of Court was conceived and promulgated to set forth
guidelines in the dispensation of justice but not to bind and chain
the hand that dispenses it, for otherwise, courts will be mere slaves
to or robots of technical rules, shorn of judicial discretion. That is
4
precisely why courts in rendering real justice have always been, as
they in fact ought to be, conscientiously guided by the norm that
when on the balance, technicalities take a backseat against
substantive rights, and not the other way around. Truly then,
technicalities, in the appropriate language of Justice Makalintal,
"should give way to the realities of the situation." x x x. 66 (Citations
omitted)
Consistent with the foregoing precepts, the Court has then
reconsidered even decisions that have attained finality, finding it
more appropriate to lift entries of judgments already made in these
cases. In Navarro v. Executive Secretary,67 we reiterated the
pronouncement in De Guzman that the power to suspend or even
disregard rules of procedure can be so pervasive and compelling
as to alter even that which this Court itself has already declared
final. The Court then recalled in Navarro an entry of judgment after
it had determined the validity and constitutionality of Republic Act
No. 9355, explaining that:
Verily, the Court had, on several occasions, sanctioned the recall
of entries of judgment in light of attendant extraordinary
circumstances. The power to suspend or even disregard rules of
procedure can be so pervasive and compelling as to alter even
that which this Court itself had already declared final. In this case,
the compelling concern is not only to afford the movants-
intervenors the right to be heard since they would be adversely
affected by the judgment in this case despite not being original
parties thereto, but also to arrive at the correct interpretation of the
provisions of the [Local Government Code (LGC)] with respect to
the creation of local government units. x x x.68(Citations omitted)
In Munoz v. CA,69 the Court resolved to recall an entry of judgment
to prevent a miscarriage of justice. This justification was likewise
applied in Tan Tiac Chiong v. Hon. Cosico,70 wherein the Court held
that:
The recall of entries of judgments, albeit rare, is not a novelty. In
Muñoz v. CA , where the case was elevated to this Court and a first
and second motion for reconsideration had been denied with
finality , the Court, in the interest of substantial justice, recalled the
Entry of Judgment as well as the letter of transmittal of the records
to the Court of Appeals.71 (Citation omitted)
In Barnes v. Judge Padilla,72 we ruled:
A final and executory judgment can no longer be attacked by any
of the parties or be modified, directly or indirectly, even by the
highest court of the land.
However, this Court has relaxed this rule in order to serve
substantial justice considering (a) matters of life, liberty, honor or
property, (b) the existence of special or compelling circumstances,
(c) the merits of the case, (d) a cause not entirely attributable to
the fault or negligence of the party favored by the suspension of
the rules, (e) a lack of any showing that the review sought is
merely frivolous and dilatory, and (f) the other party will not be
unjustly prejudiced thereby.73 (Citations omitted)
As we shall explain, the instant case also qualifies as an exception
to, first, the proscription against second and subsequent motions
for reconsideration, and second, the rule on immutability of
judgments; a reconsideration of the Decision dated September 18,
2009, along with the Resolutions dated December 14, 2009 and
January 25, 2012, is justified by the higher interest of substantial
justice.
To begin with, the Court agrees with the respondents that the
Court’s prior resolve to grant , and not just merely note, in a
Resolution dated March 15, 2010 the respondents’ motion for
leave to submit their second motion for reconsideration already
warranted a resolution and discussion of the motion for
reconsideration on its merits. Instead of doing this, however, the
Court issued on January 25, 2012 a Resolution74 denying the
motion to reconsider for lack of merit, merely citing that it was a
"prohibited pleading under Section 2, Rule 52 in relation to Section
4, Rule 56 of the 1997 Rules of Civil Procedure, as amended." 75 In
League of Cities of the Philippines (LCP) v. Commission on
Elections,76 we reiterated a ruling that when a motion for leave to
file and admit a second motion for reconsideration is granted by
the Court, the Court therefore allows the filing of the second motion
for reconsideration. In such a case, the second motion for
reconsideration is no longer a prohibited pleading. Similarly in this
case, there was then no reason for the Court to still consider the
respondents’ second motion for reconsideration as a prohibited
pleading, and deny it plainly on such ground. The Court intends to
remedy such error through this resolution.
More importantly, the Court finds it appropriate to accept the
pending motion for reconsideration and resolve it on the merits in
order to rectify its prior disposition of the main issues in the
petition. Upon review, the Court is constrained to rule differently on
the petitions. We have determined the grave error in affirming the
NLRC’s rulings, promoting results that are patently unjust for the
respondents, as we consider the facts of the case, pertinent law,
jurisprudence, and the degree of the injury and damage to the
respondents that will inevitably result from the implementation of
the Court’s Decision dated September 18, 2009.
The rule on appeal bonds
We emphasize that the crucial issue in this case concerns the
sufficiency of the appeal bond that was posted by the respondents.
The present rule on the matter is Section 6, Rule VI of the 2011
NLRC Rules of Procedure, which was substantially the same
provision in effect at the time of the respondents’ appeal to the
NLRC, and which reads:
RULE VI
APPEALS
Sec. 6. BOND. – In case the decision of the Labor Arbiter or the
Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in
an amount equivalent to the monetary award, exclusive of
damages and attorney’s fees.
xxxx
No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award.
The filing of the motion to reduce bond without compliance with the
requisites in the preceding paragraph shall not stop the running of
the period to perfect an appeal. (Emphasis supplied)
While the CA, in this case, allowed an appeal bond in the reduced
amount of ₱10,000,000.00 and then ordered the case’s remand to
the NLRC, this Court’s Decision dated September 18, 2009
provides otherwise, as it reads in part:
The posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of
the Labor Arbiter. The lawmakers clearly intended to make the
bond a mandatory requisite for the perfection of an appeal by the
employer as inferred from the provision that an appeal by the
employer may be perfected "only upon the posting of a cash or
surety bond." The word "only" makes it clear that the posting of a
5
cash or surety bond by the employer is the essential and exclusive
means by which an employer’s appeal may be perfected. x x x.
Moreover, the filing of the bond is not only mandatory but a
jurisdictional requirement as well, that must be complied with in
order to confer jurisdiction upon the NLRC. Non-compliance
therewith renders the decision of the Labor Arbiter final and
executory. This requirement is intended to assure the workers that
if they prevail in the case, they will receive the money judgment in
their favor upon the dismissal of the employer’s appeal. It is
intended to discourage employers from using an appeal to delay or
evade their obligation to satisfy their employees’ just and lawful
claims.
xxxx
Thus, it behooves the Court to give utmost regard to the legislative
and administrative intent to strictly require the employer to post a
cash or surety bond securing the full amount of the monetary
award within the 10[-]day reglementary period. Nothing in the
Labor Code or the NLRC Rules of Procedure authorizes the
posting of a bond that is less than the monetary award in the
judgment, or would deem such insufficient posting as sufficient to
perfect the appeal.
While the bond may be reduced upon motion by the employer, this
is subject to the conditions that (1) the motion to reduce the bond
shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the
appellant, otherwise the filing of the motion to reduce bond shall
not stop the running of the period to perfect an appeal. The
qualification effectively requires that unless the NLRC grants the
reduction of the cash bond within the 10-day reglementary period,
the employer is still expected to post the cash or surety bond
securing the full amount within the said 10-day period. If the NLRC
does eventually grant the motion for reduction after the
reglementary period has elapsed, the correct relief would be to
reduce the cash or surety bond already posted by the employer
within the 10-day period.77 (Emphasis supplied; underscoring ours)
To begin with, the Court rectifies its prior pronouncement – the
unqualified statement that even an appellant who seeks a
reduction of an appeal bond before the NLRC is expected to post a
cash or surety bond securing the full amount of the judgment
award within the 10-day reglementary period to perfect the appeal.
The suspension of the period to
perfect the appeal upon the filing of
a motion to reduce bond
To clarify, the prevailing jurisprudence on the matter provides that
the filing of a motion to reduce bond, coupled with compliance with
the two conditions emphasized in Garcia v. KJ Commercial 78 for
the grant of such motion, namely, (1) a meritorious ground, and (2)
posting of a bond in a reasonable amount, shall suffice to suspend
the running of the period to perfect an appeal from the labor
arbiter’s decision to the NLRC.79 To require the full amount of the
bond within the 10-day reglementary period would only render
nugatory the legal provisions which allow an appellant to seek a
reduction of the bond. Thus, we explained in Garcia:
The filing of a motion to reduce bond and compliance with the two
conditions stop the running of the period to perfect an appeal. x x x
xxxx
The NLRC has full discretion to grant or deny the motion to reduce
bond, and it may rule on the motion beyond the 10-day period
within which to perfect an appeal. Obviously, at the time of the
filing of the motion to reduce bond and posting of a bond in a
reasonable amount, there is no assurance whether the appellant’s
motion is indeed based on "meritorious ground" and whether the
bond he or she posted is of a "reasonable amount." Thus, the
appellant always runs the risk of failing to perfect an appeal.
x x x In order to give full effect to the provisions on motion to
reduce bond, the appellant must be allowed to wait for the ruling of
the NLRC on the motion even beyond the 10-day period to perfect
an appeal. If the NLRC grants the motion and rules that there is
indeed meritorious ground and that the amount of the bond posted
is reasonable, then the appeal is perfected. If the NLRC denies the
motion, the appellant may still file a motion for reconsideration as
provided under Section 15, Rule VII of the Rules. If the NLRC
grants the motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted is
reasonable, then the appeal is perfected. If the NLRC denies the
motion, then the decision of the labor arbiter becomes final and
executory.
xxxx
In any case, the rule that the filing of a motion to reduce bond shall
not stop the running of the period to perfect an appeal is not
absolute. The Court may relax the rule. In Intertranz Container
Lines, Inc. v. Bautista, the Court held:
"Jurisprudence tells us that in labor cases, an appeal from a
decision involving a monetary award may be perfected only upon
the posting of cash or surety bond. The Court, however, has
relaxed this requirement under certain exceptional circumstances
in order to resolve controversies on their merits. These
circumstances include: (1) fundamental consideration of
substantial justice; (2) prevention of miscarriage of justice or of
unjust enrichment; and (3) special circumstances of the case
combined with its legal merits, and the amount and the issue
involved."80(Citations omitted and emphasis ours)
A serious error of the NLRC was its outright denial of the motion to
reduce the bond, without even considering the respondents’
arguments and totally unmindful of the rules and jurisprudence that
allow the bond’s reduction. Instead of resolving the motion to
reduce the bond on its merits, the NLRC insisted on an amount
that was equivalent to the monetary award, merely explaining:
We are constrained to deny respondents’ motion for reduction. As
held by the Supreme Court in a recent case, in cases involving
monetary award, an employer seeking to appeal the Labor
Arbiter’s decision to the Commission is unconditionally required by
Art. 223, Labor Code to post bond in the amount equivalent to the
monetary award (Calabash Garments vs. NLRC, G.R. No. 110827,
August 8, 1996). x x x81 (Emphasis ours)
When the respondents sought to reconsider, the NLRC still refused
to fully decide on the motion. It refused to at least make a
preliminary determination of the merits of the appeal, as it held:
We are constrained to dismiss respondents’ Motion for
Reconsideration. Respondents’ contention that the appeal bond is
excessive and based on a decision which is a patent nullity
involves the merits of the case. x x x82
Prevailing rules and jurisprudence
allow the reduction of appeal bonds.
By such haste of the NLRC in peremptorily denying the
respondents’ motion without considering the respondents’
arguments, it effectively denied the respondents of their
opportunity to seek a reduction of the bond even when the same is
allowed under the rules and settled jurisprudence. It was
equivalent to the NLRC’s refusal to exercise its discretion, as it
6
refused to determine and rule on a showing of meritorious grounds
and the reasonableness of the bond tendered under the
circumstances.83 Time and again, the Court has cautioned the
NLRC to give Article 223 of the Labor Code, particularly the
provisions requiring bonds in appeals involving monetary awards,
a liberal interpretation in line with the desired objective of resolving
controversies on the merits.84 The NLRC’s failure to take action on
the motion to reduce the bond in the manner prescribed by law and
jurisprudence then cannot be countenanced. Although an appeal
by parties from decisions that are adverse to their interests is
neither a natural right nor a part of due process, it is an essential
part of our judicial system. Courts should proceed with caution so
as not to deprive a party of the right to appeal, but rather, ensure
that every party has the amplest opportunity for the proper and just
disposition of their cause, free from the constraints of
technicalities.85 Considering the mandate of labor tribunals, the
principle equally applies to them.
Given the circumstances of the case, the Court’s affirmance in the
Decision dated September 18, 2009 of the NLRC’s strict
application of the rule on appeal bonds then demands a re-
examination. Again, the emerging trend in our jurisprudence is to
afford every party-litigant the amplest opportunity for the proper
and just determination of his cause, free from the constraints of
technicalities.86 Section 2, Rule I of the NLRC Rules of Procedure
also provides the policy that "the Rules shall be liberally construed
to carry out the objectives of the Constitution, the Labor Code of
the Philippines and other relevant legislations, and to assist the
parties in obtaining just, expeditious and inexpensive resolution
and settlement of labor disputes."87
In accordance with the foregoing, although the general rule
provides that an appeal in labor cases from a decision involving a
monetary award may be perfected only upon the posting of a cash
or surety bond, the Court has relaxed this requirement under
certain exceptional circumstances in order to resolve controversies
on their merits. These circumstances include: (1) the fundamental
consideration of substantial justice; (2) the prevention of
miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the
amount and the issue involved.88 Guidelines that are applicable in
the reduction of appeal bonds were also explained in Nicol v.
Footjoy Industrial Corporation.89 The bond requirement in appeals
involving monetary awards has been and may be relaxed in
meritorious cases, including instances in which (1) there was
substantial compliance with the Rules, (2) surrounding facts and
circumstances constitute meritorious grounds to reduce the bond,
(3) a liberal interpretation of the requirement of an appeal bond
would serve the desired objective of resolving controversies on the
merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the
reglementary period.90
In Blancaflor v. NLRC,91 the Court also emphasized that while
Article 22392 of the Labor Code, as amended by Republic Act No.
6715, which requires a cash or surety bond in an amount
equivalent to the monetary award in the judgment appealed from
may be considered a jurisdictional requirement for the perfection of
an appeal, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits to be
threshed out by the NLRC, the foregoing requirement of the law
should be given a liberal interpretation.
As the Court, nonetheless, remains firm on the importance of
appeal bonds in appeals from monetary awards of LAs, we stress
that the NLRC, pursuant to Section 6, Rule VI of the NLRC Rules
of Procedure, shall only accept motions to reduce bond that are
coupled with the posting of a bond in a reasonable amount. Time
and again, we have explained that the bond requirement imposed
upon appellants in labor cases is intended to ensure the
satisfaction of awards that are made in favor of appellees, in the
event that their claims are eventually sustained by the courts. 93 On
the part of the appellants, its posting may also signify their good
faith and willingness to recognize the final outcome of their appeal.
At the time of a motion to reduce appeal bond’s filing, the question
of what constitutes "a reasonable amount of bond" that must
accompany the motion may be subject to differing interpretations
of litigants. The judgment of the NLRC which has the discretion
under the law to determine such amount cannot as yet be invoked
by litigants until after their motions to reduce appeal bond are
accepted.
Given these limitations, it is not uncommon for a party to unduly
forfeit his opportunity to seek a reduction of the required bond and
thus, to appeal, when the NLRC eventually disagrees with the
party’s assessment. These have also resulted in the filing of
numerous petitions against the NLRC, citing an alleged grave
abuse of discretion on the part of the labor tribunal for its finding on
the sufficiency or insufficiency of posted appeal bonds.
It is in this light that the Court finds it necessary to set a parameter
for the litigants’ and the NLRC’s guidance on the amount of bond
that shall hereafter be filed with a motion for a bond’s reduction. To
ensure that the provisions of Section 6, Rule VI of the NLRC Rules
of Procedure that give parties the chance to seek a reduction of
the appeal bond are effectively carried out, without however
defeating the benefits of the bond requirement in favor of a winning
litigant, all motions to reduce bond that are to be filed with the
NLRC shall be accompanied by the posting of a cash or surety
bond equivalent to 10% of the monetary award that is subject of
the appeal, which shall provisionally be deemed the reasonable
amount of the bond in the meantime that an appellant’s motion is
pending resolution by the Commission. In conformity with the
NLRC Rules, the monetary award, for the purpose of computing
the necessary appeal bond, shall exclude damages and attorney’s
fees.94 Only after the posting of a bond in the required percentage
shall an appellant’s period to perfect an appeal under the NLRC
Rules be deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the
NLRC’s exercise of its discretion, given that the percentage of
bond that is set by this guideline shall be merely provisional. The
NLRC retains its authority and duty to resolve the motion and
determine the final amount of bond that shall be posted by the
appellant, still in accordance with the standards of "meritorious
grounds" and "reasonable amount". Should the NLRC, after
considering the motion’s merit, determine that a greater amount or
the full amount of the bond needs to be posted by the appellant,
then the party shall comply accordingly. The appellant shall be
given a period of 10 days from notice of the NLRC order within
which to perfect the appeal by posting the required appeal bond.
Meritorious ground as a condition
for the reduction of the appeal bond
In all cases, the reduction of the appeal bond shall be justified by
meritorious grounds and accompanied by the posting of the
required appeal bond in a reasonable amount.
The requirement on the existence of a "meritorious ground" delves
on the worth of the parties’ arguments, taking into account their
respective rights and the circumstances that attend the case. The
condition was emphasized in University Plans Incorporated v.
Solano,95 wherein the Court held that while the NLRC’s Revised
Rules of Procedure "allows the [NLRC] to reduce the amount of the
bond, the exercise of the authority is not a matter of right on the
part of the movant, but lies within the sound discretion of the NLRC
upon a showing of meritorious grounds."96 By jurisprudence, the
merit referred to may pertain to an appellant’s lack of financial
capability to pay the full amount of the bond,97 the merits of the
main appeal such as when there is a valid claim that there was no
7
illegal dismissal to justify the award,98 the absence of an employer-
employee relationship,99 prescription of claims,100 and other
similarly valid issues that are raised in the appeal.101 For the
purpose of determining a "meritorious ground", the NLRC is not
precluded from receiving evidence, or from making a preliminary
determination of the merits of the appellant’s contentions. 102
In this case, the NLRC then should have considered the
respondents’ arguments in the memorandum on appeal that was
filed with the motion to reduce the requisite appeal bond. Although
a consideration of said arguments at that point would have been
merely preliminary and should not in any way bind the eventual
outcome of the appeal, it was apparent that the respondents’
defenses came with an indication of merit that deserved a full
review of the decision of the LA. The CA, by its Resolution dated
February 16, 2007, even found justified the issuance of a
preliminary injunction to enjoin the immediate execution of the LA’s
decision, and this Court, a temporary restraining order on
September 4, 2012.
Significantly, following the CA’s remand of the case to the NLRC,
the latter even rendered a Decision that contained findings that are
inconsistent with McBurnie’s claims. The NLRC reversed and set
aside the decision of the LA, and entered a new one dismissing
McBurnie’s complaint. It explained that McBurnie was not an
employee of the respondents; thus, they could not have dismissed
him from employment. The purported employment contract of the
respondents with the petitioner was qualified by the conditions set
forth in a letter dated May 11, 1999, which reads:
May 11, 1999
MR. ANDREW MCBURNIE
Re: Employment Contract
Dear Andrew,
It is understood that this Contract is made subject to the
understanding that it is effective only when the project financing for
our Baguio Hotel project pushed through.
The agreement with EGI Managers, Inc. is made now to support
your need to facilitate your work permit with the Department of
Labor in view of the expiration of your contract with Pan Pacific.
Regards,
Sgd. Eulalio Ganzon (p. 203, Records)103
For the NLRC, the employment agreement could not have given
rise to an employer-employee relationship by reason of legal
impossibility. The two conditions that form part of their agreement,
namely, the successful completion of the project financing for the
hotel project in Baguio City and McBurnie’s acquisition of an Alien
Employment Permit, remained unsatisfied.104 The NLRC concluded
that McBurnie was instead a potential investor in a project that
included Ganzon, but the said project failed to pursue due to lack
of funds. Any work performed by McBurnie in relation to the project
was merely preliminary to the business venture and part of his
"due diligence" study before pursuing the project, "done at his own
instance, not in furtherance of the employment contract but for his
own investment purposes."105 Lastly, the alleged employment of
the petitioner would have been void for being contrary to law, since
it is undisputed that McBurnie did not have any work permit. The
NLRC declared:
Absent an employment permit, any employment relationship that
McBurnie contemplated with the respondents was void for being
contrary to law. A void or inexistent contract, in turn, has no force
and effect from the beginning as if it had never been entered into.
Thus, without an Alien Employment Permit, the "Employment
Agreement" is void and could not be the source of a right or
obligation. In support thereof, the DOLE issued a certification that
McBurnie has neither applied nor been issued an Alien
Employment Permit (p. 204, Records).106
McBurnie moved to reconsider, citing the Court’s Decision of
September 18, 2009 that reversed and set aside the CA’s Decision
authorizing the remand. Although the NLRC granted the motion on
the said ground via a Decision107that set aside the NLRC’s
Decision dated November 17, 2009, the findings of the NLRC in
the November 17, 2009 decision merit consideration, especially
since the findings made therein are supported by the case records.
In addition to the apparent merit of the respondents’ appeal, the
Court finds the reduction of the appeal bond justified by the
substantial amount of the LA’s monetary award. Given its
considerable amount, we find reason in the respondents’ claim that
to require an appeal bond in such amount could only deprive them
of the right to appeal, even force them out of business and affect
the livelihood of their employees.108 In Rosewood Processing, Inc.
v. NLRC,109 we emphasized: "Where a decision may be made to
rest on informed judgment rather than rigid rules, the equities of
the case must be accorded their due weight because labor
determinations should not be ‘secundum rationem but also
secundum caritatem.’"110
What constitutes a reasonable
amount in the determination of the
final amount of appeal bond
As regards the requirement on the posting of a bond in a
"reasonable amount," the Court holds that the final determination
thereof by the NLRC shall be based primarily on the merits of the
motion and the main appeal.
Although the NLRC Rules of Procedure, particularly Section 6 of
Rule VI thereof, provides that the bond to be posted shall be "in a
reasonable amount in relation to the monetary award ," the merit of
the motion shall always take precedence in the determination.
Settled is the rule that procedural rules were conceived, and
should thus be applied in a manner that would only aid the
attainment of justice. If a stringent application of the rules would
hinder rather than serve the demands of substantial justice, the
former must yield to the latter.111
Thus, in Nicol where the appellant posted a bond of
₱10,000,000.00 upon an appeal from the LA’s award of
₱51,956,314.00, the Court, instead of ruling right away on the
reasonableness of the bond’s amount solely on the basis of the
judgment award, found it appropriate to remand the case to the
NLRC, which should first determine the merits of the motion. In
University Plans,112 the Court also reversed the outright dismissal
of an appeal where the bond posted in a judgment award of more
than ₱30,000,000.00 was ₱30,000.00. The Court then directed
the NLRC to first determine the merit, or lack of merit, of the
motion to reduce the bond, after the appellant therein claimed that
it was under receivership and thus, could not dispose of its assets
within a short notice. Clearly, the rule on the posting of an appeal
bond should not be allowed to defeat the substantive rights of the
parties.113
Notably, in the present case, following the CA’s rendition of its
Decision which allowed a reduced appeal bond, the respondents
have posted a bond in the amount of ₱10,000,000.00. In
Rosewood, the Court deemed the posting of a surety bond of
₱50,000.00, coupled with a motion to reduce the appeal bond, as
substantial compliance with the legal requirements for an appeal
from a ₱789,154.39 monetary award "considering the clear merits
which appear, res ipsa loquitor, in the appeal from the LA’s
8
Decision, and the petitioner’s substantial compliance with rules
governing appeals."114 The foregoing jurisprudence strongly
indicate that in determining the reasonable amount of appeal
bonds, the Court primarily considers the merits of the motions and
appeals.
Given the circumstances in this case and the merits of the
respondents’ arguments before the NLRC, the Court holds that the
respondents had posted a bond in a "reasonable amount", and had
thus complied with the requirements for the perfection of an appeal
from the LA’s decision. The CA was correct in ruling that:
In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I)
Employees Association, President Rodolfo Jimenez, and
members, Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I
Electric Cooperative, Inc. (NEECO I) and Patricio de la Peña (GR
No. 116066, January 24, 2000), the Supreme Court recognized
that: "the NLRC, in its Resolution No. 11-01-91 dated November 7,
1991 deleted the phrase "exclusive of moral and exemplary
damages as well as attorney’s fees in the determination of the
amount of bond, and provided a safeguard against the imposition
of excessive bonds by providing that "(T)he Commission may in
meritorious cases and upon motion of the appellant, reduce the
amount of the bond."
In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, it was held:
"The unreasonable and excessive amount of bond would be
oppressive and unjust and would have the effect of depriving a
party of his right to appeal."
xxxx
In dismissing outright the motion to reduce bond filed by
petitioners, NLRC abused its discretion. It should have fixed an
appeal bond in a reasonable amount. Said dismissal deprived
petitioners of their right to appeal the Labor Arbiter’s decision.
xxxx
NLRC Rules allow reduction of appeal bond on meritorious
grounds (Sec. 6, Rule VI, NLRC Rules of Procedure). This Court
finds the appeal bond in the amount of ₱54,083,910.00 prohibitive
and excessive, which constitutes a meritorious ground to allow a
motion for reduction thereof.115
The foregoing declaration of the Court requiring a bond in a
reasonable amount, taking into account the merits of the motion
and the appeal, is consistent with the oft-repeated principle that
letter-perfect rules must yield to the broader interest of substantial
justice.116
The effect of a denial of the appeal
to the NLRC
In finding merit in the respondents’ motion for reconsideration, we
also take into account the unwarranted results that will arise from
an implementation of the Court’s Decision dated September 18,
2009. We emphasize, moreover, that although a remand and an
order upon the NLRC to give due course to the appeal would have
been the usual course after a finding that the conditions for the
reduction of an appeal bond were duly satisfied by the
respondents, given such results, the Court finds it necessary to
modify the CA’s order of remand, and instead rule on the dismissal
of the complaint against the respondents.
Without the reversal of the Court’s Decision and the dismissal of
the complaint against the respondents, McBurnie would be allowed
to claim benefits under our labor laws despite his failure to comply
with a settled requirement for foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal
and sought to claim under our labor laws, it was necessary for him
to establish, first and foremost, that he was qualified and duly
authorized to obtain employment within our jurisdiction. A
requirement for foreigners who intend to work within the country is
an employment permit, as provided under Article 40, Title II of the
Labor Code which reads:
Art. 40. Employment permit for non-resident aliens. Any alien
seeking admission to the Philippines for employment purposes and
any domestic or foreign employer who desires to engage an alien
for employment in the Philippines shall obtain an employment
permit from the Department of Labor.
117
In WPP Marketing Communications, Inc. v. Galera, we held that
a foreign national’s failure to seek an employment permit prior to
employment poses a serious problem in seeking relief from the
Court.118 Thus, although the respondent therein appeared to have
been illegally dismissed from employment, we explained:
This is Galera’s dilemma: Galera worked in the Philippines without
proper work permit but now wants to claim employee’s benefits
under Philippine labor laws.
xxxx
The law and the rules are consistent in stating that the employment
permit must be acquired prior to employment. The Labor Code
states: "Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who
desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor."
Section 4, Rule XIV, Book I of the Implementing Rules and
Regulations provides:
"Employment permit required for entry. – No alien seeking
employment, whether as a resident or non-resident, may enter the
Philippines without first securing an employment permit from the
Ministry. If an alien enters the country under a non-working visa
and wishes to be employed thereafter, he may be allowed to be
employed upon presentation of a duly approved employment
permit."
Galera cannot come to this Court with unclean hands. To grant
Galera’s prayer is to sanction the violation of the Philippine labor
laws requiring aliens to secure work permits before their
employment. We hold that the status quo must prevail in the
present case and we leave the parties where they are. This ruling,
however, does not bar Galera from seeking relief from other
jurisdictions.119 (Citations omitted and underscoring ours)
Clearly, this circumstance on the failure of McBurnie to obtain an
employment permit, by itself, necessitates the dismissal of his
labor complaint.
Furthermore, as has been previously discussed, the NLRC has
ruled in its Decision dated November 17, 2009 on the issue of
illegal dismissal. It declared that McBurnie was never an employee
of any of the respondents.120 It explained:
All these facts and circumstances prove that McBurnie was never
an employee of Eulalio Ganzon or the respondent companies, but
a potential investor in a project with a group including Eulalio
Ganzon and Martinez but said project did not take off because of
lack of funds.
9
McBurnie further claims that in conformity with the provision of the
employment contract pertaining to the obligation of the
respondents to provide housing, respondents assigned him Condo
Unit # 812 of the Makati Cinema Square Condominium owned by
the respondents. He was also allowed to use a Hyundai car. If it
were true that the contract of employment was for working visa
purposes only, why did the respondents perform their obligations to
him?
There is no question that respondents assigned him Condo Unit #
812 of the MCS, but this was not free of charge. If it were true that
it is part of the compensation package as employee, then
McBurnie would not be obligated to pay anything, but clearly, he
admitted in his letter that he had to pay all the expenses incurred in
the apartment.
Assuming for the sake of argument that the employment contract is
valid between them, record shows that McBurnie worked from
September 1, 1999 until he met an accident on the last week of
October. During the period of employment, the respondents must
have paid his salaries in the sum of US$26,000.00, more or less.
However, McBurnie failed to present a single evidence that [the
respondents] paid his salaries like payslip, check or cash vouchers
duly signed by him or any document showing proof of receipt of his
compensation from the respondents or activity in furtherance of the
employment contract. Granting again that there was a valid
contract of employment, it is undisputed that on November 1,
1999, McBurnie left for Australia and never came back. x x
x.121(Emphasis supplied)
Although the NLRC’s Decision dated November 17, 2009 was set
aside in a Decision dated January 14, 2010, the Court’s resolve to
now reconsider its Decision dated September 18, 2009 and to
affirm the CA’s Decision and Resolution in the respondents’ favor
effectively restores the NLRC’s basis for rendering the Decision
dated November 17, 2009.
More importantly, the NLRC’s findings on the contractual relations
between McBurnie and the respondents are supported by the
records.
First, before a case for illegal dismissal can prosper, an employer-
employee relationship must first be established.122 Although an
employment agreement forms part of the case records, respondent
Ganzon signed it with the notation "per my note."123 The
respondents have sufficiently explained that the note refers to the
letter124dated May 11, 1999 which embodied certain conditions for
the employment’s effectivity. As we have previously explained,
however, the said conditions, particularly on the successful
completion of the project financing for the hotel project in Baguio
City and McBurnie’s acquisition of an Alien Employment Permit,
failed to materialize. Such defense of the respondents, which was
duly considered by the NLRC in its Decision dated November 17,
2009, was not sufficiently rebutted by McBurnie.
Second, McBurnie failed to present any employment permit which
would have authorized him to obtain employment in the
Philippines. This circumstance negates McBurnie’s claim that he
had been performing work for the respondents by virtue of an
employer-employee relationship. The absence of the employment
permit instead bolsters the claim that the supposed employment of
McBurnie was merely simulated, or did not ensue due to the non-
fulfillment of the conditions that were set forth in the letter of May
11, 1999.
Third, besides the employment agreement, McBurnie failed to
present other competent evidence to prove his claim of an
employer-employee relationship. Given the parties’ conflicting
claims on their true intention in executing the agreement, it was
necessary to resort to the established criteria for the determination
of an employer-employee relationship, 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 employee’s
conduct.125 The rule of thumb remains: the onus probandi falls on
the claimant to establish or substantiate the claim by the requisite
quantum of evidence. Whoever claims entitlement to the benefits
provided by law should establish his or her right
thereto.126 McBurnie failed in this regard.1âwphi1 As previously
observed by the NLRC, McBurnie even failed to show through any
document such as payslips or vouchers that his salaries during the
time that he allegedly worked for the respondents were paid by the
company. In the absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie could not
successfully claim that he was dismissed, much less illegally
dismissed, by the latter. Even granting that there was such an
employer-employee relationship, the records are barren of any
document showing that its termination was by the respondents’
dismissal of McBurnie.
Given these circumstances, it would be a circuitous exercise for
the Court to remand the case to the NLRC, more so in the absence
of any showing that the NLRC should now rule differently on the
case’s merits. In Medline Management, Inc. v. Roslinda, 127 the
Court ruled that when there is enough basis on which the Court
may render a proper evaluation of the merits of the case, the Court
may dispense with the time-consuming procedure of remanding a
case to a labor tribunal in order "to prevent delays in the
disposition of the case," "to serve the ends of justice" and when a
remand "would serve no purpose save to further delay its
disposition contrary to the spirit of fair play."128 In Real v. Sangu
Philippines, Inc.,129 we again ruled:
With the foregoing, it is clear that the CA erred in affirming the
decision of the NLRC which dismissed petitioner’s complaint for
lack of jurisdiction. In cases such as this, the Court normally
remands the case to the NLRC and directs it to properly dispose of
the case on the merits. "However, when there is enough basis on
which a proper evaluation of the merits of petitioner’s case may be
had, the Court may dispense with the time-consuming procedure
of remand in order to prevent further delays in the disposition of
the case." "It is already an accepted rule of procedure for us to
strive to settle the entire controversy in a single proceeding,
leaving no root or branch to bear the seeds of litigation. If, based
on the records, the pleadings, and other evidence, the dispute can
be resolved by us, we will do so to serve the ends of justice
instead of remanding the case to the lower court for further
proceedings." x x x.130 (Citations omitted)
It bears mentioning that although the Court resolves to grant the
respondents’ motion for reconsideration, the other grounds raised
in the motion, especially as they pertain to insinuations on
irregularities in the Court, deserve no merit for being founded on
baseless conclusions. Furthermore, the Court finds it unnecessary
to discuss the other grounds that are raised in the motion,
considering the grounds that already justify the dismissal of
McBurnie’s complaint.
All these considered, the Court also affirms its Resolution dated
September 4, 2012; accordingly, McBurnie’s motion for
reconsideration thereof is denied.
WHEREFORE, in light of the foregoing, the Court rules as follows:
(a) The motion for reconsideration filed on September
26, 2012 by petitioner Andrew James McBurnie is
DENIED;
(b) The motion for reconsideration filed on March 27,
2012 by respondents Eulalio Ganzon, EGI-Managers,
Inc. and E. Ganzon, Inc. is GRANTED.
10
(c) The Entry of Judgment issued in G.R. Nos. 186984-
85 is LIFTED. This Court’s Decision dated September
18, 2009 and Resolutions dated December 14, 2009 and
January 25, 2012 are SET ASIDE. The Court of Appeals
Decision dated October 27, 2008 and Resolution dated
March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R.
SP No. 95916 are AFFIRMED WITH MODIFICATION. In
lieu of a remand of the case to the National Labor
Relations Commission, the complaint for illegal dismissal
filed by petitioner Andrew James McBurnie against
respondents Eulalio Ganzon, EGI-Managers, Inc. and E.
Ganzon, Inc. is DISMISSED.
Furthermore, on the matter of the filing and acceptance of motions
to reduce appeal bond, as provided in Section 6, Rule VI of the
2011 NLRC Rules of Procedure, the Court hereby RESOLVES that
henceforth, the following guidelines shall be observed:
(a) The filing o a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a
bond in a reasonable amount is posted;
(b) For purposes o compliance with condition no. (2), a
motion shall be accompanied by the posting o a
provisional cash or surety bond equivalent to ten percent
(10,) of the monetary award subject o the appeal,
exclusive o damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice
to suspend the running o the 1 0-day reglementary
period to perfect an appeal from the labor arbiter's
decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the
motion to reduce bond and determine the final amount o
bond that shall be posted by the appellant, still in
accordance with the standards o meritorious grounds
and reasonable amount; and
(e) In the event that the NLRC denies the motion to
reduce bond, or requires a bond that exceeds the
amount o the provisional bond, the appellant shall be
given a fresh period o ten 1 0) days from notice o the
NLRC order within which to perfect the appeal by posting
the required appeal bond.
SO ORDERED.
G.R. No. 152894 August 17, 2007
CENTURY CANNING CORPORATION, Petitioner,
vs.
COURT OF APPEALS and GLORIA C. PALAD, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision2 dated 12 November
2001 and the Resolution dated 5 April 2002 of the Court of Appeals
in CA-G.R. SP No. 60379.
The Facts
On 15 July 1997, Century Canning Corporation (petitioner) hired
Gloria C. Palad (Palad) as "fish cleaner" at petitioner’s tuna and
sardines factory. Palad signed on 17 July 1997 an apprenticeship
agreement3 with petitioner. Palad received an apprentice
allowance of ₱138.75 daily. On 25 July 1997, petitioner submitted
its apprenticeship program for approval to the Technical Education
and Skills Development Authority (TESDA) of the Department of
Labor and Employment (DOLE). On 26 September 1997, the
TESDA approved petitioner’s apprenticeship program. 4
According to petitioner, a performance evaluation was conducted
on 15 November 1997, where petitioner gave Palad a rating of N.I.
or "needs improvement" since she scored only 27.75% based on a
100% performance indicator. Furthermore, according to the
performance evaluation, Palad incurred numerous tardiness and
absences. As a consequence, petitioner issued a termination
notice5 dated 22 November 1997 to Palad, informing her of her
termination effective at the close of business hours of 28
November 1997.
Palad then filed a complaint for illegal dismissal, underpayment of
wages, and non-payment of pro-rated 13th month pay for the year
1997.
On 25 February 1999, the Labor Arbiter dismissed the complaint
for lack of merit but ordered petitioner to pay Palad her last salary
and her pro-rated 13th month pay. The dispositive portion of the
Labor Arbiter’s decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
declaring that the complaint for illegal dismissal filed by the
complainant against the respondents in the above-entitled case
should be, as it is hereby DISMISSED for lack of merit. However,
the respondents are hereby ordered to pay the complainant the
amount of ONE THOUSAND SIX HUNDRED THIRTY-TWO
PESOS (₱1,632.00), representing her last salary and the amount
of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT
(₱7,228.00) PESOS representing her prorated 13th month pay.
All other issues are likewise dismissed.
SO ORDERED.6
On appeal, the National Labor Relations Commission (NLRC)
affirmed with modification the Labor Arbiter’s decision, thus:
WHEREFORE, premises considered, the decision of the Arbiter
dated 25 February 1999 is hereby MODIFIED in that, in addition,
respondents are ordered to pay complainant’s backwages for two
(2) months in the amount of ₱7,176.00 (₱138.75 x 26 x 2 mos.).
All other dispositions of the Arbiter as appearing in the dispositive
portion of his decision are AFFIRMED.
SO ORDERED.7
Upon denial of Palad’s motion for reconsideration, Palad filed a
special civil action for certiorari with the Court of Appeals. On 12
November 2001, the Court of Appeals rendered a decision, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the questioned decision of
the NLRC is hereby SET ASIDE and a new one entered, to wit:
(a) finding the dismissal of petitioner to be illegal;
(b) ordering private respondent to pay petitioner her
underpayment in wages;
(c) ordering private respondent to reinstate petitioner to
her former position without loss of seniority rights and to
pay her full backwages computed from the time
11
compensation was withheld from her up to the time of
her reinstatement;
(d) ordering private respondent to pay petitioner
attorney’s fees equivalent to ten (10%) per cent of the
monetary award herein; and
(e) ordering private respondent to pay the costs of the
suit.
SO ORDERED.8
The Ruling of the Court of Appeals
The Court of Appeals held that the apprenticeship agreement
which Palad signed was not valid and binding because it was
executed more than two months before the TESDA approved
petitioner’s apprenticeship program. The Court of Appeals
cited Nitto Enterprises v. National Labor Relations
Commission,9 where it was held that prior approval by the DOLE of
the proposed apprenticeship program is a condition sine qua
non before an apprenticeship agreement can be validly entered
into.
The Court of Appeals also held that petitioner illegally dismissed
Palad. The Court of Appeals ruled that petitioner failed to show that
Palad was properly apprised of the required standard of
performance. The Court of Appeals likewise held that Palad was
not afforded due process because petitioner did not comply with
the twin requirements of notice and hearing.
The Issues
Petitioner raises the following issues:
1. WHETHER THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN HOLDING THAT PRIVATE
RESPONDENT WAS NOT AN APPRENTICE; and
2. WHETHER THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN HOLDING THAT
PETITIONER HAD NOT ADEQUATELY PROVEN THE
EXISTENCE OF A VALID CAUSE IN TERMINATING
THE SERVICE OF PRIVATE RESPONDENT.10
The Ruling of the Court
The petition is without merit.
Registration and Approval by the TESDA of Apprenticeship
Program Required Before Hiring of Apprentices
The Labor Code defines an apprentice as a worker who is covered
by a written apprenticeship agreement with an employer.11 One of
the objectives of Title II (Training and Employment of Special
Workers) of the Labor Code is to establish apprenticeship
standards for the protection of apprentices.12 In line with this
objective, Articles 60 and 61 of the Labor Code provide:
ART. 60. Employment of apprentices. — Only employers in the
highly technical industries may employ apprentices and only
in apprenticeable occupations approved by the Minister of
Labor and Employment. (Emphasis supplied)
ART. 61. Contents of apprenticeship agreements. —
Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the Minister of
Labor and Employment. The period of apprenticeship shall not
exceed six months. Apprenticeship agreements providing for
wage rates below the legal minimum wage, which in no case
shall start below 75 percent of the applicable minimum
wage, may be entered into only in accordance with
apprenticeship programs duly approved by the Minister of
Labor and Employment. The Ministry shall develop standard
model programs of apprenticeship. (Emphasis supplied)
In Nitto Enterprises v. National Labor Relations Commission ,13 the
Court cited Article 61 of the Labor Code and held that an
apprenticeship program should first be approved by the DOLE
before an apprentice may be hired, otherwise the person hired will
be considered a regular employee. The Court held:
In the case at bench, the apprenticeship agreement between
petitioner and private respondent was executed on May 28, 1990
allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was
prepared by petitioner and submitted to the Department of Labor
and Employment. However, the apprenticeship agreement was
filed only on June 7, 1990. Notwithstanding the absence of
approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with
the requirements of the law. It is mandated that apprenticeship
agreements entered into by the employer and apprentice
shall be entered only in accordance with the apprenticeship
program duly approved by the Minister of Labor and
Employment.
Prior approval by the Department of Labor and Employment
of the proposed apprenticeship program is, therefore, a
condition sine qua non before an apprenticeship agreement
can be validly entered into.
The act of filing the proposed apprenticeship program with the
Department of Labor and Employment is a preliminary step
towards its final approval and does not instantaneously give rise to
an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to
"establish a national apprenticeship program through the
participation of employers, workers and government and non-
government agencies" and "to establish apprenticeship standards
for the protection of apprentices." To translate such objectives into
existence, prior approval of the DOLE to any apprenticeship
program has to be secured as a condition sine qua non before any
such apprenticeship agreement can be fully enforced. The role of
the DOLE in apprenticeship programs and agreements cannot be
debased.
Hence, since the apprenticeship agreement between petitioner and
private respondent has no force and effect in the absence of a
valid apprenticeship program duly approved by the DOLE, private
respondent’s assertion that he was hired not as an apprentice but
as a delivery boy ("kargador" or "pahinante") deserves credence.
He should rightly be considered as a regular employee of petitioner
as defined by Article 280 of the Labor Code x x x. (Emphasis
supplied)14
Republic Act No. 779615 (RA 7796), which created the TESDA, has
transferred the authority over apprenticeship programs from the
Bureau of Local Employment of the DOLE to the TESDA. 16 RA
7796 emphasizes TESDA’s approval of the apprenticeship
program as a pre-requisite for the hiring of apprentices. Such intent
is clear under Section 4 of RA 7796:
SEC. 4. Definition of Terms. — As used in this Act:
xxx
12
j) "Apprenticeship" training within employment with
compulsory related theoretical instructions involving
a contract between an apprentice and an employer
on an approved apprenticeable occupation;
k) "Apprentice" is a person undergoing training for an
approved apprenticeable occupation during an
established period assured by an apprenticeship
agreement;
l) "Apprentice Agreement" is a contract wherein a
prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for
a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities
of each party;
m) "Apprenticeable Occupation" is an occupation
officially endorsed by a tripartite body and approved for
apprenticeship by the Authority [TESDA]; (Emphasis
supplied)
In this case, the apprenticeship agreement was entered into
between the parties before petitioner filed its apprenticeship
program with the TESDA for approval. Petitioner and Palad
executed the apprenticeship agreement on 17 July 1997 wherein it
was stated that the training would start on 17 July 1997 and would
end approximately in December 1997.17 On 25 July 1997,
petitioner submitted for approval its apprenticeship program, which
the TESDA subsequently approved on 26 September
1997.18 Clearly, the apprenticeship agreement was enforced even
before the TESDA approved petitioner’s apprenticeship program.
Thus, the apprenticeship agreement is void because it lacked prior
approval from the TESDA.
The TESDA’s approval of the employer’s apprenticeship program
is required before the employer is allowed to hire apprentices. Prior
approval from the TESDA is necessary to ensure that only
employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations.19 Thus, under
RA 7796, employers can only hire apprentices for apprenticeable
occupations which must be officially endorsed by a tripartite body
and approved for apprenticeship by the TESDA.1avvphil This is to
ensure the protection of apprentices and to obviate possible
abuses by prospective employers who may want to take
advantage of the lower wage rates for apprentices and circumvent
the right of the employees to be secure in their employment.
The requisite TESDA approval of the apprenticeship program prior
to the hiring of apprentices was further emphasized by the DOLE
with the issuance of Department Order No. 68-04 on 18 August
2004. Department Order No. 68-04, which provides the guidelines
in the implementation of the Apprenticeship and Employment
Program of the government, specifically states that no enterprise
shall be allowed to hire apprentices unless its
apprenticeship program is registered and approved by
TESDA.20
Since Palad is not considered an apprentice because the
apprenticeship agreement was enforced before the TESDA’s
approval of petitioner’s apprenticeship program, Palad is deemed a
regular employee performing the job of a "fish cleaner." Clearly, the
job of a "fish cleaner" is necessary in petitioner’s business as a
tuna and sardines factory. Under Article 28021 of the Labor Code,
an employment is deemed regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer.
Illegal Termination of Palad
We shall now resolve whether petitioner illegally dismissed Palad.
Under Article 27922 of the Labor Code, an employer may terminate
the services of an employee for just causes23 or for authorized
causes.24 Furthermore, under Article 277(b)25 of the Labor Code,
the employer must send the employee who is about to be
terminated, a written notice stating the causes for termination and
must give the employee the opportunity to be heard and to defend
himself. Thus, to constitute valid dismissal from employment, two
requisites must concur: (1) the dismissal must be for a just or
authorized cause; and (2) the employee must be afforded an
opportunity to be heard and to defend himself.26
In this case, the Labor Arbiter held that petitioner terminated Palad
for habitual absenteeism and poor efficiency of performance.
Under Section 25, Rule VI, Book II of the Implementing Rules of
the Labor Code, habitual absenteeism and poor efficiency of
performance are among the valid causes for which the employer
may terminate the apprenticeship agreement after the probationary
period.
However, the NLRC reversed the finding of the Labor Arbiter on
the issue of the legality of Palad’s termination:
As to the validity of complainant’s dismissal in her status as an
apprentice, suffice to state that the findings of the Arbiter that
complainant was dismissed due to failure to meet the standards is
nebulous. What clearly appears is that complainant already passed
the probationary status of the apprenticeship agreement of 200
hours at the time she was terminated on 28 November 1997 which
was already the fourth month of the apprenticeship period of 1000
hours. As such, under the Code, she can only be dismissed for
cause, in this case, for poor efficiency of performance on the job or
in the classroom for a prolonged period despite warnings duly
given to the apprentice.
We noted that no clear and sufficient evidence exist to
warrant her dismissal as an apprentice during the agreed
period. Besides the absence of any written warnings given
to complainant reminding her of "poor performance,"
respondents’ evidence in this respect consisted of an
indecipherable or unauthenticated xerox of the performance
evaluation allegedly conducted on complainant. This is of
doubtful authenticity and/or credibility, being not only
incomplete in the sense that appearing thereon is a
signature (not that of complainant) side by side with a date
indicated as "1/16/98". From the looks of it, this signature is
close to and appertains to the typewritten position of
"Division/Department Head", which is below the signature of
complainant’s immediate superior who made the evaluation
indicated as "11-15-97."
The only conclusion We can infer is that this evaluation was
made belatedly, specifically, after the filing of the case and
during the progress thereof in the Arbitral level, as shown
that nothing thereon indicate that complainant was notified
of the results. Its authenticity therefor, is a big question
mark, and hence lacks any credibility. Evidence, to be
admissible in administrative proceedings, must at least have
a modicum of authenticity. This, respondents failed to comply
with. As such, complainant is entitled to the payment of her wages
for the remaining two (2) months of her apprenticeship
agreement.27 (Emphasis supplied)
Indeed, it appears that the Labor Arbiter’s conclusion that petitioner
validly terminated Palad was based mainly on the performance
evaluation allegedly conducted by petitioner. However, Palad
alleges that she had no knowledge of the performance evaluation
conducted and that she was not even informed of the result of the
alleged performance evaluation. Palad also claims she did not
receive a notice of dismissal, nor was she given the chance to
13
explain. According to petitioner, Palad did not receive the
termination notice because Palad allegedly stopped reporting for
work after being informed of the result of the evaluation.
Under Article 227 of the Labor Code, the employer has the burden
of proving that the termination was for a valid or authorized
cause.28 Petitioner failed to substantiate its claim that Palad was
terminated for valid reasons. In fact, the NLRC found that petitioner
failed to prove the authenticity of the performance evaluation which
petitioner claims to have conducted on Palad, where Palad
received a performance rating of only 27.75%. Petitioner merely
relies on the performance evaluation to prove Palad’s inefficiency.
It was likewise not shown that petitioner ever apprised Palad of the
performance standards set by the company. When the alleged
valid cause for the termination of employment is not clearly proven,
as in this case, the law considers the matter a case of illegal
dismissal.29
Furthermore, Palad was not accorded due process. Even if
petitioner did conduct a performance evaluation on Palad,
petitioner failed to warn Palad of her alleged poor performance. In
fact, Palad denies any knowledge of the performance evaluation
conducted and of the result thereof. Petitioner likewise admits that
Palad did not receive the notice of termination 30 because Palad
allegedly stopped reporting for work. The records are bereft of
evidence to show that petitioner ever gave Palad the opportunity to
explain and defend herself. Clearly, the two requisites for a valid
dismissal are lacking in this case.
WHEREFORE, we AFFIRM the Decision dated 12 November
2001 and the Resolution dated 5 April 2002 of the Court of Appeals
in CA-G.R. SP No. 60379.
SO ORDERED.
G.R. No. 122917 July 12, 1999
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA
E. DAVID, DAVID P. PASCUAL, RAQUEL ESTILLER,
ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O.
AGDON GEORGE P. LIGUTAN JR., CELSO M. YAZAR,
ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M.
TABAQUERO, CORAZON C. DELOS REYES, ROBERT G.
NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO,
DORENDA CANTIMBUHAN, ROBERT MARCELO, LILIBETH
Q. MARMOLEJO, JOSE E. SALES, ISABEL MAMAUAG,
VIOLETA G. MONTES, ALBINO TECSON, MELODY V.
GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA,
LANI R. CORTEZ, MA. ISABEL B. CONCEPCION, DINDO
VALERIO, ZENAIDA MATA, ARIEL DEL PILAR, MARGARET
CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE
CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL,
PINKY BALOLOA, ELIZABETH VENTURA, GRACE S.
PARDO and TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR
EAST BANK AND TRUST COMPANY, respondents.
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified
disabled persons be granted the same terms and conditions of
employment as qualified able-bodied employees. Once they have
attained the status of regular workers, they should be accorded all
the benefits granted by law, notwithstanding written or verbal
contracts to the contrary. This treatments is rooted not merely on
charity or accomodation, but on justice for all.
 The Case
Challenged in the Petition for Certiorari 1 before us is the June 20,
1995 Decision2 of the National Labor Relations Commission
(NLRC), 3 which affirmed the August, 22 1994 ruling of Labor
Arbiter Cornelio L. Linsangan. The labor arbiter's Decision
disposed as follows: 4
WHEREFORE, judgment is hereby rendered
dismissing the above-mentioned complaint for
lack of merit.
Also assailed is the August 4, 1995 Resolution 5 of the NLRC,
which denied the Motion for Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise: 6
Complainants numbering 43 (p. 176, Records)
are deaf-mutes who were hired on various
periods from 1988 to 1993 by respondent Far
East Bank and Trust Co. as Money Sorters and
Counters through a uniformly worded
agreement called "Employment Contract for
Handicapped Workers". (pp. 68 & 69, Records)
The full text of said agreement is quoted
below:
EMPLOYMENT
CONTRACT FOR
HANDICAPPED
WORKERS
This Contract, entered into
by and between:
FAR EAST BANK AND
TRUST COMPANY, a
universal banking
corporation duly organized
and existing under and by
virtue of the laws of the
Philippines, with business
address at FEBTC
Building, Muralla,
Intramuros, Manila,
represented herein by its
Assistant Vice President,
MR. FLORENDO G.
MARANAN, (hereinafter
referred to as the "BANK");
-and-
—————, —————
years old, of legal age,
————, and residing at
(hereinafter referred to as
the ("EMPLOYEE").
WITNESSETH : That
WHEREAS, the BANK,
cognizant of its social
responsibility, realizes that
there is a need to provide
disabled and handicapped
14
persons gainful
employment and
opportunities to realize
their potentials, uplift their
socio-economic well being
and welfare and make
them productive, self-
reliant and useful citizens
to enable them to fully
integrate in the mainstream
of society;
WHEREAS, there are
certain positions in the
BANK which may be filled-
up by disabled and
handicapped persons,
particularly deaf-mutes,
and the BANK ha[s] been
approached by some civic-
minded citizens and
authorized government
agencies [regarding] the
possibility of hiring
handicapped workers for
these positions;
WHEREAS, the
EMPLOYEE is one of
those handicapped
workers who [were]
recommended for possible
employment with the
BANK;
NOW, THEREFORE, for
and in consideration of the
foregoing premises and in
compliance with Article 80
of the Labor Code of the
Philippines as amended,
the BANK and the
EMPLOYEE have entered
into this Employment
Contract as follows:
1. The BANK agrees to
employ and train the
EMPLOYEE, and the
EMPLOYEE agrees to
diligently and faithfully
work with the BANK,
as Money
Sorter and Counter.
2. The EMPLOYEE shall
perform among others, the
following duties and
responsibilities:
i. Sort out
bills
according
color;
ii. Count
each
denominat
n per
hundred,
either
 manually or ii. Five (5)
with the aid days
of a incentive
counting leave.
machine;
iii. SSS
iii. Wrap and premium
label bills payment.
per hundred;
7. The EMPLOYEE binds
iv. Put the himself/herself to abide
wrapped [by] and comply with all the
bills into BANK Rules and
bundles; Regulations and Policies,
and and to conduct
himself/herself in a manner
v. Submit expected of all employees
bundled bills of the BANK.
to the bank
teller for 8. The EMPLOYEE
verification. acknowledges the fact that
he/she had been employed
3. The EMPLOYEE shall under a special
undergo a training period employment program of
of one (1) month, after the BANK, for which
which the BANK shall reason the standard hiring
determine whether or not requirements of the BANK
he/she should be allowed were not applied in his/her
to finish the remaining term case. Consequently, the
of this Contract. EMPLOYEE acknowledges
and accepts the fact that
the terms and conditions of
4. The EMPLOYEE shall
the employment generally
be entitled to an initial
observed by the BANK
compensation of P118.00
with respect to the BANK's
per day, subject to
regular employee are not
adjustment in the sole
applicable to the
judgment of the BANK,
EMPLOYEE, and that
payable every 15th and
therefore, the terms and
end of the
conditions of the
month.1âwphi1.nêt
EMPLOYEE's employment
with the BANK shall be
5. The regular work governed solely and
schedule of the exclusively by this Contract
EMPLOYEE shall be five and by the applicable rules
(5) days per week, from and regulations that the
Mondays thru Fridays, at Department of Labor and
eight (8) hours a day. The Employment may issue in
EMPLOYEE may be connection with the
required to perform employment
overtime work as of disabled and
circumstance may warrant, handicapped workers.
for which overtime work More specifically, the
he/she [shall] be paid an EMPLOYEE hereby
additional compensation of acknowledges that the
125% of his daily rate if provisions of Book Six of
performed during ordinary the Labor Code of the
days and 130% if Philippines as amended,
performed during Saturday particularly on regulation of
or [a] rest day. employment and
separation pay are not
6. The EMPLOYEE shall applicable to him/her.
likewise be entitled to the
following benefits: 9. The Employment
Contract shall be for a
i. period of six (6) months or
Proportionat from —— to —— unless
e 13th earlier terminated by the
month pay BANK for any just or
based on his reasonable cause. Any
basic daily continuation or extension
wage.
15
 of this Contract shall be in
writing and therefore this
Contract will automatically
expire at the end of its
terms unless renewed in
writing by the BANK.
counting and sorting of bills in banking
operations.
Petitioners specified when each of them was hired and
dimissed, viz: 7

IN WITNESS WHEREOF,
NAME OF PETITIONER WORKPLACE Date Hired D
the parties, have hereunto
affixed their signature[s]
this —— day of ———,
——— at1.Intramuros,
MARITES BERNARDO Intramuros 12-Nov-90
Manila, Philippines.

In 1988, two (2) deaf-mutes were hired under

2. ELVIRA
this Agreement; in 1989 another two (2);GO
in DIAMANTE Intramuros 24-Jan-90
1990, nineteen (19); in 1991 six (6); in 1992,
six (6) and in 1993, twenty-one (21). Their
employment[s] were renewed3.every six months
REBECCA E. DAVID Intramuros 16-Apr-90
such that by the time this case arose, there
were fifty-six (56) deaf-mutes who were
employed by respondent under the said
employment agreement. The 4. lastDAVID
one was
P. PASCUAL Bel-Air 15-Oct-88
Thelma Malindoy who was employed in 1992
and whose contract expired on July 1993.

xxx xxx xxx5. RAQUEL ESTILLER Intramuros 2-Jul-92

Disclaiming that complainants were regular

employees, respondent Far East Bank and
6. ALBERT HALLARE West 4-Jan-91
Trust Company maintained that complainants
who are a special class of workers — the
hearing impaired employees were hired
7. EDMUND M. CORTEZ
temporarily under [a] special employment Bel-Air 15-Jan-91
arrangement which was a result of overtures
made by some civic and political personalities
to the respondent Bank; that complainant[s]
8. JOSELITO O. AGDON Intramuros 5-Nov-90
were hired due to "pakiusap" which must be
considered in the light of the context career
and working environment which is to maintain
and strengthen a corps of professionals
9. GEORGE trained
P. LIGUTAN JR. Intramuros 6-Sep-89
and qualified officers and regular employees
who are baccalaureate degree holders from
excellent schools which is an unbending policy
10. CELSO
in the hiring of regular employees; that in M. YAZAR Intramuros 8-Feb-93
addition to this, training continues so that the
regular employee grows in the corporate
ladder; that the idea of hiring handicapped
11. ALEX
only onG.aCORPUZ Intramuros 15-Feb-93
workers was acceptable to them
special arrangement basis; that it was adopted
the special program to help tide over a group
of workers such as deaf-mutes 12.like the
RONALD M. DELFIN Intramuros 22-Feb-93
complainants who could do manual work for
the respondent Bank; that the task of counting
and sorting of bills which was being performed
by tellers could be assigned to13.deaf-mutes
ROWENAthat M. TABAQUERO Intramuros 22-Feb-93
the counting and sorting of money are tellering
works which were always logically and
naturally part and parcel of the tellers' normal
14. CORAZON
functions; that from the beginning there have C. DELOS REYES Intramuros 8-Feb-93
been no separate items in the respondent
Bank plantilla for sortes or counters; that the
tellers themselves already did15. theROBERT
sorting and G. NOORA Intramuros 15-Feb-93
counting chore as a regular feature and
integral part of their duties (p. 97, Records);
that through the "pakiusap" of Arturo Borjal, the
tellers were relieved of this task
16.ofMILAGROS
counting O. LEQUIGAN Intramuros 1-Feb-93
and sorting bills in favor of deaf-mutes without
creating new positions as there is no position
either in the respondent or in any other bank in
the Philippines which deals with 17.purely
ADRIANA F. TATLONGHARI Intramuros 22-Jan-93

16
 36. THELMA SEBASTIAN Intramuros 12-Nov-90

UCOS Intramuros 37. MA. JEANETTE CERVANTES

24-Feb-93 West 6-Jun-92

ELLO Intramuros 22-Feb-93 Intramuros 23-Apr-90

ATIMBUHAN Intramuros 39. ROZAIDA15-Feb-93

PASCUAL Bel-Air 20-Apr-89

RCELO West 40. PINKY BALOLOA

31 JUL 93 8 West 3-Jun-91

MARMOLEJO West 41. ELIZABETH VENTURA

15-Jun-90 West 12-Mar-90

ES West 42. GRACE S.6-Aug-92

PARDO West 4-Apr-90

AUAG West 8-May-92 Intramuros 28-Apr-93

MONTES Intramuros 2-Feb-90 As earlier noted, the labor arbiter and, on appeal, the NLRC ruled
against herein petitioners. Hence, this recourse to this Court. 9

The Ruling of the NLRC

SON Intramuros 7-Nov-91
In affirming the ruling of the labor arbiter that herein petitioners
could not be deemed regular employees under Article 280 of the
GRUELA West 28-Oct-91 Labor Code, as amended, Respondent Commission ratiocinated
as follows:

We agree that Art. 280 is not controlling herein.

D. AGERO West 19-Dec-90 We give due credence to the conclusion that
complainants were hired as an accommodation
to [the] recommendation of civic oriented
VERA Bel-Air 26-Jun-90 personalities whose employment[s] were
covered by . . . Employment Contract[s] with
special provisions on duration of contract as
specified under Art. 80. Hence, as correctly
TEZ Bel-Air 15-Oct-88 held by the Labor Arbiter a quo, the terms of
the contract shall be the law between the
parties. 10

L B.CONCEPCION West 6-Sep-90 The NLRC also declared that the Magna Carta for Disabled
Persons was not applicable, "considering the prevailing
circumstances/milieu of the case."
RIO Intramuros 30-May-93
Issues

In their Memorandum, petitioners cite the following grounds in

TA Intramuros 10-Feb-93
support of their cause:

I. The Honorable Commission committed grave

LAR Intramuros 24-Feb-93 abuse of discretion in holding that the
petitioners — money sorters and counters
working in a bank — were not regular
employees.
CECILIA CANOZA Intramuros 27-Jul-90
II. The Honorable Commission committed
grave abuse of discretion in holding that the
employment contracts signed and renewed by
17
 the petitioners — which provide for a period of
six (6) months — were valid.
III. The Honorable Commission committed
grave abuse of discretion in not applying the
provisions of the Magna Carta for the Disabled
(Republic Act No. 7277), on proscription
against discrimination against disabled
persons. 11
In the main, the Court will resolve whether petitioners have
become regular employees.
This Court's Ruling
The petition is meritorious. However, only the employees, who
worked for more than six months and whose contracts were
renewed are deemed regular. Hence, their dismissal from
employement was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a
review of the findings of facts of the NLRC is not allowed in a
petition for certiorari. Specifically, it maintains that the Court cannot
pass upon the findings of public respondent that petitioners were
not regular employees.
True, the Court, as a rule, does not review the factual findings of
public respondents in a certiorari proceeding. In resolving whether
the petitioners have become regular employees, we shall not
change the facts found by the public respondent. Our task is
merely to determine whether the NLRC committed grave abuse of
discretion in applying the law to the established facts, as above-
quoted from the assailed Decision.
Main Issue
Are Petitioners Regular Employee?
Petitioners maintain that they should be considered regular
employees, because their task as money sorters and counters was
necessary and desirable to the business of respondent bank. They
further allege that their contracts served merely to preclude the
application of Article 280 and to bar them from becoming regular
employees.
Private respondent, on the other hand, submits that petitioners
were hired only as "special workers and should not in any way be
considered as part of the regular complement of the
Bank." 12 Rather, they were "special" workers under Article 80 of
the Labor Code. Private respondent contends that it never solicited
the services of petitioners, whose employment was merely an
"accommodation" in response to the requests of government
officials and civic-minded citizens. They were told from the start,
"with the assistance of government representatives," that they
could not become regular employees because there were no
plantilla positions for "money sorters," whose task used to be
performed by tellers. Their contracts were renewed several times,
not because of need "but merely for humanitarian reasons."
Respondent submits that "as of the present, the "special position"
that was created for the petitioners no longer exist[s] in private
respondent [bank], after the latter had decided not to renew
anymore their special employment contracts."
At the outset, let it be known that this Court appreciates the nobility
of private respondent's effort to provide employment to physically
18
impaired individuals and to make them more productive members
of society. However, we cannot allow it to elude the legal
consequences of that effort, simply because it now deems their
employment irrelevant. The facts, viewed in light of the Labor Code
and the Magna Carta for Disabled Persons, indubitably show that
the petitioners, except sixteen of them, should be deemed regular
employees. As such, they have acquired legal rights that this Court
is duty-bound to protect and uphold, not as a matter of compassion
but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that
they shall be trained for a period of one month, after which the
employer shall determine whether or not they should be allowed to
finish the 6-month term of the contract. Furthermore, the employer
may terminate the contract at any time for a just and reasonable
cause. Unless renewed in writing by the employer, the contract
shall automatically expire at the end of the term. 1âwphi1.nêt
According to private respondent, the employment contracts were
prepared in accordance with Article 80 of the Labor code, which
provides;
Art. 80. Employment agreement. — Any
employer who employs handicapped workers
shall enter into an employment agreement with
them, which agreement shall include:
(a) The names and
addresses of the
handicapped workers to be
employed;
(b) The rate to be paid the
handicapped workers
which shall be not less
than seventy five (75%)
per cent of the applicable
legal minimum wage;
(c) The duration of
employment period; and
(d) The work to be
performed by handicapped
workers.
The employment agreement shall be subject to
inspection by the Secretary of Labor or his duly
authorized representatives.
The stipulations in the employment contracts indubitably conform
with the aforecited provision. Succeeding events and the
enactment of RA No. 7277 (the Magna Carta for Disabled
Persons), 13 however, justify the application of Article 280 of the
Labor Code.
Respondent bank entered into the aforesaid contract with a total of
56 handicapped workers and renewed the contracts of 37 of them.
In fact, two of them worked from 1988 to 1993. Verily, the renewal
of the contracts of the handicapped workers and the hiring of
others lead to the conclusion that their tasks were beneficial and
necessary to the bank. More important, these facts show that they
were qualified to perform the responsibilities of their positions. In
other words, their disability did not render them unqualified or unfit
for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates
that a qualified disabled employee should be given the same terms
and conditions of employment as a qualified able-bodied person.
Section 5 of the Magna Carta provides:
 Sec. 5. Equal Opportunity for Employment. —
No disabled person shall be denied access to
opportunities for suitable employment. A
qualified disabled employee shall be subject to
the same terms and conditions of employment
and the same compensation, privileges,
benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.
The fact that the employees were qualified disabled persons
necessarily removes the employment contracts from the ambit of
Article 80. Since the Magna Carta accords them the rights of
qualified able-bodied persons, they are thus covered by Article 280
of the Labor Code, which provides:
Art. 280. Regular and Casual Employment. —
The provisions of written agreement to the
contrary notwithstanding and regardless of the
oral agreement of the parties, an employment
shall be deemed to be regular where the
employee has been engaged to perform
activities which are usually necessary or
desirable in the usual business or trade of the
employer, except where the employment has
been fixed for a specific project or undertaking
the completion or termination of which has
been determined at the time of the
engagement of the employee or where the
work or services to be performed is seasonal in
nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual
if it is not covered by the preceding paragraph:
Provided, That, any employee who has
rendered at least one year of service, whether
such service is continuous or broken, shall be
considered as regular employee with respect
to the activity in which he is employed and his
employment shall continue while such activity
exists.
The test of whether an employee is regular was laid down in De
Leon v. NLRC, 14 in which this Court held:
The primary standard, therefore, of
determining regular employment is the
reasonable connection between the particular
activity performed by the employee in relation
to the usual trade or business of the employer.
The test is whether the former is usually
necessary or desirable in the usual business or
trade of the employer. The connection can be
determined by considering the nature of the
work performed and its relation to the scheme
of the particular business or trade in its
entirety. Also if the employee has been
performing the job for at least one year, even if
the performance is not continuous and merely
intermittent, the law deems repeated and
continuing need for its performance as
sufficient evidence of the necessity if not
indispensibility of that activity to the business.
Hence, the employment is considered regular,
but only with respect to such activity, and while
such activity exist.
Without a doubt, the task of counting and sorting bills is necessary
and desirable to the business of respondent bank. With the
exception of sixteen of them, petitioners performed these tasks for
more than six months. Thus, the following twenty-seven petitioners
19
should be deemed regular employees: Marites Bernardo, Elvira Go
Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller,
Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P.
Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag,
Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D.
Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion,
Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette
Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa,
Elizabeth Ventura and Grace S. Pardo.
As held by the Court, "Articles 280 and 281 of the Labor Code put
an end to the pernicious practice of making permanent casuals of
our lowly employees by the simple expedient of extending to them
probationary appointments, ad infinitum."15 The contract signed by
petitioners is akin to a probationary employment, during which the
bank determined the employees' fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary
period, the employees thereby became regular employees. 16 No
employer is allowed to determine indefinitely the fitness of its
employees.
As regular employees, the twenty-seven petitioners are entitled to
security of tenure; that is, their services may be terminated only for
a just or authorized cause. Because respondent failed to show
such cause, 17 these twenty-seven petitioners are deemed illegally
dismissed and therefore entitled to back wages and reinstatement
without loss of seniority rights and other privileges. 18 Considering
the allegation of respondent that the job of money sorting is no
longer available because it has been assigned back to the tellers
to whom it originally belonged, 18 petitioners are hereby awarded
separation pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are not
deemed regular employees and hence not entitled to the same
benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora 21 in which the
Court upheld the validity of an employment contract with a fixed
term, argues that the parties entered into the contract on equal
footing. It adds that the petitioners had in fact an advantage,
because they were backed by then DSWD Secretary Mita Pardo
de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised
on the fact that the petitioners were disabled, and that the bank
had to determine their fitness for the position. Indeed, its validity is
based on Article 80 of the Labor Code. But as noted earlier,
petitioners proved themselves to be qualified disabled persons
who, under the Magna Carta for Disabled Persons, are entitled to
terms and conditions of employment enjoyed by qualified able-
bodied individuals; hence, Article 80 does not apply because
petitioners are qualified for their positions. The validation of the
limit imposed on their contracts, imposed by reason of their
disability, was a glaring instance of the very mischief sought to be
addressed by the new law.
Moreover, it must be emphasized that a contract of employment is
impressed with public interest. 22 Provisions of applicable statutes
are deemed written into the contract, and the "parties are not at
liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with
each other." 23Clearly, the agreement of the parties regarding the
period of employment cannot prevail over the provisions of the
Magna Carta for Disabled Persons, which mandate that petitioners
must be treated as qualified able-bodied employees.
Respondent's reason for terminating the employment of petitioners
is instructive. Because the Bangko Sentral ng Pilipinas (BSP)
required that cash in the bank be turned over to the BSP during
business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to
nighttime sorting and counting of money. Thus, it reasons that this
task "could not be done by deaf mutes because of their physical
limitations as it is very risky for them to travel at night." 24 We find
no basis for this argument. Travelling at night involves risks to
handicapped and able-bodied persons alike. This excuse cannot
justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely "accommodated"
employees. This fact does not change the nature of their
employment. As earlier noted, an employee is regular because of
the nature of work and the length of service, not because of the
mode or even the reason for hiring them.
Equally unavailing are private respondent's arguments that it did
not go out of its way to recruit petitioners, and that its plantilla did
not contain their positions. In L. T. Datu v. NLRC, 25 the Court held
that "the determination of whether employment is casual or regular
does not depend on the will or word of the employer, and the
procedure of hiring . . . but on the nature of the activities performed
by the employee, and to some extent, the length of performance
and its continued existence."
Private respondent argues that the petitioners were informed from
the start that they could not become regular employees. In fact, the
bank adds, they agreed with the stipulation in the contract
regarding this point. Still, we are not persuaded. The well-settled
rule is that the character of employment is determined not by
stipulations in the contract, but by the nature of the work
performed. 26 Otherwise, no employee can become regular by the
simple expedient of incorporating this condition in the contract of
employment.
In this light, we iterate our ruling in Romares v. NLRC: 27
Art. 280 was emplaced in our statute books to
prevent the circumvention of the employee's
right to be secure in his tenure by
indiscriminately and completely ruling out all
written and oral agreements inconsistent with
the concept of regular employment defined
therein. Where an employee has been
engaged to perform activities which are usually
necessary or desirable in the usual business of
the employer, such employee is deemed a
regular employee and is entitled to security of
tenure notwithstanding the contrary provisions
of his contract of employment.
xxx xxx xxx
At this juncture, the leading case of Brent
School, Inc. v. Zamora proves instructive. As
reaffirmed in subsequent cases, this Court has
upheld the legality of fixed-term employment. It
ruled that the decisive determinant in "term
employment" should not be the activities that
the employee is called upon to perform but the
day certain agreed upon the parties for the
commencement and termination of their
employment relationship. But this Court went
on to say that where from the circumstances it
is apparent that the periods have been
imposed to preclude acquisition of tenurial
security by the employee, they should be
20
struck down or disregarded as contrary to
public policy and morals.
In rendering this Decision, the Court emphasizes not only the
constitutional bias in favor of the working class, but also the
concern of the State for the plight of the disabled. The noble
objectives of Magna Carta for Disabled Persons are not based
merely on charity or accommodation, but on justice and the equal
treatment of qualified persons, disabled or not. In the present case,
the handicap of petitioners (deaf-mutes) is not a hindrance to their
work. The eloquent proof of this statement is the repeated renewal
of their employment contracts. Why then should they be dismissed,
simply because they are physically impaired? The Court believes,
that, after showing their fitness for the work assigned to them, they
should be treated and granted the same rights like any other
regular employees.
In this light, we note the Office of the Solicitor General's prayer
joining the petitioners' cause. 28
WHEREFORE, premises considered, the Petition is hereby
GRANTED. The June 20, 1995 Decision and the August 4, 1995
Resolution of the NLRC are REVERSED and SET ASIDE.
Respondent Far East Bank and Trust Company is hereby
ORDERED to pay back wages and separation pay to each of the
following twenty-seven (27) petitioners, namely, Marites Bernardo,
Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel
Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon,
George P. Ligutan Jr., Liliberh Q. Marmolejo, Jose E. Sales, Isabel
Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela,
Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel
B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky
Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is
hereby directed to compute the exact amount due each of said
employees, pursuant to existing laws and regulations, within fifteen
days from the finality of this Decision. No costs.1âwphi1.nêt
SO ORDERED.
G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL BANK, petitioner,
vs.
PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION
(PEMA) and COURT OF INDUSTRIAL
RELATIONS, respondents.
Conrado E. Medina, Edgardo M. Magtalas and Nestor Kalaw for
petitioner.
Leon O. Ty, Gesmundo Fernandez & Zulueta, Oliver B. Gesmundo
and Israel Bocobo for respondents.
BARREDO, J.:
Appeal by the Philippine National Bank from the decision of the
trial court of the Court of Industrial Relations in Case No. IPA-53
dated August 5, 1967 and affirmed en banc by said court on
January 15, 1968.
This case started on January 28, 1965 in consequence of the
certification of the President of the Philippines of an industrial
dispute between the Philippine National Bank Employees
Association (PEMA, for short), on the one hand, and the Philippine
National Bank (PNB, for short), on the other, which arose from no
more than the alleged failure of the PNB to comply with its
commitment of organizing a Committee on Personnel Affairs to
take charge of screening and deliberating on the promotion of
employees covered by the collective bargaining agreement then in
force between the said parties. On January 28, 1965, the Industrial
Court issued an order aimed at settling the dispute temporarily
between the parties, which was certified by the President.
Pertinent portions of the order read thus:
xxx xxx xxx
1. That in order to settle the strike and for the
employees to return to work immediately
starting January 29, 1965, the Committee on
Personnel Affairs is hereby created to start
functioning on February 1, 1965;
xxx xxx xxx
f. That in return for this
concession, an injunction
against future strikes or
lockouts shall be issued by
the Court to last for a
period of six months but
which shall terminate even
before that period should
all disputes of the parties
be already resolved; (Page
84, Record.)
According to the very decision now on appeal, "on May 22, 1965,
petitioner (private respondent herein) filed another pleading
submitting to this Court for determination certain matters which it
claims cannot be resolved by the parties, which are as follows:
First Cause of Action
a. In a Resolution No. 1162 dated September
16, 1957, the Respondent's Board of Directors
approved a revision of the computation of
overtime pay retroactive as of July 1, 1954,
and authorized a recomputation of the regular
one- hour and extra overtime already rendered
by all officers and employees of the
Respondent Bank.
The details of the benefits involved in said
Resolution are contained in a Memorandum of
the Respondent Bank dated September 18,
1957.
b. Since the grant of the benefits in question,
the employees of the Respondent, represented
by the petitioner, have always considered them
to be a part of their salaries and/or fringe
benefits; nevertheless, the Respondent, in
1963, without just cause, withdrew said
benefits and in spite of repeated demands
refused, and still refuses to reinstate the same
up to the present.
Second Cause of Action
c. After the promulgation of the Decision in
National Waterworks and Sewerage Authority
vs. NAWASA Consolidated Unions, et al. G.R.
No. L-18938, Aug. 31, 1964, the Petitioner has
repeatedly requested Respondent that the cost
of living allowance and longevity pay be taken
into account in the computation of overtime
pay, effective as of the grant of said benefits on
21
January 1, 1958, in accordance with the ruling
in said Decision of the Supreme Court.
d. Until now Respondent has not taken any
concrete steps toward the payment of the
differential overtime and nighttime pays arising
from the cost of living allowance and longevity
pay.
xxx xxx xxx
Respondent in its answer of June 7, 1965 took exception to this
mentioned petition on several grounds, namely, (1) the said
alleged causes of action were not disputes existing between the
parties, (2) the same are mere money claims and therefore not
within this Court's jurisdiction, and (3) that the parties have not so
stipulated under the collective bargaining agreement between
them, or the same is premature as the pertinent collective
bargaining agreement has not yet expired." (Pp. 84-86, Record.) 1
Resolving the issues of jurisdiction and prematurity thus raised by
PNB, the court held:
As to the first ground, it is well to note that this
Court in its Order of January 28, 1965 has
enjoined the parties not to strike or lockout for
a period of six (6) months starting from said
date. In a very definite sense the labor
disputes between the parties have been given
a specific period for the settlement of their
differences. The fact that thereafter the
question of the manner of payment of overtime
pay is being put in issue, appears to indicate
that this was a part of the labor dispute. If we
are to consider that this question, particularly
the second cause of action, has in fact existed
as early as 1958, shows the necessity of
resolving the same now. And the same would
indeed be an existing issue considering that
the present certification came only in 1965.
It is further to be noted that the presidential
certification has not limited specific areas of
the labor dispute embraced within the said
certification. It speaks of the existence of a
labor dispute between the parties and of a
strike declared by the PEMA, for which the
Court has been requested to take immediate
steps in the exercise of its powers under the
law.
Even on the assumption that the present issue
is not one embraced by the presidential
certification or it is an issue presented by one
party on a cause arising subsequent to the
certification, the same would still be subject to
the jurisdiction of this Court. In "Apo Cement
Workers Union versus Cebu Portland Cement",
Case No. 11 IPA (G.R. No. L-12451, July 10,
1957), the Court en banc (where this Sala has
taken an opposite view) upheld its jurisdiction
under the circumstances just enumerated. It
would seem that this question has been further
settled by our Supreme Court in "National
Waterworks & Sewerage Authority vs.
NAWASA Consolidated Unions, et al." (supra),
which we quote in part:
xxx xxx xxx
4. Petitioner's claim that the issue of overtime
compensation not having been raised in the
original case but merely dragged into it by
intervenors, respondent Court cannot take
cognizance thereof under Section 1, Rule 13 of
the Rules of Court.
xxx xxx xxx
... The fact that the question of overtime
payment is not included in the principal case in
the sense that it is not one of the items of
dispute certified to by the President is of no
moment, for it comes within the sound
discretion of the Court of Industrial Relations.
Moreover, in labor disputes technicalities of
procedure should as much as possible be
avoided not only in the interest of labor but to
avoid multiplicity of action. This claim has no
merit.
xxx xxx xxx
As to the objection posed that the issues are
mere money claims, there appears to be no
ground for the same. In the first place,
although the same involves a claim for
additional compensation it is also a part of the
labor dispute existing between the parties and
subject to the compulsory arbitration powers of
the Court, pursuant to Section 10 of Rep. Act
No. 875. In the second place, on the basis of
the so-called PRISCO doctrine (G.R. No. L-
13806, May 23,.1960), there is an existing and
current employer-employee relationship
between the respondent and the members of
petitioner union, for whom the additional
overtime compensation is claimed.
With respect to ground three of the answer on
which objection is based, on C.A. 444, as
amended, Section 6 thereof, provides as
follows:
'Any agreement or contract
between the employer and
the laborer or employee
contrary to the provisions
of this Act shall be null and
void ab initio'.
The instant action is partially subject to the
provisions of Commonwealth Act 444, as
amended. Even if, the parties have stipulated
to the extent that overtime will not be paid, the
same will not be binding. More so under the
present circumstances, where the only
question is the correctness of the computation
of the overtime payments.
While the Court notes that the first cause of
action has become moot and academic in view
of the compliance by respondent, hence there
is no further need to resolve the same (t.s.n.,
pp. 5-7, August 16, 1965), the settlement of
said first cause of action further strengthens
the view that the second cause of action is
indeed an existing dispute between the parties.
Both causes of fiction involve overtime
questions. Both stem from dates well beyond
and before the presidential certification of the
22
present proceedings. If respondent has been fit
to take steps to expedite and resolve, without
court intervention, the first cause of action, it
cannot deny the existence of the second cause
of action as the first and second appear to be
interrelated matters. (Pp. 86-89, Record)
And We agree that the foregoing holding is well taken. It would be
more worthwhile to proceed to the basic issues immediately than
to add anything more of Our own discourse to the sufficiently
based disposition of the court a quo of the above- mentioned
preliminary questions.
After discussing the pros and cons on the issue involved in the
second cause of action as to whether or not the cost-of-living
allowance otherwise denominated as equity pay and longevity pay
granted by the bank, the first beginning January 1, 1958 and the
latter effective July 1, 1961, should be included in the computation
of overtime-pay, the court granted the demands of PE MA, except
the additional rate of work for night pay, and rendered the following
judgment:
WHEREFORE, in view of the foregoing, this
Court hereby promulgates the following:
1. The respondent Philippine National Bank is
hereby required to pay overtime and nighttime
rates to its employees from January 28, 1962;
and such overtime compensation shall be
based on the sum total of the employee's basic
salary or wage plus cost of living allowance
and longevity pay under the following
schedule:
'a. Overtime services
rendered shall be paid at
the rate of time and one-
third, but overtime work
performed between 6:00
P.M. and 6- .00 A.M. shall
be paid at the rate of 150%
or 50% beyond the regular
rate;
'b. The rate for work
performed in the night shift,
or during the period from
6:00 P.M. to 6:00 A.M. shall
be compensated at the
rate of 150% or 50%
beyond the regular rate,
provided the work
performed involved a
definite night shift and not
merely a continuation by
way of overtime of the
regular and established
hours of the respondent
Bank.
2. The Chief of the Examining Division of the
Court or any of his duly designated
representatives is hereby ordered to compute
the overtime rates due each employee of the
respondent Bank from January 28, 1962, in
accordance with the above determination; and
to complete the same within a period of sixty
(60) days from receipt of this Order. However,
considering that the Philippine National Bank is
a government depository, and renders and
performs functions distinct and unique; and,
 while it may be a banking institution, its
relationship with other government agencies
and the public is such that it has no basis for
comparison with other banking institutions
organized under the corporation law or special
charter. To require it to pay immediately the
liability after the exact amount shall have been
determined by the Court Examiner and duly
approved by the Court, as in other cases,
would work undue hardship to the whole
government machinery, not to mention the
outstanding foreign liabilities and outside
commitments, if any. Moreover, the records
show that this case was initiated long before
the taking over of the incumbent bank officials.
Accordingly, the Court feels that the payment
shall be subject to the negotiations by the
parties as to time, amount, and duration.
The Court may intervene in said negotiations
for the purpose of settling once and for all this
case to maintain industrial peace pursuant to
Section 13 of Commonwealth Act 103, as
amended, if desired, however by the parties.
After all this is not an unfair labor practice
case.
SO ORDERED. (Pp. 98-100, Record.)
In connection with the above decision, two interesting points
appear at once to be of determinative relevance:
The first is that in upholding its jurisdiction to take cognizance of
the demand in question about cost-of-living allowance and
longevity pay, the Industrial Court carefully noted that it was not
resolving a petition for declaratory relief in the light of the decision
of this Court in NAWASA vs. NAWASA Consolidated Unions, G.R.
No. L- 18938, August 31, 1964, 11 SCRA 766. Thus the decision
under review states:
Incidentally, the present action is not one for
declaratory relief as to the applicability of a
judicial decision to the herein parties. A careful
perusal of the pleadings indicates that what is
being sought is the payment of differential
overtime and nighttime pay based on existing
law and jurisprudence. The cause of action is
not anchored on any decision of any court but
on provisions of the law which have been in
effect at the time of the occurrence of the
cause of the action in relation to a labor
dispute. Hence, this is not a petition for
declaratory relief. (Pp. 94-95, Record.)
The second refers to a subsequent decision of the same Industrial
Court in Shell Oil Workers Union vs. Shell Co., et al., Case No.
2410-V and Shell & Affiliates Supervisors Union vs. Shell
Company of the Philippines, et al., Case No. 2411- V, in which the
court made an explanatory discourse of its understanding of the
NAWASA ruling, supra, and on that basis rejected the claim of the
workers. In brief, it held that (1) NAWASA does not apply where
the collective bargaining agreement does not provide for the
method of computation of overtime pay herein insisted upon by
private respondent PEMA and (2) the fact-situation in the Shell
cases differed from that of NAWASA, since the sole and definite
ratio decidendi in NAWASA was merely that inasmuch as Republic
Act 1880 merely fixed a 40-hour 5-day work for all workers,
laborers and employees including government-owned corporations
like NAWASA, the weekly pay of NAWASA workers working more
23
than five days a week should remain intact; with overtime pay in
excess of eight hours work and 25 % additional compensation on
Sundays. There was no pronouncement at all therein regarding the
basis of the computation of overtime pay in regard to bonuses and
other fringe benefits.
For being commendably lucid and comprehensive, We deem it
justified to quote from that Shell decision:
The main issue:
The Unions appear to have read the NAWASA
case very broadly. They would want it held that
in view of the said ruling of the Supreme Court,
employers and employees must, even in the
face of existing bargaining contracts providing
otherwise, determine the daily and hourly rates
of employees in this manner: Add to basic pay
all the money value of all fringe benefits
agreed upon or already received by the
workers individually and overtime pay shall be
computed thus —
Basic yearly Rate plus Value of all Fringe
Benefits divided by number of days worked
during the year equals daily wage; Daily wage
divided by 8 equals hourly rate. Hourly rate
plus premium rate equals hourly overtime rate.
The NAWASA case must be viewed to
determine whether it is that broad. NAWASA
case must be understood in its setting. The
words used by the Supreme Court in its
reasoning should not be disengaged from the
fact-situation with which it was confronted and
the specific question which it was there
required to decide. Above all care should be
taken not to lose sight of the truth that the facts
obtaining, the issue settled, and the law
applied in the said case, and these, though
extractable from the records thereof as
material in the resolution herein, were, as they
are, primarily declarative of the rights and
liabilities of the parties involved therein.
Recourse to the records of the NAWASA case
shows that the fact- situation, as far as can be
materially connected with the instant case, is
as follows:
In view of the enactment of
Rep. Act 1880, providing
that the legal hours of work
for government employees,
(including those in
government-owned or
controlled corporations)
shall be eight (8) hours a
day for five (5) days a
week or forty (40) hours a
week, its implementation
by NAWASA was disputed
by the Union. The workers
affected were those who,
for a period of three (3)
months prior to or
immediately preceding the
implementation of Rep. Act
1880, were working seven
(7) days a week and were
continuously receiving 25%
 Sunday differential pay.
The manner of computing
or determining the daily
rate of monthly salaried
employees.
And the Supreme Court, specifically laid out
the issue to be decided, as it did decide, in the
NAWASA, as follows:
7. and 8. How is a daily wage of a weekly
employee computed in the light of Republic Act
1880?'(G.R. L-18938)
Resolving the above issue, it was held;
According to petitioner, the
daily wage should be
computed exclusively on
the basic wage without
including the automatic
increase of 25%
corresponding to the
Sunday differential. To
include said Sunday
differential would be to
increase the basic pay
which is not contemplated
by said Act. Respondent
court disagrees with this
manner of computation. lt
holds that Republic Act
1880 requires that the
basic weekly wage and the
basic monthly salary
should not be diminished
notwithstanding the
reduction in the number of
working days a week. If the
automatic increase
corresponding to the salary
differential should not be
included there would be a
diminution of the weekly
wage of the laborer
concerned. Of course, this
should only benefit those
who have been working
seven days a week and
had been regularly
receiving 25% additional
compensation for Sunday
work before the effectivity
of the Act.
It is thus necessary to analyze the Court's
rationale in the said NAWASA case, 'in the light
of Rep. Act 1880', and the 'specific corollaries'
discussed preparatory to arriving at a final
conclusion on the main issue. What was
required to be done, by way of implementing
R. A. 1880? The statute directs that working
hours and days of government employees
(including those of government owned and
controlled proprietary corporations) shall be
reduced to five days-forty hours a week. But,
the same law carried the specific proviso,
designed to guard against diminution of
salaries or earnings of affected employees.
The Supreme Court itself clearly spelled this
out in the following language: 'It is evident that
24
Republic Act 1880 does not intend to raise the
wages of the employees over what they are
actually receiving. Rather, its purpose is to limit
the working days in a week to five days, or to
40 hours without however permitting any
reduction in the weekly or daily wage of the
compensation which was previously
received. ...
If the object of the law was to keep intact, (not
either to increase it or decrease it) it is but
natural that the Court should concern itself, as
it did, with the corollary, what is the weekly
wage of worker who, prior to R.A. 1880, had
been working seven (7) days a week and
regularly receiving differential payments for
work on Sundays or at night? It seems clear
that the Court was only concerned in
implementing correctly R.A. 1880 by ensuring
that in diminishing the working days and hours
of workers in one week, no diminution should
result in the worker's weekly or daily wage.
And, the conclusion reached by the Supreme
Court was to affirm or recognize the
correctness of the action taken by the industrial
court including such differential pay in
computing the weekly wages of these
employees and laborers who worked seven
days a week and were continuously receiving
25% Sunday differential for a period of three
months immediately preceding the
implementation of R.A. 1880.' Nothing was
said about adding the money value of some
other bonuses or allowances or money value
of other fringe benefits, received outside the
week or at some other periods. That was not
within the scope of the issue before the Court.
in fact, the limited application of the decision is
expressed in the decision itself. The resolution
of this particular issue was for the benefit of
only a segment of the NAWASA employees.
Said the Court 'Of course, this should only
benefit those who have been working seven
days a week and had been regularly receiving
25% additional compensation for Sunday work
before the effectivity of the Act.'
Unions make capital of the following
pronouncement of the Supreme Court in the
NAWASA case:
It has been held that for
purposes of computing
overtime compensation a
regular wage includes all
payments which the parties
have agreed shall be
received during the work
week, including piece-work
wages, differential
payments for working at
undesirable times, such as
at night or on Sundays and
holidays, and the cost of
board and lodging
customarily furnished the
employee (Walling v.
Yangerman-Reynolds
Hardwook Co., 325 U.S.
419; Walling v.
Harischfeger Corp. 325
U.S. 427). The 'Regular
 rate of pay also ordinarily
includes incentive bonus or
profit- sharing payments
made in addition to the
normal basic pay (56
C.J.S., pp. 704-705), and it
was also held that the
higher rate for night,
Sunday and holiday work
is just as much as regular
rate as the lower rate for
daytime work. The higher
rate is merely an
inducement to accept
employment at times which
are not at desirable form a
workman's standpoint
(International L. Ass'n.
Wise 50 F. Supp. 26,
affirmed C.C.A. Carbunao
v. National Terminals Corp.
139 F. 853).
But this paragraph in the decision appears to
have been used and cited by the Court to
sustain the action of the court a quo: that it was
correct to include the 25% Sunday premium for
the purpose of setting the weekly wage of
specified workers whose weekly earnings
before the passage of R.A. 1880 would be
diminished, if said premium pay regularly
received for three months were not included. It
is significant that the citations therein used by
the Supreme Court are excerpts from
American decisions whose legislation on
overtime is at variance with the law in this
jurisdiction in this respect: the U.S. legislation
considers work in excess of forty hours a week
as overtime; whereas, what is generally
considered overtime in the Philippines is work
in excess 'of the regular 8-hours a day. It is
understandably material to refer to precedents
in the U.S. for purposes of computing weekly
wages under a 40- hour a week rule, since the
particular issue involved in NAWASA is the
conversion of prior weekly regular earnings
into daily rates without allowing diminution or
addition.
No rule of universal application to other cases
may, therefore, be justifiably extracted from the
NAWASA case. Let it be enough that in arriving
at just solution and correct application of R.A.
1880, an inference was drawn from other
decisions that a regular wage includes
payments 'agreed by the parties to be received
during the week.' But to use this analogy in
another fact- situation would unmitigatingly
stretch its value as basis for legal reasoning,
for analogies are not perfect and can bring a
collapse if stretched far beyond their logical
and reasoned efficacy. Neither would it be far
to ascribe to the Supreme Court's citation of
foreign jurisprudence, which was used for
purposes of analogy, the force of statute law,
for this would be the consequence if it were
allowed to be used as authority for all fact-
situations, even if different from the NAWASA
case. This, because courts do not legislate. All
they do is apply the law.
25
The above discussions impel the objective
analyst to reject the proposition that the
NAWASA decision is an embracing and can be
used with the authority of a statute's effects on
existing contracts.
It appears that the answer to dispute lies, not
in the text of the NAWASA case but in the
terms and conditions and practice in the
implementation of, the agreement, an area
which makes resolution of the issue dependent
on the relation of the terms and conditions of
the contract to the phraseology and purpose of
the Eight-Hour Labor Law (Act 444).
The more we read the NAWASA case, the
more we are convinced that the overtime
computation set therein cannot apply to the
cases at bar. For to do so would lead to unjust
results, inequities between and among the
employees themselves and absurd situations.
To apply the NAWASA computation would
require a different formula for each and every
employee, would require reference to and
continued use of individual earnings in the
past, thus multiplying the administrative
difficulties of the Company. It would be
cumbersome and tedious a process to
compute overtime pay and this may again
cause delays in payments, which in turn could
lead to serious disputes. To apply this mode of
computation would retard and stifle the growth
of unions themselves as Companies would be
irresistibly drawn into denying, new and
additional fringe benefits, if not those already
existing, for fear of bloating their overhead
expenses through overtime which, by reason
of being unfixed, becomes instead a veritable
source of irritant in labor relations.
One other reason why application of the
NAWASA case should be rejected is that this
Court is not prepared to accept that it can lay
down a less cumbersome formula for a
company-wide overtime pay other than that
which is already provided in the collective
bargaining agreement. Courts cannot make
contracts for the parties themselves.
Commonwealth Act 444 prescribes that
overtime work shall be paid 'at the same rate
as their regular wages or salary, plus at least
twenty-five per centum additional' (Secs. 4 &
5). The law did not define what is a 'regular
wage or salary'. What the law emphasized by
way of repeated expression is that in addition
to 'regular wage', there must be paid an
additional 25% of that 'regular wage' to
constitute overtime rate of pay. The parties
were thus allowed to agree on what shag be
mutually considered regular pay from or upon
which a 25% premium shall be based and
added to make up overtime compensation.
This the parties did by agreeing and accepting
for a very long period to a basic hourly rate to
which a premium shall be added for purposes
of overtime.
Also significant is the fact that Commonwealth
Act 444 merely sets a minimum, a least
premium rate for purposes of overtime. In this
 case, the parties agreed to premium rates four
(4) or even six (6) times than that fixed by the
Act. Far from being against the law, therefore,
the agreement provided for rates
'commensurate with the Company's reputation
of being among the leading employers in the
Philippines' (Art. 1, Sec. 2, Coll. Barg.
Agreement) at the same time that the
Company is maintained in a competitive
position in the market Coll. Barg. Agreement,
lbid).
Since the agreed rates are way above
prevailing statutory wages and premiums, fixed
by themselves bona fide through negotiations
favored by law, there appears no compelling
reason nor basis for declaring the same illegal.
A basic principle forming an important
foundation of R.A. 875 is the encouragement
given to parties to resort to peaceful settlement
of industrial problems through collective
bargaining. It behooves this Court, therefore, to
help develop respect for those agreements
which do not exhibit features of illegality This is
the only way to build confidence in the
democratic process of collective bargaining.
Parties cannot be permitted to avoid the
implications and ramifications of the
agreement.
Although this Court has gone very far in
resolving an doubts and in giving great weight
to evidence and presumptions in favor of labor,
it may not go as far as reconstruct the law to fit
particular cases." (Pp. 174-181, Record)
Proof of the correctness of the aforequoted considerations, the
appeal of the workers from the Industrial Court's decision did not
prosper. Affirming the appealed decision, We held:
The theory, therefore, of the petitioners is to
the effect that, notwithstanding the terms and
conditions of their existing collective bargaining
agreement with respondent Shell Company,
particularly Exhibit 'A-l' for the Petitioners and
Exhibit 'l-A' for the Respondent (which is
Appendix 'B' of the Collective Bargaining
Agreement of the parties), considering the
ruling in the NAWASA case, a recomputation
should be made of their basic wage by adding
the money value of the fringe benefits enjoyed
by them from whence the premium rates
agreed upon shall be computed in order to
arrive at the correct computation of their
overtime compensation from the Company. On
the other hand, respondent Shell Company
maintains that the NAWASA case should not
be utilized as the basis for the alteration of
their mode of computing overtime rate of pay
as set forth in their collective Bargaining
Agreement. It insists that their collective
bargaining agreement should be the law
between them.
After a careful and thorough re-examination of
the NAWASA case, supra, and a minute
examination of the facts and the evidence of
the case now before Us, We rule that the
NAWASA case is not in point and, therefore, is
inapplicable to the case at bar.
26
The ruling of this Court in the NAWASA case
contemplates the regularity and continuity of
the benefits enjoyed by the employees or
workers (for at least three (3) months) as the
condition precedent before such additional
payments or benefits are taken into account.
This is evident in the aforequoted ruling of this
Court in the NAWASA case as well as in the
hereinbelow cited authorities, to wit:
The 'regular rate' of pay on
the basis of which overtime
must be computed must
reflect an payments which
parties have agreed shall
be received regularly
during the work week,
exclusive of overtime
payments.' Walling v.
Garlock Packing Co.
C.C.A.N.Y., 159 F. 2d 44,
45. (Page 289, WORDS
And PHRASES,
Permanent Edition, Vol.
36A; Italics supplied); and
As a general rule the
words 'regular rate' mean
the hourly rate actually
paid for the normal, non-
overtime work week, and
an employee's regular
compensation is the
compensation which
regularly and actually
reaches him, ... .' (56
C.J.S. 704; Emphasis
supplied).
Even in the definition of wage under the
Minimum Wage Law, the words 'customarily
furnished' are used in referring to the additional
payments or benefits, thus, -
'Wage' paid to any employee shag mean the
remuneration or earnings, however
designated, capable of being expressed in
terms of money, whether fixed or ascertained
on a time, task, piece, 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.' (Sec. 2 (g), R.A.
No. 602).
Having been stipulated by the parties that ...
the Tin Factory Incentive Pay has ceased in
view of the closure of the factory in May 1966
the fringe benefits as described show that they
are occasionally not regularly enjoyed and that
not all employees are entitled to them', herein
petitioners failed to meet the test laid down by
this Court in the NAWASA case. Further, the
collective bargaining agreement resorted to by
the parties being in accordance with R.A. 875,
with its provision on overtime pay far way
 beyond the premium rate provided for in
Sections 4 and 5 of Commonwealth Act 444,
the same should govern their relationship.
Since this is their contract entered into by them
pursuant to bargaining negotiations under
existing laws, they are bound to respect it. It is
the duty of this Court to see to it that contracts
between parties, not tainted with infirmity or
irregularity or illegality, be strictly complied with
by the parties themselves. This is the only way
by which unity and order can be properly
attained in our society.
It should be noted in passing that
Commonwealth Act 444 prescribes only a
minimum of at least 25% in addition to the
regular wage or salary of an employee to
constitute his overtime rate of pay, whereas,
under Appendix 'B', (Exhs. 'A-l', Petitioners and
'l-A', Respondent) of the Collective Bargaining
Agreement of the parties, the premium rate of
overtime pay is as high as l50% on regular
working days up to 250 % on Sundays and
recognized national holidays. (Shell Oil
Workers Union vs. Shell Company of the
Philippines, G.R. No. L-30658-59, March 31,
1976, 70 SCRA 242-243.)
In the instant case, on May 22, 1965 PEMA alleged in the court
below the following cause of action as amended on June 7, 1965:
Since the start of the giving of cost of living
allowance and longevity pay and reiterated,
after the promulgation of the Decision in
National Waterworks and Sewerage Authority
vs. NAWASA Consolidated Unions et al., G.R.
No. L-18938, August 31, 1964, the petitioner
has repeatedly requested respondent that the
cost of living allowance and longevity pay be
taken into account in the computation of
overtime pay, effective as of the grant of said
benefits on January 1, 1958, in accordance
with the ruling in said Decision of the Supreme
Court. (Page 14, PNB's Brief.)
To be sure, there could be some plausibility in PNB's pose
regarding the jurisdiction of the Industrial Court over the above
cause of action. But, as We have already stated, We agree with
the broader view adopted by the court a quo on said point, and We
find that it is in the best interests of an concerned that this almost
25-year dispute be settled once and for all without the need of
going through other forums only for the matter to ultimately come
back to this Court probably years later, taking particular note as
We do, in this regard, of the cases cited on pages 9-10 of PEMA's
original memo, as follows:
Realizing its error before in not considering the
present case a certified labor dispute, the Bank
now concedes that the case at bar 'belongs to
compulsory arbitration'. Hence, the lawful
powers of the CIR over the same. However,
the Bank says 'overtime differential is but a
money claim, (and) respondent court does not
have jurisdiction to take cognizance of the
same'.
But this is not a pure money claim (pp. 10-11,
Opposition) because other factors are involved
- certification by the President, the matter may
likely cause a strike, the dispute concerns
national interest and comes within the CIR's
27
injunction against striking, and the employer-
employee relationship between the Bank and
the employees has not been severed. Besides,
'money claim' is embraced within the term
'compensation' and therefore falls squarely
under the jurisdiction of the CIR in the exercise
of its arbitration power (Sec. 4, CA 103; Please
see also Republic vs. CIR, L- 21303, Sept.
23/68; Makalintal J., NWSA Case, L-26894-96,
Feb. 28/69; Fernando, J.).
What confers jurisdiction on the Industrial
Court, says Justice J.B.L. Reyes, is not the
form or manner of certification by the
President, but the referral to said court of the
industrial dispute between the employer and
the employees. (Liberation Steamship vs. CIR,
etc., L-25389 & 25390, June 27/68).
In Phil. Postal Savings Bank, et al. vs. CIR, et
al., L-24572, Dec. 20/67, this Honorable Court,
speaking through Chief Justice Concepcion,
held that the certification of the issue 'as a
dispute affecting an industry indispensable to
the national interest' leaves 'no room for doubt
on the jurisdiction of the CIR to settle such
dispute.'
Relatedly, however, it is to be noted that it is clear from the holding
of the Industrial Court's decision We have earlier quoted, "the
cause of action (here) is not on any decision of any court but on
the provisions of the law which have been in effect at the time of
the occurrence of the cause of action in relation to a labor dispute".
Viewed from such perspective laid by the lower court itself, it can
hardly be said that it indeed exercised purely its power of
arbitration, which means laying down the terms and conditions that
should govern the relationship between the employer and
employees of an enterprise following its own appreciation of the
relevant circumstances rather empirically. More accurately
understood, the court in fact indulged in an interpretation of the
applicable law, namely, CA 444, in the light of its own impression of
the opinion of this Court in NAWASA and based its decision
thereon.
Accordingly, upon the fact-situation of this case hereunder to be
set forth, the fundamental question for Us to decide is whether or
not the decision under appeal is in accordance with that law and
the cited jurisprudence. In brief, as PEMA posits, is NAWASA four-
square with this case? And even assuming, for a while, that in a
sense what is before Us is an arbitration decision, private
respondent itself admits in its above-mentioned memorandum that
this Court is not without power and authority to determine whether
or not such arbitration decision is against the law or jurisprudence
or constitutes a grave abuse of discretion. Thus, in PEMA's
memorandum, it makes the observation that "(F)urthermore, in the
Shell cases, the unions are using the NAWASA decision as a
source of right for recomputation, while in the PNB, the Union
merely cites the NAWASA doctrine, not as a source of right, but as
a legal authority or reference by both parties so the Union demand
may be granted. " (Motion to Dismiss, p. 3.)
Obviously, therefore, the polestar to which Our mental vision must
be focused in order that We may arrive at a correct legal and
equitable determination of this controversy and, in the process
make NAWASA better understood as We believe it should be, is
none other than Sections 3 and 4 of Com. Act No. 444, the Eight
Hour Labor Law, which pertinently provide thus:
SEC. 3. Work may be performed beyond eight
hours a day in case of actual or impending
emergencies caused by serious accidents, fire,
 flood, typhoon, earthquake, epidemic, or other
disaster or calamity in order to prevent loss to
life and property or imminent danger to public
safety; or in case of urgent work to be
performed on the machines, equipment, or
installations in order to avoid a serious loss
which the employer would otherwise suffer, or
some other just cause of a similar nature; but
in all such cases the laborers and employees
shall be entitled to receive compensation for
the overtime work performed at the same rate
as their regular wages or salary, plus at least
twenty-five per centum additional.
In case of national emergency the Government
is empowered to establish rules and
regulations for the operation of the plants and
factories and to determine the wages to be
paid the laborers.
xxx xxx xxx
SEC. 4. No person, firm, or corporation,
business establishment or place or center of
labor shall compel an employee or laborer to
work during Sundays and legal holidays,
unless he is paid an additional sum of at least
twenty-five per centum of his regular
remuneration: Provided, however, that this
prohibition shall not apply to public utilities
performing some public service such as
supplying gas, electricity, power, water, or
providing means of transportation or
communication.
The vital question is, what does "regular wage or salary" mean or
connote in the light of the demand of PEMA?
In Our considered opinion, the answer to such question lies in the
basic rationale of overtime pay. Why is a laborer or employee who
works beyond the regular hours of work entitled to extra
compensation called in this enlightened time, overtime pay? Verily,
there can be no other reason than that he is made to work longer
than what is commensurate with his agreed compensation for the
statutorily fixed or voluntarily agreed hours of labor he is supposed
to do. When he thus spends additional time to his work, the effect
upon him is multi-faceted: he puts in more effort, physical and/or
mental; he is delayed in going home to his family to enjoy the
comforts thereof; he might have no time for relaxation, amusement
or sports; he might miss important pre-arranged engagements;
etc., etc. It is thus the additional work, labor or service employed
and the adverse effects just mentioned of his longer stay in his
place of work that justify and is the real reason for the extra
compensation that he called overtime pay.
Overtime work is actually the lengthening of hours developed to
the interests of the employer and the requirements of his
enterprise. It follows that the wage or salary to be received must
likewise be increased, and more than that, a special additional
amount must be added to serve either as encouragement or
inducement or to make up fop the things he loses which We have
already referred to. And on this score, it must always be borne in
mind that wage is indisputably intended as payment for work done
or services rendered. Thus, in the definition of wage for purposes
of the Minimum Wage Law, Republic Act No. 602, it is stated:
'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, commission basis or
28
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 and reasonable value' shall not include a
profit to the employer which reduces the wage
received by the employee below the minimum
wage applicable to the employee under this
Act, nor shall any transaction between an
employer or any person affiliated with the
employer and the employee of the employer
include any profit to the employer or affiliated
person which reduces the employee's wage
below the wage applicable to the employee
under this Act.' 2 (Emphasis supplied).
As can be seen, wage under said law, in whatever means or form it
is given to the worker, is "for work done or to be done or for
services rendered or to be rendered" and logically "includes (only)
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".
Indeed, for the purpose of avoiding any misunderstanding or
misinterpretation of the word "wage" used in the law and to
differentiate it from "supplement", the Wage Administration Service
to implement the Minimum Wage Law, defined the latter as:
extra remuneration or benefits received by
wage earners from their employers and include
but are not restricted to pay for vacation and
holidays not worked; paid sick leave or
maternity leave; overtime rate in excess of
what is required by law; pension, retirement,
and death benefits; profit-sharing, family
allowances; Christmas, war risk and cost-of-
living bonuses; or other bonuses other than
those paid as a reward for extra output or time
spent on the job. (Emphasis ours).
In these times when humane and dignified treatment of labor is
steadily becoming universally an obsession of society, we, in our
country, have reached a point in employer- employee relationship
wherein employers themselves realize the indispensability of at
least making the compensation of workers equal to the worth of
their efforts as much as this case can be statistically determined.
Thus, in order to meet the effects of uncertain economic conditions
affecting adversely the living conditions of wage earners,
employers, whenever the financial conditions of the enterprise
permit, grant them what has been called as cost-of-living
allowance. In other words, instead of leaving the workers to
assume the risks of or drift by themselves amidst the cross
-currents of country-wide economic dislocation, employers try their
best to help them tide over the hardships and difficulties of the
situation. Sometimes, such allowances are voluntarily agreed upon
in collective bargaining agreements. At other times, it is imposed
by the government as in the instances of Presidential Decrees
Nos. 525, 928, 1123, 1389, 1614, 1678, 1751 and 1790; Letters of
Instructions No. 1056 and Wage Order No. 1. Notably, Presidential
Decree No. 1751 increased the statutory wage at all levels by
P400 in addition to integrating the mandatory emergency living
allowances under Presidential Decree No. 525 and Presidential
Decree No. 1123 into the basic pay of all covered workers.
Going over these laws, one readily notices two distinctive features:
First, it is evidently gratifying that the government, in keeping with
the humanitarian trend of the times, always makes every effort to
keep wages abreast with increased cost of living conditions, doing
it as soon as the necessity for it arises. However, obviously, in
order not to overdo things, except when otherwise provided, it
spares from such obligation employers who by mutual agreement
with their workers are already paying what the corresponding law
provides (See Sec. 4 of P.D. No. 525; Section 2 of P.D. No. 851
until P.D. 1684 abolished all exemptions under P.D. No. 525, P.D.
No. 1123, P.D. No. 851 and P.D. No. 928 among distressed
employers who even though given sufficient lapse of time to make
the necessary adjustment have not done so.)3
In the case at bar, as already related earlier, the cost-of-living
allowance began to be granted in 1958 and the longevity pay in
1981. In other words, they were granted by PNB upon realizing the
difficult plight of its labor force in the face of the unusual
inflationary situation in the economy of the country, which, however
acute, was nevertheless expected to improve. There was thus
evident an inherently contingent character in said allowances.
They were not intended to be regular, much less permanent
additional part of the compensation of the employees and workers.
To such effect were the testimonies of the witnesses at the trial.
For instance, Mr. Ladislao Yuzon declared:
ATTORNEY GESMUNDO
Questioning ....
Q. Calling your attention to
paragraph No. 1, entitled
monthly living allowance,
which has been marked as
Exhibit 'A-l', will you kindly
tell us the history of this
benefit- monthly living
allowance, why the same
has been granted?
A. Well, in view of the
increasing standard of
living, we decided to
demand from management
in our set of demands ...
included in our set of
demands in 1957-1958 a
monthly living allowance in
addition to our basic salary.
This benefit was agreed
upon and granted to take
effect as of January 1,
1958. That was the first
time it was enjoyed by the
employees of the
Philippine National Bank. It
started on a lesser amount
but year after year we have
been demanding for
increases on this living
allowance until we have
attained the present
amount of P 1 50.00 a
month, starting with P40.00
when it was first granted.
The same is still being
enjoyed by the employees
on a much higher amount.
There were a few
variations to that. (t. t.s.n.,
pp. 18-19, Hearing of
August 16, 1965)
29
which testimony was affirmed by Mr. Panfilo Domingo, on cross-
examination by counsel for the respondent, reading as follows:
ATTORNEY GESMUNDO:
Q. Do you recall Mr.
Domingo, that in denying
the cost of living allowance
and longevity pay for
incorporation with the basic
salary, the reason given by
the management was that
as according to you, it will
mean an added cost and '
furthermore it will increase
the contribution of the
Philippine National Bank to
the GSIS, is that correct?
A. This is one of the
reasons, of the objections
for the inclusion of the
living allowance and
longevity pay to form part
of the basic pay, I mean
among others, because the
basic reason why
management would object
is the cost of living
allowance is temporary in
nature, the philosophy
behind the grant of this
benefit, Nonetheless, it
was the understanding if I
recall right that in the event
that cost of living should
go down then there should
be a corresponding
decrease in the cost of
living allowance being
granted I have to mention
this because this is the
fundamental philosophy in
the grant of cost of living
allowance. (Pp. 19-20,
Record.)
Much less were they dependent on extra or special work done or
service rendered by the corresponding recipient. Rather, they were
based on the needs of their families as the conditions of the
economy warranted. Such is the inexorable import of the pertinent
provisions of the collective bargaining agreement:
MONTHLY LIVING ALLOWANCE
All employees of the Bank shall be granted a
monthly living allowance of P140, plus P10 for
each minor dependent child below 21 years of
age, but in no case shall the total allowance
exceed P200 or 25% of the monthly salary,
whichever is higher, subject to the following
conditions:
a) That this new basic
allowance shall be
applicable to all
employees, irrespective of
their civil status;
b) That a widow or
widower shall also enjoy
 the basic allowance of
P140 a month, plus the
additional benefit of P10
for each minor dependent
child but not to exceed
P200 or 25% of basic
salary whichever is higher.
c) That in case the
husband and wife are both
employees in the Bank
both shall enjoy this new
basic monthly living
allowance of P140 but only
one of spouses shall be
entitled to claim the
additional benefit of P10
for each minor legitimate or
acknowledged child. (Pp.
30-31, PNB's memo.)
So also with the longevity pay; manifestly, this was not based on
the daily or monthly amount of work done or service rendered it
was more of a gratuity for their loyalty, or their having been in the
bank's employment for consideration periods of time. Indeed, with
particular reference to the longevity pay, the then existing collective
bargaining contract expressly provided: "... That this benefit shall
not form part of the basic salaries of the officers so affected."
PEMA may contend that the express exclusion of the longevity
pay, means that the cost-of-living allowance was not intended to be
excluded. Considering, however, the contingent nature of the
allowances and their lack of relation to work done or service
rendered, which in a sense may be otherwise in respect to
longevity pay PEMA's contention is untenable. The rule of exclusio
unius, exclusio alterius would not apply here, if only because in the
very nature of the two benefits in question, considerations and
conclusions as to one of them could be non-sequitur as to the
other.
Withal, there is the indisputable significant fact that after 1958,
everytime a collective bargaining agreement was being entered
into, the union always demanded the integration of the cost-of-
living allowances and longevity pay, and as many times, upon
opposition of the bank, no stipulation to such effect has ever been
included in any of said agreements. And the express exclusion of
longevity pay was continued to be maintained.
On this point, the respondent court held that under its broad
jurisdiction, it was within the ambit of its authority to provide for
what the parties could not agree upon. We are not persuaded to
view the matter that way. We are not convinced that the
government, thru the Industrial Court, then, could impose upon the
parties in an employer-employee conflict, terms and conditions
which are inconsistent with the existing law and jurisprudence,
particularly where the remedy is sought by the actors more on
such legal basis and not purely on the court's arbitration powers.
As pointed out earlier in this opinion, Our task here is two-fold:
First, reviewing the decision under scrutiny as based on law and
jurisprudence, the question is whether or not the rulings therein are
correct. And second, reading such judgment as an arbitration
decision, did the court a quo gravely abuse its discretion in holding,
as it did, that cost-of-living allowance and longevity pay should be
included in the computation of overtime pay?
In regard to the first question, We have already pointed out to start
with, that as far as longevity pay is concerned, it is beyond
question that the same cannot be included in the computation of
overtime pay for the very simple reason that the contrary is
expressly stipulated in the collective bargaining agreement and, as
30
should be the case, it is settled that the terms and conditions of a
collective bargaining agreement constitute the law between the
parties. (Mactan Workers Union vs. Aboitiz, 45 SCRA 577. See
also Shell Oil Workers Union et al. vs. Shell Company of the
Philippines, supra) The contention of PEMA that the express
provision in the collective bargaining agreement that "this benefit
(longevity pay) shall not form part of the basic salaries of the
officers so affected" cannot imply the same Idea insofar as the
computation of the overtime pay is concerned defies the rules of
logic and mathematics. If the basic pay cannot be deemed
increased, how could the overtime pay be based on any increased
amount at all?
However, the matter of the cost-of-living allowance has to be
examined from another perspective, namely, that while PEMA had
been always demanding for its integration into the basic pay, it
never succeeded in getting the conformity of PNB thereto, and so,
all collective bargaining agreements entered -4 into periodically by
the said parties did not provide therefor. And it would appear that
PEMA took the non-agreement of the bank in good grace, for the
record does not show that any remedial measure was ever taken
by it in connection therewith. In other words, the parties seemed to
be mutually satisfied that the matter could be better left for
settlement on the bargaining table sooner or later, pursuant to the
spirit of free bargaining underlying Republic Act 875, the Industrial
Peace Act then in force. Or, as observed by PEMA in its
memorandum, (page 23), the parties "agreed to let the question
remain open-pending decision of authorities that would justify the
demand of the Union." Indeed, on pages 23-24 of said
memorandum, the following position of PEMA is stated thus:
Thus the following proceeding took place at the
Court a quo:
ATTY. GESMUNDO:
That is our position, Your Honor, because
apparently there was an understanding
reached between the parties as to their having
to wait for authorities and considering that the
issue or one of the issues then involved in the
NAWASA case pending in the CIR supports
the stand of the union, that the principle
enunciated in connection with that issue is
applicable to this case.
xxx xxx xxx
Q. Do we understand from
you, Mister Yuson, that it
was because of the
management asking you
for authorities in allowing
the integration of the cost
of living allowance with
your basic salary and your
failure to produce at the
time such authorities that
the union then did not bring
any case to the Court?
A. Well, in the first place, it
is not really my Idea to be
bringing matters to the
Court during my time but I
would much prefer that we
agree on the issue. Well,
insofar as you said that the
management was asking
me, welt I would say that
they were invoking (on)
 authorities that we can
show in order to become
as a basis for granting or
for agreeing with us
although we were aware of
the existence of a pending
case which is very closely
similar to our demand, yet
we decided to wait until
this case should be
decided by the Court so
that we can avail of the
decision to present to
management as what they
are asking for. (t.s.n., pp.
31-32, 35-36, Aug.
28,1965.)
Now, to complete proper understanding of the character of the
controversy before Us, and lest it be felt by those concerned that
We have overlooked a point precisely related to the matter touched
in the above immediately preceding paragraph, it should be
relevant to quote a portion of the "Stipulation of Facts" of the
parties hereto:
1. This particular demand was among those
submitted by Petitioner-Union in the current
collective bargaining negotiations to the
Respondent Bank. However, since this case
was already filed in court on May 22, 1965, the
parties agreed not to include this particular
demand in the discussion, leaving the matter to
the discretion and final judicial determination of
the courts of justice." (Page 81, Rec.)
In any event, as stressed by Us in the Shell cases, the basis of
computation of overtime pay beyond that required by CA 444 must
be the collective bargaining agreement, 4 for, to reiterate Our
postulation therein and in Bisig ng Manggagawa, supra, it is not for
the court to impose upon the parties anything beyond what they
have agreed upon which is not tainted with illegality. On the other
hand, where the parties fail to come to an agreement, on a matter
not legally required, the court abuses its discretion when it obliges
any 6f them to do more than what is legally obliged.
Doctrinally, We hold that, in the absence of any specific provision
on the matter in a collective bargaining agreement, what are
decisive in determining the basis for the computation of overtime
pay are two very germane considerations, namely, (1) whether or
not the additional pay is for extra work done or service rendered
and (2) whether or not the same is intended to be permanent and
regular, not contingent nor temporary and given only to remedy a
situation which can change any time. We reiterate, overtime pay is
for extra effort beyond that contemplated in the employment
contract, hence when additional pay is given for any other purpose,
it is illogical to include the same in the basis for the computation of
overtime pay. This holding supersedes NAWASA.
Having arrived at the foregoing conclusions, We deem it
unnecessary to discuss any of the other issues raised by the
parties.
WHEREFORE, judgment is hereby rendered reversing the
decision appealed from, without costs.

In fine, what the parties commonly desire is for this Court to

construe CA 444 in the light of NAWASA, considering the fact-
situation of the instant case.

In this respect, it is Our considered opinion, after mature

deliberation, that notwithstanding the portions of the NAWASA's
opinion relied upon by PEMA, there is nothing in CA 444 that could
justify its posture that cost-of-living allowance should be added to
the regular wage in computing overtime pay.

After all, what was said in NAWASA that could be controlling here?
True, it is there stated that "for purposes of computing overtime
compensation, regular wage includes all payments which the
parties have agreed shall be received during the work week,
including - differential payments for working at undesirable times,
such as at night and the board and lodging customarily furnished
the employee. ... The 'regular rate' of pay also ordinarily includes
incentive bonus or profit-sharing payments made in addition to the
normal basic pay (56 C.J.S., pp. 704-705), and it was also held
that the higher rate for night, Sunday and holiday work is just as
much a regular rate as the lower rate for daytime work. The higher
rate is merely an inducement to accept employment at times which
are not as desirable from a workmen's standpoint (International L.
Ass'n vs. National Terminals Corp. C.C. Wise, 50 F. Supp. 26,
affirmed C.C.A. Carbunoa v. National Terminals Corp. 139 F. 2d
853)." (11 SCRA, p. 783)

But nowhere did NAWASA refer to extra, temporary and contingent

compensation unrelated to work done or service rendered, which
as explained earlier is the very nature of cost-of- living allowance.
Withal, in strict sense, what We have just quoted from NAWASA
was obiter dictum, since the only issue before the Court there was
whether or not "in computing the daily wage, (whether) the addition
compensation for Sunday should be included. " (See No. 7 of
Record)

31