Labor Law Cases Part 2

7/30/2019 Labor Law Cases Part 2

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EN BANC

[G.R. No. 71813. July 20, 1987.]

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,vs. THEHONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO

and RICARDO DIONELE, SR., respondents.

D E C I S I O N

PARAS, Jp:

This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor andEmployment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of grantingseparation pay to private respondents.

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Ponteverde, NegrosOccidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option,for another ten (10) years (Rollo, pp. 16-20).

On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid., pp. 26-27).During the existence of the lease, she employed the herein private respondents. Private respondentRicardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo in 1963.On the other hand, private respondent Romeo Quitco started as a regular employee in 1968 and waspromoted to Cabo in November of the same year.

Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over thehacienda to the owners thereof on October 5, 1981, who continued the management, cultivation andoperation of the farm (Rollo, pp. 33; 89).

On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry ofLabor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement

with backwages. After the parties had presented their respective evidence, Labor Arbiter Manuel M.Lucas, Jr., in a Decision dated July 16, 1982 (Ibid., pp. 29-31), ruled that the dismissal is warranted bythe cessation of business, but granted the private respondents separation pay. Pertinent portion of thedispositive portion of the Decision reads:

"In the instant case, the respondent closed its business operation not by reason ofbusiness reverses or losses. Accordingly, the award of termination pay in complainants'favor is warranted.

"WHEREFORE, the respondent is hereby ordered to pay the complainants separationpay at the rate of half-month salary for every year of service, a fraction of six (6)months being considered one (1) year." (Rollo, pp. 29-30)

On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated April 8,1985 (Ibid., pp. 39-40), affirmed the decision and dismissed the appeal for lack of merit.

On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-45), but the same wasdenied in a Resolution dated June 10, 1985 (Ibid., p. 46). Hence, the present petition (Ibid., pp. 3-8)

The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require therespondents to comment (Ibid., p. 58). In compliance therewith, private respondents filed their Commenton October 23, 1985 (Ibid., pp. 53-55); and the Solicitor General on December 17, 1985 (Ibid., pp. 71-73-B).

On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and public

respondents (Ibid., pp. 80-81).

The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course to thepetition; and to require the parties to submit simultaneous memoranda (Ibid., p. 83). In compliancetherewith, the Solicitor General filed his Memorandum on June 18, 1986 (Ibid., pp. 89-94); and petitioneron July 23, 1986 (Ibid., pp. 96-194).

The petition is devoid of merit.


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The sole issue in this case is

WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.

Petitioner claims that since her lease agreement had already expired, she is not liable for payment ofseparation pay. Neither could she reinstate the complainants in the farm as this is a complete cessationor closure of a business operation, a just cause for employment termination under Article 272 of the

Labor Code.On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the privaterespondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specificallyprovides:

"Sec. 15.Articles 285 and 284 of the Labor Code are hereby amended to read as follows:"xxx xxx xxx

"Art. 284.Closure of establishment and reduction of personnel. The employer may alsoterminate the employment of any employee due to the installation of labor-saving devices,redundancy, retrenchment to prevent losses or the closing or cessation of operation of theestablishment or undertaking unless the closing is for the purpose of circumventing theprovisions of this title, by serving a written notice on the workers and the Ministry of Labor and

Employment at least one (1) month before the intended date thereof. In case of termination dueto the installation of labor-saving devices or redundancy, the worker affected thereby shall beentitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)month pay for every year of service, whichever is higher. In case of retrenchment to preventlosses and in cases of closure or cessation of operations of establishment or undertaking not dueto serious business losses or financial reverses, the separation pay shall be equivalent to one (1)month pay or at least one-half (1/2) month pay for every year of service whichever is higher. Afraction of at least six (6) months shall be considered one (1) whole year."

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable inthis case.

Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. TheLabor Arbiter does not argue the justification of the termination of employment but applied Article 284 as

amended, which provides for the rights of the employees under the circumstances of termination.

Petitioner then contends that the aforequoted provision violates the constitutional guarantee againstimpairment of obligations and contracts, because when she leased Hacienda Danao-Ramona on June 27,1960, neither she nor the lessor contemplated the creation of the obligation to pay separation pay toworkers at the end of the lease.

Such contention is untenable.

This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-369[1977]) where the Supreme Court ruled:

"It should not be overlooked however, that the prohibition to impair the obligation ofcontracts is not absolute and unqualified. The prohibition is general, affording a broadoutline and requiring construction to fill in the details. The prohibition is not to readwith literal exactness like a mathematical formula for it prohibits unreasonableimpairment only. In spite of the constitutional prohibition the State continues topossess authority to safeguard the vital interests of its people. Legislation appropriateto safeguard said interest may modify or abrogate contracts already in effect. For notonly are existing laws read into contracts in order to fix the obligations as between theparties but the reservation of essential attributes of sovereign power is also read intocontracts as a postulate of the legal order. All contracts made with reference to anymatter that is subject to regulation under the police power must be understood asmade in reference to the possible exercise of that power. Otherwise, important andvaluable reforms may be precluded by the simple device of entering into contracts for

the purpose of doing that which otherwise may be prohibited. . . .

"In order to determine whether legislation unconstitutionally impairs contract ofobligations, no unchanging yardstick, applicable at all times and under allcircumstances, by which the validity of each statute may be measured or determined,has been fashioned, but every case must be determined upon its own circumstances.Legislation impairing the obligation of contracts can be sustained when it is enacted forthe promotion of the general good of the people, and when the means adopted must


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be legitimate, i.e. within the scope of the reserved power of the state construed inharmony with the constitutional limitation of that power." (Citing Basa vs. FederacionObrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974, 61 SCRA 93, 102-113]).

The purpose of Article 284 as amended is obvious the protection of the workers whose employment is

terminated because of the closure of establishment and reduction of personnel. Without said law,employees like private respondents in the case at bar will lose the benefits to which they are entitled for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco.Although they were absorbed by the new management of the hacienda, in the absence of any showingthat the latter has assumed the responsibilities of the former employer, they will be considered as newemployees and the years of service behind them would amount to nothing.

Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of theparties with reference to each other and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits tofarm hands who were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent legislation designed to protect theinterest of the working class.

In any event, it is well-settled that in the implementation and interpretation of the provisions of the LaborCode and its implementing regulations, the workingman's welfare should be the primordial andparamount consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It isthe kind of interpretation which gives meaning and substance to the liberal and compassionate spirit ofthe law as provided for in Article 4 of the New Labor Code which states that `all doubts in theimplementation and interpretation of the provisions of this Code including its implementing rules andregulations shall be resolved in favor of labor." The policy is to extend the applicability of the decree to agreater number of employees who can avail of the benefits under the law, which is in consonance withthe avowed policy of the State to give maximum aid and protection to labor. (Sarmiento v. EmployeesCompensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees Compensation

Commission, 103 SCRA 329; Acosta v. Employees Compensation Commission, 109 SCRA 209).

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of theLabor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are herebyAFFIRMED.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco,Padilla, Bidin, Sarmientoand Cortes, JJ., concur.


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FIRST DIVISION

[G.R. No. L-48926. December 14, 1987.]

MANUEL SOSITO, petitioner,vs. AGUINALDO DEVELOPMENTCORPORATION, respondent.

D E C I S I O N

CRUZ, Jp:

We gave due course to this petition and required the parties to file simultaneous memoranda on the solequestion of whether or not the petitioner is entitled to separation pay under the retrenchment program ofthe private respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and wasin charge of logging importation, with a monthly salary of P675.00,1when he went on indefinite leavewith the consent of the company on January 16, 1976.2On July 20, 1976, the private respondent,

through its president, announced a retrenchment program and offered separation pay to employees inthe active service as of June 30, 1976, who would tender their resignations not later than July 31, 1976.The petitioner decided to accept this offer and so submitted his resignation on July 29, 1976, "to availhimself of the gratuity benefits" promised.3However, his resignation was not acted upon and he wasnever given the separation pay he expected. The petitioner complained to the Department of Labor,where he was sustained by the labor arbiter.4The company was ordered to pay Sosito the sum ofP4,387.50, representing his salary for six and a half months. On appeal to the National Labor RelationsCommission, this decision was reversed and it was held that the petitioner was not covered by theretrenchment program.5The petitioner then came to us.

For a better understanding of this case, the memorandum of the private respondent on its retrenchmentprogram is reproduced in full as follows:

"July 20, 1976

"Memorandum To:ALL EMPLOYEES

"Re:RETRENCHMENT PROGRAM

"As you are all aware, the operations of wood-based industries in the Philippines for the last two(2) years were adversely affected by the worldwide decline in the demand for and prices of logsand wood products. Our company was no exception to this general decline in the market, andhas suffered tremendous losses. In 1975 alone, such losses amounted to nearly P20,000,000.00.

"The company has made a general review of its operations and has come to the unhappydecision of the need to make adjustments in its manpower strength if it is to survive. This isindeed an unfortunate and painful decision to make, but it leaves the company no alternative butto reduce its tremendous and excessive overhead expense in order to prevent an ultimateclosure.

"Although the law allows the Company, in a situation such as this, to drastically reduce itmanpower strength without any obligation to pay separation benefits, we recognize the need toprovide our employees some financial assistance while they are looking for other jobs.

"The Company therefore is adopting a retrenchment program whereby employees who are in theactive service as of June 30, 1976 will be paid separation benefits in an amount equivalent to theemployee's one-half (1/2) month's basic salary multiplied by his/her years of service with theCompany. Employees interested in availing of the separation benefits offered by the Companymust manifest such intention by submitting written letters of resignation to the Management notlater than July 31, 1976. Those whose resignations are accepted shall be informed accordinglyand shall be paid their separation benefits."After July 31, 1976, this offer of payment of separation benefits will no longer be available.Thereafter, the Company shall apply for a clearance to terminate the services of such number ofemployees as may be necessary in order to reduce the manpower strength to such desired levelas to prevent further losses.

"(SGD.) JOSE G. RICAFORTPresident
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"N.B.

"For additional information and/or resignation forms, please see Mr. Vic Maceda or Atty.Ben Aritao."6

It is clear from the memorandum that the offer of separation pay was extended only to those who werein the active service of the company as of June 30, 1976. It is equally clear that the petitioner was noteligible for the promised gratuity as he was not actually working with the company as of the said date.Being on indefinite leave, he was not in the active service of the private respondent although, if one wereto be technical, he was still in its employ. Even so, during the period of indefinite leave, he was notentitled to receive any salary or to enjoy any other benefits available to those in the active service.

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the privaterespondent. He has insulated himself from the insecurities of the floundering firm but at the same timewould demand the benefits it offers. Being on indefinite leave from the company, he could seek and tryother employment and remain there if he should find it acceptable; but if not, he could go back to hisformer work and argue that he still had the right to return as he was only on leave.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary,

the record shows that he voluntarily sought the indefinite leave which the private respondent granted. Itis strange that the company should agree to such an open-ended arrangement, which is obviously one-sided. The company would not be free to replace the petitioner but the petitioner would have a right toresume his work as and when he saw fit. cdphil

We note that under the law then in force the private respondent could have validly reduced its work forcebecause of its financial reverses without the obligation to grant separation pay. This was permitted underthe original Article 272(a), of the Labor Code,7which was in force at the time. To its credit, however,the company voluntarily offered gratuities to those who would agree to be phased out pursuant to theterms and conditions of its retrenchment program, in recognition of their loyalty and to tide them overtheir own financial difficulties. The Court feels that such compassionate measure deserves commendationand support but at the same time rules that it should be available only to those who are qualifiedtherefor. We hold that the petitioner is not one of them.

While the Constitution is committed to the policy of social justice and the protection of the working class,it should not be supposed that every labor dispute will be automatically decided in favor of labor.Management also has its own rights which, as such, are entitled to respect and enforcement in theinterest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclinedmore often than not toward the worker and upheld his cause in his conflicts with the employer. Suchfavoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to bedispensed in the light of the established facts and the applicable law and doctrine.

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against thepetitioner.

SO ORDERED.

Teehankee, C.J., Narvasa, Parasand Gancayco, JJ.,concur.

Footnotes1.Rollo, p. 13.2.Ibid.3.Id., p. 14.4.Id., pp. 43-45.5.Id., pp. 62-64.6.Id., p. 19.7."Art. 272.Termination by employer. An employer may terminate an employment without a definite period for any of the following just causes:"(a)the closing or cessation of operation of the establishment or enterprise, or where the employer has to reduce his work force by more than one -

half due to serious business reverses, unless the closing is for the purpose of circumventing the provisions of this Chapter; . . ."
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SECOND DIVISION

[G.R. No. 101761. March 24, 1993.]

NATIONAL SUGAR REFINERIES CORPORATION, petitioner,vs. NATIONALLABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION,

(PACIWU) TUCP, respondents.

Jose Mario C. Bunagfor petitioner.The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruzfor private respondent.

D E C I S I O N

REGALADO, Jp:

The main issue presented for resolution in this original petition for certiorari is whether supervisoryemployees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers ormembers of the managerial staff under Article 82, Book III of the same Code, and hence are not entitledto overtime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned andcontrolled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo andBatangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No.50.1Private respondent union represents the former supervisors of the NASUREFCO Batangas SugarRefinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar WarehouseSupervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant,Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift ElectricalSupervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer,Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services,Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift ProcessSupervisor, Day Maintenance Supervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, fromrank-and-file to department heads. The JE Program was designed to rationalized the duties and functionsof all positions, reestablish levels of responsibility, and recognize both wage and operational structures.Jobs were ranked according to effort, responsibility, training and working conditions and relative worth ofthe job. As a result, all positions were re-evaluated, and all employees including the members ofrespondent union were granted salary adjustments and increases in benefits commensurate to theiractual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of respondentunion were treated in the same manner as rank-and file employees. As such, they used to be paidovertime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Codeas amended. With the implementation of the JE Program, the following adjustments were made: (1) the

members of respondent union were re-classified under levels S-5 to S-8 which are considered managerialstaff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap(P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevitypay was increased on top of alignment adjustments; (4) they were entitled to increased company COLAof P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work.On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organizedpursuant to Republic Act No. 6715 allowing supervisory employees to form their own unions, as thebargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.Two years after the implementation of the JE Program, specifically on June 20, 1990, the members ofherein respondent union filed a complainant with the executive labor arbiter for non-payment ofovertime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision2disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is herebydirected to

1.pay the individual members of complainant union the usual overtime pay, rest day pay andholiday pay enjoyed by them instead of the P100.00 special allowance which was implementedon June 11, 1988; and
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2.pay the individual members of complainant union the difference in money value between theP100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought tohave received from June 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled that the along span of time duringwhich the benefits were being paid to the supervisors has accused the payment thereof to ripen intocontractual obligation; at the complainants cannot be estopped from questioning the validity of the newcompensation package despite the fact that they have been receiving the benefits therefrom, consideringthat respondent union was formed only a year after the implementation of the Job Evaluation Program,hence there was no way for the individual supervisors to express their collective response thereto prior tothe formation of the union; and the comparative computations presented by the private respondent unionshowed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought toreceive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement,therefore, amounted to a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National LaborRelations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the membersof respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Codeand, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared thatthese supervisory employees are merely exercising recommendatory powers subject to the evaluation,review and final action by their department heads; their responsibilities do not require the exercise ofdiscretion and independent judgment; they do not participate in the formulation of management policiesnor in the hiring or firing of employees; and their main function is to carry out the ready policies andplans of the corporation.3Reconsideration of said decision was denied in a resolution of publicrespondent dated August 30, 1991.4

Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondentcommission committed a grave abuse of discretion in refusing to recognized the fact that the members of

respondent union are members of the managerial staff who are not entitled to overtime, rest day andholiday pay; and in making petitioner assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program.

We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue.The primordial issue to be resolved herein is whether the members of respondent union are entitled toovertime, rest day and holiday pay. Before this can be resolved, however it must of necessity beascertained first whether or not the union members, as supervisory employees, are to be considered asofficers or members of the managerial staff who are exempt from the coverage of Article 82 of the LaborCode.

It is not disputed that the members of respondent union are supervisory employees, as definedemployees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m)'Managerial employee' is one who is vested with powers or prerogatives to lay down andexecute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assignor discipline employees. Supervisory employees are those who, in the interest of the employereffectively recommend such managerial actions if the exercise of such authority is not merelyroutinary or clerical in nature but requires the use of independent judgment. All employees notfalling within any of those above definitions are considered rank-and-file employees of thisBook."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay,and in ruling that the latter are not managerial employees, adopted the definition stated in theaforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of respondentunion are entitled to overtime, rest day and holiday pay, said employees should be considered as"officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on"Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules toImplement the Labor Code, to wit:

"Art. 82Coverage. The provisions of this title shall apply to employees in allestablishments and undertakings whether for profit or not, but not to government


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employees, managerial employees, field personnel, members of the family of theemployer who are dependent on him for support, domestic helpers, persons in thepersonal service of another, and workers who are paid by results as determined by theSecretary of Labor in Appropriate regulations.

"As used herein, 'managerial employees' refer to those whose primary duty consists of

the management of the establishment in which they are employed or of a departmentor subdivision thereof, and to other officers or members of the managerial staff."(Emphasis supplied.)

xxx xxx xxx

'Sec. 2.Exemption. The provisions of this rule shall not apply to the followingpersons if they qualify for exemption under the condition set forth herein:

xxx xxx xxx

(b)Managerial employees, if they meet all of the following conditions, namely:

(1)Their primary duty consists of the management of the establishment inwhich they are employed or of a department or subdivision thereof:

(2)They customarily and regularly direct the work of two or more employeestherein:

(3)They have the authority to hire or fire other employees of lower rank; ortheir suggestions and recommendations as to the hiring and firing and as to thepromotion or any other change of status of other employees are given particularweight.

(c)Officers or members of a managerial staff if they perform the following duties andresponsibilities:

(1)The primary duty consists of the performance of work directly related tomanagement policies of their employer;

(2)Customarily and regularly exercise discretion and independent judgment;

(3)(i) Regularly and directly assist a proprietor or a managerial employeewhose primary duty consists of the management of the establishment in which he isemployed or subdivision thereof; or (ii) execute under general supervision work alongspecialized or technical lines requiring special training, experience, or knowledge; or (iii)execute under general supervision special assignments and tasks; and

(4)Who do not devote more 20 percent of their hours worked in a work-weekto activities which are not directly and closely related to the performance of the workdescribed in paragraphs (1), (2), and above."

It is the submission of petitioner that while the members of respondent union, as supervisors, may not beoccupying managerial positions, they are clearly officers or members of the managerial staff because theymeet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day andsupervisory employees under Article 212 (m) should be made to apply only to the provisions on LaborRelations, while the right of said employees to the questioned benefits should be considered in the lightof the meaning of a managerial employee and of the officers or members of the managerial staff, ascontemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. Inother words, for purposes of forming and joining unions, certification elections, collective bargaining, andso forth, the union members are supervisory employees. In terms of working conditions and rest periodsand entitlement to the questioned benefits, however, they are officers or members of the managerialstaff, hence they are not entitled thereto.

While the Constitution is committed to the policy of social justice and the protection of the working class,it should not be supposed that every labor dispute will be automatically decided in favor of labor.Management also has its own rights which, as such, are entitled to respect and enforcement in theinterest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclinedmore often than not toward the worker and upheld his cause in his conflicts with the employer. Suchfavoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to bedispensed in the light of the established facts and the applicable law and doctrine.5This is one such case where we are inclined to tip the scales of justice in favor of the employer.
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The question whether a given employee is exempt from the benefits of the law is a factual onedependent on the circumstances of the particular case, In determining whether an employee is within theterms of the statutes, the criterion is the character of the work performed, rather than the title of theemployee's position.6

Consequently, while generally this Court is not supposed to review the factual findings of respondent

commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation fromthe rule.

A cursory perusal of the Job Value Contribution Statements7of the union members will readily show thatthese supervisory employees are under the direct supervision of their respective departmentsuperintendents and that generally they assist the latter in planning, organizing, staffing, directing,controlling communicating and in making decisions in attaining the company's set goals and objectives.These supervisory employees are likewise responsible for the effective and efficient operation of theirrespective departments. More specifically, their duties and functions include, among others, the followingoperations whereby the employee:

1)assists the department superintendent in the following:

a)planning of systems and procedures relative to department activities;

b)organizing and scheduling of work activities of the department,which includes employee shifting scheduled and manning complement;

c)decision making by providing relevant information data and otherinputs;

d)attaining the company's set goals and objectives by giving his fullsupport;

e)selecting the appropriate man to handle the job in the department;and

f)preparing annual departmental budget;

2)observes, follows and implements company policies at all times and recommendsdisciplinary action on erring subordinates;

3)trains and guides subordinates on how to assume responsibilities and become moreproductive;

4)conducts semi-annual performance evaluation of his subordinates and recommendsnecessary action for their development/advancement;

5)represents the superintendent or the department when appointed and authorized bythe former;

6)coordinates and communicates with other inter and intra department supervisorswhen necessary;

7)recommends disciplinary actions/promotions;

8)recommends measures to improve work methods, equipment performance, quality ofservice and working conditions;

9)sees to it that safety rules and regulations and procedure and are implemented andfollowed by all NASUREFCO employees, recommends revisions or modifications to saidrules when deemed necessary, and initiates and prepares reports for any observed

abnormality within the refinery;

10)supervises the activities of all personnel under him and goes to it that instructionsto subordinates are properly implemented; and

11)performs other related tasks as may be assigned by his immediate superior.


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From the foregoing, it is apparent that the members of respondent union discharge duties andresponsibilities which ineluctably qualify them as officers or members of the managerial staff, as definedin Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primaryduty consists of the performance of work directly related to management policies of their employer; (2)they customarily and regularly exercise discretion and independent judgment; (3) they regularly anddirectly assist the managerial employee whose primary duty consist of the management of a department

of the establishment in which they are employed (4) they execute, under general supervision, work alongspecialized or technical lines requiring special training, experience, or knowledge; (5) they execute, undergeneral supervision, special assignments and tasks; and (6) they do not devote more than 20% of theirhours worked in a work-week to activities which are not directly and clearly related to the performance oftheir work hereinbefore described. LLjur

Under the facts obtaining in this case, we are constrained to agree with petitioner that the unionmembers should be considered as officers and members of the managerial staff and are, therefore,exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

The distinction made by respondent NLRC on the basis of whether or not the union membersare managerial employees, to determine the latter's entitlement to the questioned benefits, is misplacedand inappropriate. It is admitted that these union members are supervisory employees and this is oneinstance where the nomenclatures or titles of their jobs conform with the nature of their functions.Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) ofthe Labor Code, is puerile and in efficacious. The controversy actually involved here seeks adetermination of whether or not these supervisory employees ought to be considered as officers ormembers of the managerial staff. The distinction, therefore, should have been made along that line andits corresponding conceptual criteria.

II.We likewise no not subscribe to the finding of the labor arbiter that the payment of the questionedbenefits to the union members has ripened into a contractual obligation.

A.Prior to the JE Program, the union members, while being supervisors, received benefits similar to therank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in

the same manner as rank-and-file employees, and their basic pay was nearly on the same level as thoseof the latter, aside from the fact that their specific functions and duties then as supervisors had not beenproperly defined and delineated from those of the rank-and-file. Such fact is apparent from theclarification made by petitioner in its motion for reconsideration8filed with respondent commission inNLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held before the JEProgram. Those positions formerly classified as 'supervisory' and found after the JEProgram to be rank-and-file were classified correctly and continue to receive overtime,holiday and restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were re-evaluated,

their duties re-defined and in most cases their organizational positions re-designated toconfirm their superior rank and duties. Thus, after the JE program, complainantscannot be said to occupy the same positions."9

It bears mention that this positional submission was never refuted nor controverted by respondent unionin any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safelyconcluded therefrom that the members of respondent union were paid the questioned benefits for thereason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not becategorically classified as members or officers of the managerial staff considering that they were thentreated merely on the same level as rank-and-file. Consequently, the payment thereof could not beconstrued as constitutive of voluntary employer practice, which cannot be now be unilaterally withdrawnby petitioner. To be considered as such, it should have been practiced over a long period of time, andmust be shown to have been consistent and deliberate.10

The test or rationale of this rule on long practice requires an indubitable showing that the employeragreed to continue giving the benefits knowingly fully well that said employees are not covered by thelaw requiring payment thereof.11In the case at bar, respondent union failed to sufficiently establishthat petitioner has been motivated or is wont to give these benefits out of pure generosity.

B.It remains undisputed that the implementation of the JE Program, the members of private respondentunion were re-classified under levels S-5 S-8 which were considered under the program as managerial
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staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that theirbasic pay was increased by an average of 50% of their basic salary prior to the JE Program. In otherwords, after the JE Program there was an ascent in position, rank and salary. This in essence is apromotion which is defined as the advancement from one position to another with an increase in dutiesand responsibilities as authorized by law, and usually accompanied by an increase in salary.12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefitswhich attach and pertain exclusively to their positions. Entitlement to the benefits provided for by lawrequires prior compliance with the conditions set forth therein. With the promotion of the members ofrespondent union, they occupied positions which no longer met the requirements imposed by law. Theirassumption of these positions removed them from the coverage of the law, ergo, their exemptiontherefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving thebenefits which attach to their former positions, there was nothing to prevent them from refusing toaccept their promotions and their corresponding benefits. As the sating goes by, they cannot have theircake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, getthe best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives ofmanagement, provided it is done in good faith. In the case at bar, private respondent union hasmiserably failed to convince this Court that the petitioner acted implementing the JE Program. There is noshowing that the JE Program was intended to circumvent the law and deprive the members ofrespondent union of the benefits they used to receive.

Not so long ago, on this particular score, we had the occasion to hold that: LibLex

". . . it is the prerogative of the management to regulate, according to its discretionand judgment, all aspects of employment. This flows from the established rule thatlabor law does not authorize the substitution of the judgment of the employer in theconduct of its business. Such management prerogative may be availed of without fearof any liability so long as it is exercised in good faith for the advancement of theemployer's interest and not for the purpose of defeating on circumventing the rights ofemployees under special laws or valid agreement and are not exercised in a malicious,harsh, oppressive, vindictive or wanton manner or out of malice or spite."13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commissionpromulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDEfor having been rendered and adopted with grave abuse of discretion, and the basic complaint of privaterespondent union is DISMISSED.

Narvasa, C. J., Padilla, Noconand Campos, Jr., JJ.,concur.

Footnotes1.Rollo, 209.2.Annex E, Petition; Rollo, 51, 56-57.3.Annex A, id.; ibid., 20-27; NLRC Case CA No. L-000058; penned by Pres. Comm. Lourdes C. Javier, with the concurrence of

Comm. Ireneo B. Bernardo and Regalio I. Rayala.4.Rollo, 28-29.5.Sosito vs. Aguinaldo Development Corporation, 156 SCRA 392 (1987).6.56 C.J.S., Master and Servant, Sec. 151 (11).7.Annexes I to I-23, Petition; Rollo, 84-149.8.Annex G, Petition; Rollo, 72.9.Rollo, 7910.Globe Mackay Cable and Radio Corporation, et al. vs. NLRC et al., 163 SCRA 71 (1988).11.Oceanic Pharmacal Employees Union (FFW) vs. Inciong, et al., 94 SCRA 270 (1979).12.Millares vs. Subido, et al., 20 SCRA 954 (1967); Dosch, vs. NLRC, et al., 123 SCRA 296 (1983).13.Wise and Co., Inc. vs. Wise and Co., Inc. Employees Union-Natu, et al., SCRA 536 (1989).


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FIRST DIVISION

[G.R. No. L-49582. January 7, 1986.]

CBTC EMPLOYEES UNION, petitioner,vs. THE HONORABLE JACOBO C. CLAVE,Presidential Executive Assistant, and COMMERCIAL BANK & TRUST

COMPANY OF THE PHILIPPINES, respondents.

Francisco F. Angelesfor petitioner.Pacis, Reyes, De Leon & Cruz Law Officefor respondent CBTC.

Edmundo R. Abigan Jr. for respondent Union.

D E C I S I O N

DE LA FUENTE, Jp:

Petition for certiorari seeking to annul and set aside the decision of the respondent Presidential ExecutiveAssistant1affirming that of the Acting Secretary of Labor who reversed the decision of the NationalLabor Relations Commission which upheld the Voluntary Arbitrator's order directing the privaterespondent bank to pay its monthly paid employees their "legal holiday pay."

Petitioner Commercial Bank and Trust Company Employees' Union (Union for short) lodged a complaintwith the Regional Office No. IV, Department of Labor, against private respondent bank (Comtrust) fornon-payment of the holiday pay benefits provided for under Article 95 of the Labor Code in relation toRule X, Book III of the Rules and Regulations Implementing the Labor Code.

Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit their disputefor voluntary arbitration. The issue presented was: "Whether the permanent employees of the Bankwithin the collective bargaining unit paid on a monthly basis are entitled to holiday payeffectiveNovember 1, 1974, pursuant to Article 95 (now Article 94) of the Labor Code, as amended and Rule X(now Rule IV), Book III of the Rules and Regulations Implementing the Labor Code."

In addition, the disputants signed a Submission Agreement stipulating as final, unappealable andexecutory the decision of the Arbitrator, including subsequent issuances for clarificatory and/or reliefpurposes, notwithstanding Article 262 of the Labor Code which allow appeal in certain instances.2

In the course of the hearing, the Arbitrator apprised the parties of an interpretative bulletin on "holidaypay" about to be issued by the Department of Labor. Whereupon, the Union filed a Manifestation3whichinsofar as relevant stated: Cdpr

"6.That complainant union . . . has manifested its apprehension on the contents of thesaid Interpretative Bulletin in view of a well-nigh irresistible move on the part of theemployers to exclude permanent workers similarly situated as the employees ofComtrust from the coverage of the holiday pay benefit despite the express and self-

explanatory provisions of the law, its implementing rules and opinions thereon . . .

7.That in the event that said Interpretative Bulletin regarding holiday pay would beadverse to the present claim . . . in that it would in effect exclude the said employeesfrom enjoyment of said benefit, whether wholly or partially, complainant unionrespectfully reserves the right to take such action as may be appropriate to protect itsinterests, a question of law being involved . . . An Interpretative Bulletin which wasinexistent at the time the said commitment was made and which may be contrary tothe law itself should not bar the right of the union to claim for its holiday pay benefits."

On April 22, 1976, the Arbitrator handed down an award on the dispute. Relevant portions thereof readas follows:

"The uncontroverted facts of this case are as follows:

(1)That the complainant Union is the recognized sole and exclusive collectivebargaining representative of all the permanent rank-and-file employees of the Bankwith an existing Collective Bargaining Agreement covering the period from July 1, 1974up to June 30, 1977;
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(2)That . . . the standard workweek of the Bank generally consists of five (5) days ofeight (8) hours each day which, .. said five days are generally from Monday thruFriday; and, as a rule, Saturdays, Sundays and the regular holidays are not consideredpart of the standard workweek.

(3) That, in computing the equivalent daily rate of its employees covered by the CBA

who are paid on a monthly basis, the following computation is used, as per theprovisions of Section 4, Article VII, of the CBA (Annex "A"):

Daily Rate = Basic Monthly Salary plus CLA x 12 250

Basic Hourly Rate = Daily Rate 8

(4) That the divisor of '250', . . . was arrived at by subtracting the 52 Sundays, 52Saturdays, the 10 regular holidays and December 31 (secured thru bargaining), or atotal of 115 off-days from the 365 days of the year or a difference of 250 days.

"Considering the above uncontroverted facts, the principal question to be resolved iswhether or not the monthly pay of the covered employees already includes what Article94 of the Labor Code requires as regular holiday pay benefit in the amount of hisregular daily wage (100% if unworked or 200% if worked) during the regular holidaysenumerated therein, i.e., Article 94(c) of the Labor Code.

"In its latest Memorandum, filed on March 26, 1976, the Bank relies heavily on theprovisions of Section 2, Rule IV, Book III, of the Rules and Regulations implementingparticularly Article 94 (formerly Article 208) of the Labor Code, which Section reads asfollows:

'SECTION 2.Status of employees paid by the month. Employees who areuniformly paid by the month, irrespective of the number of working days therein, with asalary of not less than the statutory or established minimum wage, shall bepresumed to be paid for all days in the month whether worked or not.

'For this purpose, the monthly minimum wage shall not be less than thestatutory minimum wage multiplied by 365 days divided by twelve.' (Emphasissupplied).

"While admitting that there has virtually been no change effected by PresidentialDecree No. 850, which amended the Labor Code, other than the re-numbering of theoriginal Article 208 of said Code to what is now Article 94, the Bank, however, attachesa great deal of significance in the above quoted Rule as to render the question at issue'moot and academic'.

"On the other hand, the Union maintains, in its own latest Memorandum filed also onMarch 26, 1976, that the legal presumption established in the above quoted Rule ismerely a disputable presumption. This contention of the Union is now supported by apronouncement categorically to that effect by no less than the National Labor RelationsCommission (NLRC) in the case of The Chartered Bank Employees Association vs. TheChartered Bank. NLRC Case No. (s) RB-IV-1739-75 (R04-5-3028-75), which reads, inpart, as follows:

'. . . A disputable presumption was set, in that it would be presumed the salaryof monthly-paid employees may already include rest days, such as Saturdays, Sundays,special and legal holidays, worked or unworked, in effect connoting that evidence to the

contrary may destroy such a supposed legal presumption. Indeed, the Rule merely setsa presumption. It does not conclusively presume that the salary of monthly-paidemployees already includes unworked holidays . . .

'The practice of the Bank of paying its employees a sum equivalent to Basepay plus Premium on Saturdays, Sundays and special and legal holidays, destroys thelegal presumption that monthly pay is for all days of the month. For if the monthly payis payment for all days of the month, then why should the employee be paid again forworking on such rest days'. (Emphasis supplied).


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"There is no reason at present not to adopt the above ruling of the HonorableCommission, especially considering the fact that this Arbitrator, in asking a query onthe nature of the presumption established by the above Rule, from the Director ofLabor Standards in the PMAP Conference held at the Makati Hotel on March 13, 1976,was given the categorical answer that said presumption is merely disputable. Thisanswer from the Labor Standards Director is significant inasmuch as it is his office, the

Bureau of Labor Standards, that is reportedly instrumental in the preparation of theimplementing Rules, particularly on Book III of the Labor Code on Conditions ofEmployment, to which group the present Rule under discussion belongs.

"So, rather than rendering moot and academic the issue at hand, as suggested by theBank, the more logical step to take is to determine whether or not there is sufficientevidence to overcome the disputable presumption established by the Rule.

"It is unquestioned, and as provided for in the CBA itself, that the divisor used indetermining the daily rate of the monthly-paid employees is '250'.

xxx xxx xxx

"Against this backdrop, certain relevant end logical conclusions result, namely:

"(A)The Bank maintains that, since its inception or start of operations in 1954, allmonthly-paid employees in the Bank are paid their monthly salaries without anydeduction for unworked Saturdays, Sundays, legal and special holidays. On the otherhand, it also maintains that, as a matter of fact, 'always conscious of its employee whohas to work on respondent's rest days of Saturdays and Sundays or on a legal holiday,an employee who works overtime on any of said days is paid one addition regular payfor the day plus 50% of said regular pay.' (Bank's Memorandum, page 3, filed January21, 1976) . . .

xxx xxx xxx

"On the other hand, there is more reason to believe that, if the Bank has never madeany deduction from its monthly-paid employee for unworked Saturdays. Sundays, legaland special holidays, it is because there is really nothing to deduct properly since themonthly salary never really included pay for such unworked daysand which givecredence to the conclusion that the divisor '250' is the proper one to use in computingthe equivalent daily rate of the monthly-paid employees.

(B)The Bank further maintains that the holiday pay is intended only for daily-paidworkers. In this regard, the NLRC has this to say in the same above-quoted CharteredBank case:

'It is contended that holiday pay is primarily for daily wage earners. Let usexamine the law, more specifically Article 95 (now Article 94) of the Labor Code to seewhether it supports this contention. The words used in the Decree are 'every worker',while the framers of the Implementing Rules preferred the use of the phrase 'allemployees.' Both the decree itself and the Rules mentioned enumerated the exceptedworkers. It is a basic rule of statutory construction that putting an exception limits ormodifies the enumeration or meaning made in the law. It is thus easy to see that amere reading of the Decree and of the Rules would show that the monthly-paidemployees of the Bank are not expressly included in the enumeration of the exception.

'Special notice is made of the fact that the criteria at once readable from theexception referred to is the nature of the job and the number of employees involved,and not whether the employee is a daily-wage earner or a regular monthly-paidemployee.'

"There is no reason at all to digress from the above-quoted observation of theHonorable Commission for purposes of the present case.

xxx xxx xxx


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"Finally, inasmuch as Article 94 of the Labor Code is one of its so-called self-executingprovisions, conjointly with its corresponding implementing Rules, it is to be taken tohave taken effect as of November 1, 1974, as per Section 1 (1), Rule IV, Book III, ofthe Implementing Rules.

"WHEREAS, all the above premises considered, this Arbitrator rules that:

(1)All the monthly-paid employees of the Bank herein represented by the Union and asgoverned by their Collective Bargaining Agreement, are entitled to the holiday paybenefits as provided for in Article 94 of the Labor Code and as implemented by Rule IV,Book III, of the corresponding implementing Rules, except for any day or any longerperiod designated by law for holding a general election or referendum;

(2)Paragraph (1) hereof means that any covered employee who does not work on anyof the regular holidays enumerated in Article 94 (c) of the Labor Code, except thatwhich is designated for election or referendum purposes, is still entitled to receive anamount equivalent to his regular daily wage in addition to his monthly salary. If heworks on any of the regular holidays, other than that which is designated for election

or referendum purposes, he is entitled to twice his regular daily wage in addition to hismonthly salary. The 50% premium pay provided for in the CBA for working on a restday (which has been interpreted by the parties to include the holidays) shall bedeemed already included in the 200% he receives for working on a regular holiday.With respect to the day or any longer period designated by law for holding a generalelection or referendum, if the employee does not work on such day or period he shallno longer be entitled to receive any additional amount other than his monthly salarywhich is deemed to include already his regular daily wage for such day or period. If heworks on such day or period, he shall be entitled to an amount equivalent to hisregular daily wage (100%) for that day or period in addition to his monthly salary. The50% premium pay provided for in the CBA for working on that day or period shall bedeemed already included in the additional 100% he receives for working on such dayor period; and

(3)The Bank is hereby ordered to pay all the above employees in accordance with theabove paragraphs (1) and (2), retroactive from November 1, 1974.

SO ORDERED.

April 22, 1976, Manila, Philippines."4

The next day, on April 23, 1976, the Department of Labor released Policy Instructions No. 9, hereinbelowquoted:

"The Rules implementing PD 850 have clarified the policy in the implementation of the

ten (10) paid legal holidays. Before PD 850, the number of working days a year in afirm was considered important in determining entitlement to the benefit. Thus, wherean employee was working for at least 313 days, he was considered definitely alreadypaid. If he was working for less than 313, there was no certainty whether the ten (10)paid legal holidays were already paid to him or not.

"The ten (10) paid legal holidays law, to start with, is intended to benefit principallydaily employees. In the case of monthly, only those whose monthly salary did not yetinclude payment for the ten (10) paid legal holidays are entitled to the benefit.

"Under the rules implementing PD 850, this policy has been fully clarified to eliminatecontroversies on the entitlement of monthly paid employees. The new determining rule

is this: If the monthly paid employee is receiving not less than P240, the maximummonthly minimum wage, and his monthly pay is uniform from January to December, heis presumed to be already paid the ten (10) paid legal holidays. However, if deductionsare made from his monthly salary on account of holidays in months where they occur,then he is still entitled to the ten (10) paid legal holidays.

"These new interpretations must be uniformly and consistently upheld.
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"This issuance shall take effect immediately."

After receipt of a copy of the award, private respondent filed a motion for reconsideration, followed by asupplement thereto. Said motion for reconsideration was denied. A copy of the order of denial wasreceived by private respondent on July 8, 1976. cdphil

Said private respondent interposed an appeal to the National Labor Relations Commission (NLRC),contending that the Arbitrator demonstrated gross incompetence and/or grave abuse of discretion whenhe entirely premised the award on the Chartered Bank case and failed to apply Policy Instructions No. 9.This appeal was dismissed on August 16, 1976, by the NLRC because it was filed way beyond the ten-dayperiod for perfecting an appeal and because it contravened the agreement that the award shall be finaland unappealable.

Private respondent then appealed to the Secretary of Labor. On June 30, 1977, the Acting Secretary ofLabor reversed the NLRC decision and ruled that the appeal was filed on time and that a review of thecase was inevitable as the money claim exceeded P100,000.00.5Regarding the timeliness of the appeal,it was pointed out that the Labor Department had on several occasions treated a motion forreconsideration (here, filed before the Arbitrator) as an appeal to the proper appellate body in

consonance with the spirit of the Labor Code to afford the parties a just, expeditious and inexpensivedisposition of their claims, liberated from the strict technical rules obtaining in the ordinary courts.

Anent the issue whether or not the agreement barred the appeal, it was noted that theManifestation, supra, "is not of slight significance because it has in fact abrogated complainant'scommitment to abide with the decision of the Voluntary Arbitrator without any reservation" andamounted to a "virtual repudiation of the agreement vesting finality"6on the arbitrator's disposition.

And on the principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions No. 9,applied the same retrospectively, among other things. LLjur

In due time, the Union appealed to the Office of the President. In affirming the assailed decision,Presidential Executive Assistant Jacobo C. Clave relied heavily on the Manifestation and PolicyInstructions No. 9.

Hence, this petition.

On January 10, 1981, petitioner filed a motion to substitute the Bank of the Philippine Islands as privaterespondent, as a consequence of the Articles of Merger executed by said bank and Commercial Bank &Trust Co. which inter aliadesignated the former as the surviving corporate entity. Said motion wasgranted by the Court.

We find the petitioner impressed with merit.

In excluding the union members of herein petitioner from the benefits of the holiday pay law, publicrespondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 ofthe Labor Code promulgated by the then Secretary of Labor and Policy Instructions No. 9.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong,7this Court's SecondDivision, speaking through former Justice Makasiar, expressed the view and declared that theaforementioned section and interpretative bulletin are null and void, having been promulgated by thethen Secretary of Labor in excess of his rule-making authority. It was pointed out, inter alia, that in theguise of clarifying the provisions on holiday pay, said rule and policy instructions in effect amended thelaw by enlarging the scope of the exclusions. We further stated that the then Secretary of Labor went asfar as to categorically state that the benefit is principally intended for daily paid employees whereas thelaw clearly states that every worker shall be paid their regular holiday pay which is incompatible withthe mandatory directive, in Article 4 of the Labor Code, that "all doubts in the implementation and

interpretation of the provisions of Labor Code, including its implementing rules and regulations, shall beresolved in favor of labor." Thus, there was no basis at all to deprive the union members of their right toholiday pay.

In the more recent case of The Chartered Bank Employees Association vs. Hon. Ople,8this Court inan en bancdecision had the occasion to reiterate the above-stated pronouncement. We added:
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"The questioned Section 2, Rule IV, Book III of the Integrated Rules and theSecretary's Policy Instruction No. 9 add another excluded group, namely, 'employeeswho are uniformly paid by the month'. While the additional exclusion is only in the formof a presumption that all monthly paid employees have already been paid holiday pay,it constitutes a taking away or a deprivation which must be in the law if it is to be valid.An administrative interpretation which diminishes the benefits of labor more than what

the statute delimits or withholds is obviously ultra vires."

In view of the foregoing, the challenged decision of public respondent has no leg to stand on as it waspremised principally on the same Section 2, Rule IV, Book III of the Implementing Rules and PolicyInstructions No. 9. This being the decisive issue to be resolved, We find no necessity to pass upon theother issues raised, such as the effects of the Union's Manifestation and the propriety of applying PolicyInstructions No. 9 retroactively to the instant case.

WHEREFORE, the questioned decisions of the respondent Presidential Executive Assistant and the ActingSecretary of Labor are hereby set aside, and the award of the Arbitrator reinstated. Costs against theprivate respondent.

IT IS SO ORDERED.

Teehankee, Plana, Relova, Gutierrez, Jr. and Patajo, JJ., concur.Melencio-Herrera, J., took no part.

Footnotes1.dated Dec. 8, 1978, Annex "J", pp. 73-78, Rollo.2."However, voluntary arbitration awards or decisions on money claims involving an amount exceeding P100,000 or forty percent

(40%) of the paid-up capital of the respondent employer, whichever is lower, may be appealed to the National LaborRelations Commission on any of the following grounds: (a) Abuse of discretion; and (b) Gross incompetence."

3.pp. 50-51, Rollo.4.pp. 53-61, Rollo.5.the Socio-Economic Analyst of the Department having reported that the money value of the holiday pay amounted to

P432,122.88.6.p. 69, Rollo.

7.G.R. No. 52415, 132 SCRA 663.8.G.R. No. L-44717, August 28, 1985.


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FIRST DIVISION

[G.R. No. 78763. July 12, 1989.]

MANILA ELECTRIC COMPANY, petitioner, vs. THE NATIONAL LABORRELATIONS COMMISSION, and APOLINARIO M. SIGNO,respondents.

Angara, Abello, Concepcion, Regala & Cruzfor petitioner.Dominador Maglalangfor private respondent.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATIONS; TERMINATION OF EMPLOYMENT; EMPLOYER CAN GENERALLYDISMISS OR LAY-OFF AN EMPLOYEE FOR JUST AND AUTHORIZED CAUSES UNDER ARTICLES 282 AND 283OF LABOR CODE. The power to dismiss is the normal prerogative of the employer. An employer,generally, can dismiss or lay-off an employee for just and authorized causes enumerated under Articles 282and 283 of the Labor Code.;

2. ID.; ID.; ID.; RIGHT OF EMPLOYER TO FREELY DISCHARGE HIS EMPLOYEES, SUBJECT TO REGULATIONBY THE STATE IN THE EXERCISE OF ITS PARAMOUNT POLICE POWER; REASON. The right of anemployer to freely discharge his employees is subject to regulation by the State, basically in the exercise of

its paramount police power. This is so because the preservation of the lives of the citizens is a basic duty ofthe State, more vital than the preservation of corporate profits (Euro-Linea, Phil. Inc. v. NLRC, G.R. No.75782, December 1, 1987, 156 SCRA 78).

3. REMEDIAL LAW; APPEAL; FINDINGS OF ADMINISTRATIVE AGENCIES GENERALLY ACCORDED NOT ONLYRESPECT BUT EVEN FINALITY; REVIES LIMITED TO ISSUES OF JURISDICTION OR GRAVE ABUSE OFDISCRETION. Well-established is the principle that findings of administrative agencies which haveacquired expertise because their jurisdiction is confined to specific matters are generally accorded not onlyrespect but even finality. Judicial review by this Court on labor cases does not go so far as to evaluate thesufficiency of the evidence upon which the proper labor officer or office based his or its determination but islimited to issues of jurisdiction or grave abuse of discretion (Special Events and Central Shipping OfficeWorkers Union v. San Miguel Corporation, G.R. Nos. L-51002-06, May 30, 1983, 122 SCRA 557).

4. LABOR AND SOCIAL LEGISLATIONS; TERMINATION OF EMPLOYMENT; DISMISSAL OF AN EMPLOYEE EVENFOR A VALID CAUSE SHOULD NOT BE IMPOSED; LENGTH OF TIME OF EMPLOYEE'S SERVICE,CONSTRUED. This Court has held time and again, in a number of decisions, that notwithstanding theexistence of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissalshould not be imposed, as it is too severe a penalty if the latter has been employed for a considerablelength of time in the service of his employer. (Itogon-Suyoc Mines, Inc. v. NLRC, et al., G.R. No. L-54280,September 30, 1982, 117 SCRA 523 and other cases cited.)

5. ID.; LABOR CODE; WORKMEN'S WELFARE IS PRIMORDIAL AND PARAMOUNT CONSIDERATION IN THEINTERPRETATION OF PROVISIONS AND IMPLEMENTING REGULATIONS. In carrying out and interpretingthe Labor Code's provisions and its implementing regulations, the workingman's welfare should be theprimordial and paramount consideration. This kind of interpretation gives meaning and substance to theliberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which statesthat "all doubts in the implementation and interpretation of the provisions of the Labor Code including itsimplementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July

30, 1987, 152 SCRA 140).

6. ID.; TERMINATION OF EMPLOYMENT; REINSTATEMENT OF RESPONDENT PROPER BUT WITHOUT AWARDOF BACKWAGES; CASE AT BAR. Reinstatement of respondent Signo is proper in the instant case, butwithout the award of backwages, considering the good faith of the employer in dismissing the respondent.

D E C I S I O N

MEDIALDEA, Jp:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of theresolution of the respondent National Labor Relations Commission dated March 12, 1987 (p. 28, Rollo) inNLRC Case No. NCR-8-3808-83, entitled, "Apolinario M. Signo, Complainant, versus Manila Electric

Company, Respondents", affirming the decision of the Labor Arbiter which ordered the reinstatement ofprivate respondent herein, Apolinario Signo, to his former position without backwages.

The antecedent facts are as follows:

Private respondent Signo was employed in petitioner company as supervisor-leadman since January 1963up to the time when his services were terminated on May 18, 1983. cdll


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In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical servicesat his residence at Peafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private respondent Signofacilitated the processing of the said application as well as the required documentation for saidapplication at the Municipality of Antipolo, Rizal. In consideration thereof, private respondent receivedfrom Fernando de Lara the amount of P7,000.00. Signo thereafter filed the application for electricservices with the Power Sales Division of the company.

It was established that the area where the residence of de Lara was located is not yet within theserviceable point of Meralco, because the place was beyond the 30-meter distance from the nearestexisting Meralco facilities. In order to expedite the electrical connections at de Lara's residence, certainemployees of the company, including respondent Signo, made it appear in the application that the sari-sari store at the corner of Marcos Highway, an entrance to the subdivision, is applicant de Lara'sestablishment, which, in reality is not owned by the latter. LLpr

As a result of this scheme, the electrical connections to de Lara's residence were installed and madepossible. However, due to the fault of the Power Sales Division of petitioner company, Fernando de Larawas not billed for more than a year.

Petitioner company conducted an investigation of the matter and found respondent Signo responsible forthe said irregularities in the installation. Thus, the services of the latter were terminated on May 18,1983.

On August 10, 1983, respondent Signo filed a complaint for illegal dismissal, unpaid wages, andseparation pay.

After the parties had submitted their position papers, the Labor Arbiter rendered a decision (p. 79, Rollo)on April 29, 1985, which stated, inter alia:

"Verily, complainant's act of inducing the Meralco employees to effectuate theinstallation on Engr. de Lara's residence prejudiced the respondent, and therefore,complainant himself had indeed became a participant in the transactions, although notdirectly, which turned out to be illegal, not to mention that some of the materials usedtherein belongs to Meralco, some of which were inferior quality . . ."

"While complainant may deny the violation, he cannot do away with company's Codeon Employee Discipline, more particularly Section 7, par. 8 and Section 6, par. 24thereof. However, as admitted by the respondent, the infraction of the above citedCode is punishable by reprimand to dismissal."

". . . And in this case, while considering that complainant indeed committed the above-cited infractions of company Code of Employee Discipline, We shall also consider hisrecords of uninterrupted twenty (20) years of service coupled with two (2)commendations for honesty. Likewise, We shall take note that subject offense is his

first, and therefore, to impose the extreme penalty of dismissal is certainly too drastic.A penalty short of dismissal is more in keeping with justice, and adherence tocompassionate society.

"WHEREFORE, respondent Meralco is hereby directed to reinstate complainantApolinario M. Signo to his former position as Supervisor Leadman without backwages,considering that he is not at all faultless. He is however, here warned, that commissionof similar offense in the future, shall be dealt with more severely.

"SO ORDERED."

Both parties appealed from the decision to the respondent Commission. On March 12, 1987, the

respondent Commission dismissed both appeals for lack of merit and affirmed in totothe decision of theLabor Arbiter.

On June 23, 1987, the instant petition was filed with the petitioner contending that the respondentCommission committed grave abuse of discretion in affirming the decision of the Labor Arbiter. Atemporary restraining order was issued by this Court on August 3, 1987, enjoining the respondents fromenforcing the questioned resolution of the respondent Commission.


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The issue to resolve in the instant case is whether or not respondent Signo should be dismissed frompetitioner company on grounds of serious misconduct and loss of trust and confidence.

Petitioner contends that respondent Signo violated Sections 6 and 7 of the company's Code on EmployeeDiscipline, which provide:

"Section 6, Par. 24Encouraging, inducing or threatening another employee toperform an act constituting a violation of this Code or of company work, rules or anoffense in connection with the official duties of the latter, or allowing himself to bepersuaded, induced or influenced to commit such offense.

"PenaltyReprimand to dismissal, depending upon the gravity of the offense.

"Section 7, Par. 8Soliciting or receiving money, gift, share, percentage or benefitsfrom any person, personally or through the mediation of another, to perform an actprejudicial to the Company.

"PenaltyDismissal." (pp. 13-14, Rollo)

Petitioner further argues that the acts of private respondent constituted breach of trust and causedthe petitioner company economic losses resulting from the unbilled electric consumption of de Lara;that in view thereof, the dismissal of private respondent Signo is proper considering thecircumstances of the case.

The power to di

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