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LABREV

[G.R. No. 47800. December 2, 1940.]

1.MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

SYLLABUS1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The provisions of section 1 of Commonwealth Act No. 648 do not confer legislative power upon the Director of Public Works and the Secretary of Public Works and Communications. The authority therein conferred upon them and under which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and interest." The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount police power of the state. Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the

enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through education and, personal discipline, so that there may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex. Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."

D E C I S I O N

LAUREL, J.:

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Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary of Public Works and Communications, recommended to the latter the approval of the recommendation made by the Chairman of the National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during the hours as above indicated, for a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above-mentioned to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the approval of the Secretary of Public Works and Communications, is authorized to promulgate rules and regulations for the

regulation and control of the use of and traffic on national roads and streets is unconstitutional because it constitutes an undue delegation of legislative power. This contention is untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: ’The true distinction therefore is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the Legislature to an executive department or official. The Legislature may make decisions of executive departments or subordinate officials thereof, to whom it has committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to the ’necessity’ of the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines, the Director of Public Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the approval of the President, may contain provisions controlling or regulating the construction of buildings or other structures within a reasonable distance from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by the Director of Public Works and his duly authorized representatives whenever the condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and interest, or for a specified period, with the approval of the Secretary of Public Works and Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary of Public Works and Communications. The authority therein conferred upon them and under which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and streets designated as national roads by acts of the National

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Assembly or by executive orders of the President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the traffic makes such action necessary or advisable in the public convenience and interest." The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law. As was said in Locke’s Appeal (72 Pa. 491): "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know." The proper distinction the court said was this: "The Legislature cannot delegate its power to make the law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law-making power, and, must, therefore, be a subject of inquiry and determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to adapt itself to the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of "subordinate legislation," not only in the United States and England but in practically all modern governments. Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased difficulty of administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed by permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in administrative and executive officials, not only in the execution of the laws, but also in the promulgation of certain rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade and abridge the right to personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through education and personal discipline, so that there may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing one, and a business lawful today may in the future, because of the changed situation, the growth of population or other causes, become a menace to the public health and welfare, and be required to yield to the public good." And in People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is bringing within the police power of the state today things which were not thought of as being within such power yesterday. The development of civilization, the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the interests of the individuals of the state, have brought within

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the police power many questions for regulation which formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic security of all the people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So ordered.

Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

2. ADELAIDA B. AQUINO, G.R. No. 149256Petitioner,Present: PUNO, J., Chairperson,- v e r s u s - SANDOVAL-GUTIERREZ,CORONA,AZCUNA andGARCIA, JJ.SOCIAL SECURITY SYSTEM andU.S. NAVAL COMMISSARYSTORE, Subic Bay,Respondents. Promulgated: July 21, 2006x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N CORONA, J.: At bar is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the decision of the Court of Appeals (CA) in CA-G.R. SP No. 60726, entitled Adelaida B. Aquino v. Social Security System, dismissing petitioner Adelaida Aquinos claim under Presidential Decree (PD) No. 626 (the Employees Compensation Act). Petitioners husband, Jaime Aquino, worked as grocery man for the US Navy Commissary, Subic Bay, Olongapo City from 1970 to 1977. He performed the following tasks: (1) checked the availability of stocks before they were turned over to the supervisor of the store; (2) piled items in shelves and display cases and assisted patrons in locating them; (3) processed retail price changes by conducting inventories of items and (4) operated the forklift. On February 2, 2000 or about 23 years after his separation from employment, he died of congestive heart failure. Petitioner filed a claim for surviving spouses compensation benefits under PD 626 with respondent Social Security System (SSS). The latter denied the claim. Petitioner then appealed the case to the Employees Compensation Commission (ECC) which affirmed SSSs dismissal of the claim on the ground that the cause of death of petitioners husband was not attributable to the nature of his work as a grocery man in the Commissary. He was no longer connected with the store at that time. Aggrieved, petitioner went to the CA seeking the reversal of the ECCs decision. There, petitioner insisted that the cause of her husbands death was traceable to the nature of his job at the commissary store. The CA dismissed her appeal.[1] Petitioner sought reconsideration of the CA decision[2] but it was denied, hence, this petition. In this petition, petitioner essentially faults the CA for not finding that the ailment causing her husbands death was compensable under PD 626.[3] The petition will not prosper.Under the law, the beneficiary of an employee is entitled to death benefits if the cause of death is (1) an illness accepted as an occupational disease by the ECC or (2) any other illness caused by employment, subject to proof that the risk of contracting the same was increased by the working conditions.[4]

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Stated otherwise, a claimant must prove that the illness is listed as an occupational disease by the ECC; otherwise, he must present substantial evidence showing that the nature of the work increased the risk of contracting it. In the case of Panangui v. Employees Compensation Commission,[5] the Court explained congestive heart failure as: a clinical syndrome which develops eventually in 50-60% of all patients with organic cardiovascular disease. It is defined as the clinical state resulting from the inability of the heart to expel sufficient blood for the metabolic demands of the body. Heart failure may therefore be present when the cardiac output is high, normal or low, regardless of the absolute level, the cardiac output is reduced to metabolic demands Under the Rules on Employees Compensation, particularly Annex A thereof which contains the list of occupational diseases, congestive heart failure is not included. Hence, petitioner should have shown proof that the working conditions in the commissary store where her husband worked aggravated the risk of contracting the ailment.[6] Petitioner should have adduced evidence of a reasonable connection between the work of her deceased husband and the cause of his death, or that the progression of the disease was brought about largely by the conditions in her husbands job as grocery man at the commissary store.[7] Failing in this aspect, we are constrained to rule that her husbands illness which eventually caused his demise was not compensable. Moreover, even if we were to construe the ailment of petitioners husband as cardiovascular disease compensable under ECC Resolution No. 432, the petition will still not prosper. To be compensable, the cardiovascular (or heart) disease of Jaime Aquino must have occurred under any of the following conditions: (a) [i]f the heart disease was known to have been present during employment[,] there must be proof that an acute exacerbation clearly precipitated by the unusual strain by reason of the nature of his work; (b) [t]he strain of work that [brought] about an acute attack must be of sufficient severity and must be followed within twenty-four (24) hours by clinical signs of a cardiac insult to constitute causal relationship; (c) [i]f a person who was apparently symptomatic before subjecting himself to strain at work showed signs and symptoms of cardiac injury during the performance of his work and such symptoms and signs persisted, it [was] reasonable to claim a causal relationship.[8]

Clearly, the circumstances of the present case do not fall under any of the foregoing conditions. In addition, granting petitioners claim will set a bad precedent considering that 23 years elapsed from the time her husband stopped working at the commissary store up to the time he died. If we were to grant it, we might unduly burden the funds of the ECC and jeopardize it with a flood of unsubstantiated claims. Besides, the Court cannot remain oblivious to the possibility that, within that 23-year period, other factors intervened to cause the death of petitioners husband. Petitioner was thus under an even greater compulsion to proffer evidence to negate this possibility and establish the causal connection between her husbands work and his death. The 23-year gap between his separation from employment in 1977 and his death in 2000 was a gaping hole in petitioners claim. Furthermore, well-entrenched is the rule that findings of fact of administrative officials who have acquired expertise on account of their specialized jurisdiction are accorded by the Courts not only respect but, most often, with finality. Lastly, while it is true that PD 626 operates on the principle of social justice, sympathy for the workers should also be placed in a sensible equilibrium with the stability of the ECC trust fund. WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. SP No. 60726 is hereby AFFIRMED. Accordingly, the petition isDENIED. No costs. SO ORDERED.3. G.R. No. 85985 August 13, 1993PHILIPPINE AIRLINES, INC. (PAL), petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.Solon Garcia for petitioner.Adolpho M. Guerzon for respondent PALEA. MELO, J.:In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employees.On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately

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implemented, and some employees were forthwith subjected to the disciplinary measures embodied therein.Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under the Code be reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14, Record.)PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe rules and regulations regarding employess' conduct in carrying out their duties and functions, and alleging that by implementing the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of the Code as defective for, respectively, running counter to the construction of penal laws and making punishable any offense within PAL's contemplation. These provisions are the following:Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the company. Every employee is bound to comply with all applicable rules, regulations, policies, procedures and standards, including standards of quality, productivity and behaviour, as issued and promulgated by the company through its duly authorized officials. Any violations thereof shall be punishable with a penalty to be determined by the gravity and/or frequency of the offense.Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The penalty for an offense shall be determined on the basis of his past record of offenses of any nature or the absence thereof. The more habitual an offender has been, the greater shall be the penalty for the latest offense. Thus, an employee may be dismissed if the number of

his past offenses warrants such penalty in the judgment of management even if each offense considered separately may not warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due regard shall be given to the length of time between commission of individual offenses to determine whether the employee's conduct may indicate occasional lapses (which may nevertheless require sterner disciplinary action) or a pattern of incorrigibility.Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault free" considering that while the issuance of rules and regulations governing the conduct of employees is a "legitimate management prerogative" such rules and regulations must meet the test of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all embracing and all encompassing provision that makes punishable any offense one can think of in the company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the while that the 1966 Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds application only after it has been conclusively shown that the law was circulated to all the parties concerned and efforts to disseminate information regarding the new law have been exerted. (p. 39, Rollo.) She thereupon disposed:WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:1. Furnish all employees with the new Code of Discipline;2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same for further hearing; and3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.SO ORDERED. (p. 40, Rollo.)PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya

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concurring, found no evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC made the following observations:Indeed, failure of management to discuss the provisions of a contemplated code of discipline which shall govern the conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth relationship between them as did happen in the instant case. There is no dispute that adoption of rules of conduct or discipline is a prerogative of management and is imperative and essential if an industry, has to survive in a competitive world. But labor climate has progressed, too. In the Philippine scene, at no time in our contemporary history is the need for a cooperative, supportive and smooth relationship between labor and management more keenly felt if we are to survive economically. Management can no longer exclude labor in the deliberation and adoption of rules and regulations that will affect them.The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. The Code of Discipline involves security of tenure and loss of employment — a property right! It is time that management realizes that to attain effectiveness in its conduct rules, there should be candidness and openness by Management and participation by the union, representing its members. In fact, our Constitution has recognized the principle of "shared responsibility" between employers and workers and has likewise recognized the right of workers to participate in "policy and decision-making process affecting their rights . . ." The latter provision was interpreted by the Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional Commission, Vol. II).In a sense, participation by the union in the adoption of the code if conduct could have accelerated and enhanced their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. In fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)Respondent Commission thereupon disposed:WHEREFORE, premises considered, we modify the appealed decision in the sense that the New Code of Discipline should be reviewed and discussed with complainant union, particularly the disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. The pending cases adverted to in the appealed decision if still in the arbitral level, should be reconsidered by the respondent Philippine Air Lines. Other dispositions of the Labor Arbiter are sustained.SO ORDERED. (p. 5, NLRC Decision.)PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of Discipline"; (b) engaging in quasi-judicial legislation in ordering

PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)As stated above, the Principal issue submitted for resolution in the instant petition is whether management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline.PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of responsibility therefor between employer and employee.Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the participation of workers in decision and policy-making processes affecting the rights, duties and welfare." However, even in the absence of said clear provision of law, the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that management's prerogatives must be without abuse of discretion.In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the company's right to implement a new system of distributing its products, but gave the following caveat:So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. (at p. 28.)All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly established that the prerogative being invoked is clearly a managerial one.A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor do they concern the management aspect of the business of the company as in the San Miguel case. The provisions of the Code clearly have repercusions on the employee's right to security of tenure. The implementation of the provisions may result in the deprivation of an employee's means of livelihood which, as correctly pointed out by the NLRC, is a property right (Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which border on infringement of constitutional rights, we must uphold the constitutional requirements for the protection of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of

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the worker" (Employees Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. PAL asserts that all its employees have been furnished copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great respect.PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with PALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement:The Association recognizes the right of the Company to determine matters of management it policy and Company operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department, to another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management.The exercise by management of its prerogative shall be done in a just reasonable, humane and/or lawful manner.Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. And one such mater is the formulation of a code of discipline.Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To promote the enlightenment of workers concerning their rights and obligations . . . as employees." This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a harmonious labor-management relationship and the then already existing state

policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees' rights.Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation of the employees. Such cooperation cannot be attained if the employees are restive on account, of their being left out in the determination of cardinal and fundamental matters affecting their employment.WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is made as to costs.SO ORDERED.4. G.R. No. 108031 March 1, 1995DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and LEONOR A ANG, respondents. BELLOSILLO, J.:Is declaration of bankruptcy or judicial liquidation required before the worker's preference may be invoked under Art. 110 of the Labor Code?On 21 March 1977 private respondent Leonor A. Ang started employment as Executive Secretary with Tropical Philippines Wood Industries, Inc. (TPWII), a corporation engaged in the manufacture and sale of veneer, plywood and sawdust panel boards. In 1982 she was promoted to the position of Personnel Officer.In September 1983 petitioner Development Bank of the Philippines, as mortgagee of TPWII, foreclosed its plant facilities and equipment. Nevertheless TPWII continued its business operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities and equipment. In January 1986 petitioner took possession of the foreclosed properties. From then on the company ceased its operations. As a consequence private respondent was on 15 April 1986 verbally terminated from the service.On 14 December 1987 aggrieved by the termination of her employment, private respondent filed with the Labor Arbiter a complaint for separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances against TPWII, its General Manager, and petitioner.After hearing the Labor Arbiter found TPWII primarily liable to private respondent but only for her separation pay and vacation and sick leave pay because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed. 1 The General Manager was absolved of any liability. But with respect to petitioner, it was held subsidiarily liable in

9

the event the company failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an employee to be paid benefits due him from the properties of his employer is superior to the right of the latter's mortgage, citing this Court's resolution in PNB v. Delta Motor Workers Union. 2On 16 November 1992 public respondent National Labor Relations Commission affirmed the ruling of the Labor Arbiter. 3The issue now before us is whether public respondent committed grave abuse of discretion in holding that Art. 110 of the Labor Code, as amended, which refers to worker preference in case of bankruptcy or liquidation of an employer's business is applicable to the present case notwithstanding the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII.Petitioner argues that the decision of public respondent runs counter to the consistent rulings of this Court in a long line of cases emphasizing that the application of Art. 110 of the Labor Code is contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer.We hold that public respondent gravely abused its discretion in affirming the decision of the Labor Arbiter. Art. 110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions of the Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is avoided. Art. 110, then prevailing, provides:Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and Regulations Implementing the Labor Code provides:Sec. 10. Payment of wages in case of bankruptcy. — Unpaid wages earned by the employees before the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.We interpreted this provision in Development Bank of the Philippines v. Santos 4 to mean that —. . . a declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order . . . . (Emphasis supplied).The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be putting the worker in a

better position than the State which could only assert its own prior preference in case of a judicial proceeding. 5 Art. 110, which was amended by R.A. 6715 effective 21 March 1989, now reads:Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid.Obviously, the amendment expanded the concept of "worker preference" to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. The Rules and Regulations Implementing R.A. 6715, approved 24 May 1989, also amended the corresponding implementing rule, and now reads:Sec. 10. Payment of wages and other monetary claims in case of bankruptcy. — In case of bankruptcy or liquidation of the employer's business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid.Although the terms "declaration" (of bankruptcy) or "judicial" (liquidation) have been notably eliminated, still inDevelopment Bank of the Philippines v. NLRC, 6 this Court did not alter its original position that the right to preference given to workers under Art. 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. In effect, we reiterated our previous interpretation in Development Bank of the Philippines v. Santos where we said:It (worker preference) will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the "claims of the Government and other creditors" may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined. In the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the adjudication made will be binding on all parties-in-interest since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony. 7In ruling, as we did, in Development Bank of the Philippines v. Santos, we took into account the following pronouncements:In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvents property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvent's creditors may be given and where the claims of preferred

10

creditors may be bindingly adjudicated. (De Barreto v. Villanueva, No. L-14938, December 29, 1962, 6 SCRA 928). The rationale therefore has been expressed in the recent case of DBP v. Secretary of Labor (G.R. No. 79351, 28 November 1989), which we quote:A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtors are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale (of) the debtor's specific property. Indubitably, the preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established (Kuenzle & Sheriff (Ltd.) v. Villanueva, 41 Phil. 611 [1916]; Barretto v. Villanueva, G.R. No. 14938, 29 December 1962, 6 SCRA 928; Philippine Savings Bank v. Lantin, G.R. No. 33929, 2 September 1983, 124 SCRA 476).In the present case, there is as yet no declaration of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to enforce the worker's preference.The additional ratiocination of public respondent that "under Article 110 of the Labor Code complainant enjoys a preference of credit over the properties of TPWII being held in possession by DBP," is a dismal misconception of the nature of preference of credit, a subject matter which we have already discussed in clear and simple terms and even distinguished from a lien in Development Bank of the Philippines v. NLRC 8 —. . . A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor . . . In the words of Republic v. Peralta, supra: Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article 2241, number 6: "claims for laborers: wages, on the goods manufactured or the work done;" or by Article 2242, number 3, "claims of laborers and other workers engaged in the construction reconstruction or repair of buildings, canals

and other works, upon said buildings, canals and other works . . . . To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6, and 22421 number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2244.The DBP anchors its claim on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 1l0, when not falling within Article 2241 (6) and Article 2242 (3), of the Civil Code and not attached to any specific property, is all ordinary preferred credit although its impact is to move it from second priority to first priority in the order of preference established by Article 2244 of the Civil Code.The present controversy could have been easily settled by public respondent had it referred to ample jurisprudence which already provides the solution. Stare decisions et non quiet movere. Once a case is decided by this Court as the final arbiter of any justifiable controversy one way, then another case involving exactly the same point at issue should be decided in the same manner. Public respondent had no choice on the matter. It could not have ruled any other way. This Court having spoken in a string of cases against public respondent, its duty is simply to obey judicial precedents. 9 Any further disregard, if not defiance, of our rulings will be considered a ground to hold public respondent in contempt.WHEREFORE, the petition is GRANTED. The decision of public respondent National Labor Relations Commission affirming the decision of the Labor Arbiter insofar as it held petitioner Development Bank of the Philippines liable for the monetary claims of private respondent Leonor A. Ang is SET ASIDE. The temporary restraining order we issued on 8 February 1993 10 enjoining the execution of the decision of public respondent against petitioner is made PERMANENT.SO ORDERED.5. G.R. No. 77859 May 25, 1988CENTURY TEXTILE MILLS, INC. and ALFREDO T. ESCAÑO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER FELIPE P. PATI, and EDUARDO CALANGI, respondents.Melanio L. Zoreta for petitioners.The Solicitor General for public respondent.Alfonso P. Ancheta, Jr. for private respondent. FELICIANO, J.:Since 13 December 1974, private respondent Eduardo Calangi had been employed at the factory of petitioner Century Textile Mills, Inc. where he worked initially as an apprentice and later

11

on as a machine operator in the Finishing Department. Effective 10 June 1983, however, petitioner Corporation, acting through its company officers, 1 placed him under preventive suspension and, on 27 July 1983, completely terminated his services with the company. Private respondent Calangi was accused of having masterminded a criminal plot against Melchor Meliton and Antonio Santos, two of his supervisors at his place of work.The events that led to private respondent's dismissal are as follows:According to Rodolfo Marin (a factory co-worker of private respondent Calangi), at around 12:15 a.m. on 4 June 1983 and within company premises, he chanced upon "Gatchie" Torrena (a machine operator at petitioner's factory) and noticed the latter mixing some substance with the drinking water contained in a pitcher from which Meliton and Santos regularly drank. Before anyone could take a drink from the pitcher, Marin reported what he had observed to Meliton who, in turn, informed Santos of the same. Soon after, Meliton and Santos took possession of the pitcher of water and filed a formal report of the incident with company management. 2 The contents of the pitcher were subsequently brought to and analyzed by chemists at the Philippine Constabulary Crime Laboratory at Camp Crame, Quezon City who found the presence of a toxic chemical (formaldehyde) therein. 3In the police investigation that followed, Torrena confessed that private respondent Calangi personally instructed him, and he agreed, to place formaldehyde in the pitcher of water. Torrena also admitted that he and private respondent were then motivated by a desire to avenge themselves upon Meliton and Santos, both of whom had instigated their (i.e., Torrena's and private respondent's) suspension from work several times in the past. 4 These circumstances moved petitioner Corporation preventively to suspend Torrena and private respondent Calangi, and eventually to dismiss them from its employ. Additionally, criminal charges for attempted murder were filed against these two employees with the Office of the Provincial Fiscal of Rizal.On 11 October 1983, private respondent Calangi filed a Complaint 5 for illegal dismissal (docketed as Case No. NLRC-NCR-10-4518-83) with the Arbitration Branch, National Capital Region, of the then Ministry of Labor and Employment. Among other things, private respondent alleged in his complaint that "[p]rior to his preventive suspension neither the company nor any of its officers furnished him [with] a copy of their charges, if any, nor afforded him the opportunity to answer the same and defend himself." Hence, private respondent claimed entitlement to the following:

A. Moral damages P50,000.00

Actual damages

a) Wages for 3 years P6,520.80

b) ECOLA for 3 years 3, 841.60

c) 13th month pay for

3 years 903.60

d) Vacation and Sick

Leave of 15 days each 627.00 11,893.00

Exemplary damages 25,000.00

Attorney's fees 17,398.60

TOTAL P104,291.60

A prayer for "such other reliefs and remedies consequent upon the premises" was likewise set out in the complaint.In a Decision 6 dated 16 August 1984, the Labor Arbiter dismissed private respondent's Complaint. The Labor Arbiter found that not only was the evidence against private respondent Calangi "so overwhelming" and "sufficient enough" to justify his dismissal, but that private respondent had himself failed inexplicably to deny or controvert the charges against him.An appeal was brought by private respondent Calangi before the public respondent National Labor Relations Commission, which agency, on 3 December 1985, rendered a Decision, 7 the dispositive portion of which reads:WHEREFORE, with all the foregoing considerations, let the appealed decision dated 27 August 1984 be, as it is hereby REVERSED. Accordingly, complainant's dismissal is hereby declared to be illegal, and consequently, respondents [petitioners] are hereby ordered to reinstate Eduardo Calangi to his former or equivalent position without loss of seniority and other benefits, with full backwages from 27 July 1983 until he is actually reinstated.SO ORDERED.Petitioner Corporations' Motion for Reconsideration was denied on 4 April 1986. Sometime in November of 1986, the Labor Arbiter issued a writ of execution directing petitioners to pay private respondent Calangi the amount ofP54,747.74 representing the latter's backwages, 13th month pay, living allowance, and vacation and sick leave — i.e., actual damages.The present Petition for certiorari with Preliminary Injunction or Restraining Order was filed with this Court on 3 April 1987. The Court issued a Temporary Restraining Orders 8 on 8 April 1987 and, on 24 August 1987, issued a Resolution 9 giving due course to the Petition and directing the parties to submit their respective memoranda.The Petition at bar raises the following issues for consideration: (1) whether or not private respondent Calangi was illegally dismissed from his job as machine operator; and (2) assuming he was illegally dismissed, whether or not petitioner Corporation can be ordered legally (a) to reinstate private

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respondent Calangi to his former position in the company, with full backwages and without loss of seniority rights and other benefits, considering that such relief had not been sought by private respondent in his complaint, and (b) to pay private respondent an amount for actual damages in excess of what had been claimed by the latter in his Complaint.We sustain the ruling of public respondent Commission that private respondent Calangi had been dismissed without just cause from his employment by petitioner Corporation.Public respondent Commission found that private respondent Calangi was effectively denied his right to due process in that, prior to his preventive suspension and the termination of his services, he had not been given the opportunity either to affirm or refute the charges proferred against him by petitioner Corporation. Petitioners allege however that private respondent Calangi had been previously informed of and given the chance to answer the company's accusations against him, but that he had "kept silent" all the while. The following Memorandum issued by petitioner's Personnel Manager on 10 June 1983 (Calangi's first day of preventive suspension) was cited in this connection:MEMO: TO ALL CONCERNEDSUBJ.: Under Preventive Suspension Employees. Please be advised that the following employees are under preventive suspension (indefinite) namely:1. Eduardo Calangi--effective June 10, 19832. Gatchie Torrena--effective June 10, 1983GROUNDPolicy Instruction No. 10 of the New Labor Code of the Philippines, Revised Edition 1982.NOTE: Decision about the indebtedness suspension of concerned employees was reached after the meeting between the union and the management.Be guided accordingly.MANAGEMENT(SGD.) Jovencio G. TolentinoPersonnel ManagerPetitioners contend that the above Memorandum "clearly shows that prior investigation and consultation with the union was made," and "will therefore negate the theory of respondents that respondent Calangi was not afforded the chance to present his side for the memo itself speaks otherwise."The procedure that an employer wishing to terminate the services of an employee must follow, is spelled out in the Labor Code:ART. 278. Miscellaneous provisions. —xxx xxx xxxHowever, the employer shall fumish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations

promulgated pursuant to guidelines set by the [Department] of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity and legality of his dismissing by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The [Department] may suspend the effects of the termination pending resolution of the case in the event of a prima facie finding by the Ministry that the termination may cause a serious labor dispute or is in implementation of a mass lay-off.xxx xxx xxx(Emphasis supplied)Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code reiterates the above requirements:xxx xxx xxxSec. 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In case of abandomment of work, the notice shall be served at the worker's last known address.xxx xxx xxxSec. 5. Answer and hearing. — The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.SEC. 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor.xxx xxx xxx(Emphasis supplied)The twin requirements of notice and hearing constitute essential elements of due process in cases of employee dismissal: the requirement of notice is intended to inform the employee concerned of the employer's intent to dismiss and the reason for the proposed dismissal; upon the other hand, the requirement of hearing affords the employee an opportunity to answer his employer's charges against him and accordingly to defend himself therefrom before dismissal is effected. Neither of these two requirements can be dispensed with without running afoul of the due process requirement of the 1987 Constitution.The record of this case is bereft of any indication that a hearing or other gathering was in fact held where private respondent Calangi was given a reasonable opportunity to confront his accuser(s) and to defend against the charges made by the latter. Petitioner Corporation's "prior consultation" with the labor union with which private respondent Calangi was affiliated, was legally insufficient. So far as the record shows, neither petitioner nor the labor union actually advised Calangi of the matters at issue. The Memorandum of petitioner's Personnel Manager certainly offered no helpful particulars. It is

13

important to stress that the rights of an employee whose services are sought to be terminated to be informed beforehand of his proposed dismissal (or suspension) as well as of the reasons therefor, and to be afforded an adequate opportunity to defend himself from the charges levelled against him, are rights personal to the employee. Those rights were not satisfied by petitioner Corporation's obtaining the consent of or consulting with the labor union; such consultation or consent was not a substitute for actual observance of those rights of private respondent Calangi. The employee can waive those rights, if he so chooses, but the union cannot waive them for him. That the private respondent simply 'kept silent" all the while, is not adequate to show an effective waiver of his rights. Notice and opportunity to be heard must be accorded by an employer even though the employee does not affirmatively demand them.Investigation of the alleged attempt to poison the drinking water of the two (2) supervisors of the private respondent was conducted by the Cainta police authorities. These authorities interrogated and took the sworn statements of Messrs. Marin, Torrena, Meliton and Santos who, in one way or another, had been involved in such incident. Petitioners argue that the decision to place private respondent Calangi under preventive suspension and subsequently to terminate his services was arrived at only after the incident complained of, and Mr. Calangi, had been investigated by the company. There is, once again, nothing in the record to show that private respondent Calangi been interrogated by the Cainta police authorities or by anyone else; indeed, it appears that practically everybody, save Calangi, was so interrogated by the police. If petitioner Corporation did notify and investigate private respondent and did hold a hearing, petitioners have succeeded in keeping such facts off the record. It needs no documentation, but perhaps it should be stressed, that this Court can act only on the basis of matters which have been submitted in evidence and made part of the record.Additionally, the Court notes that the application filed by petitioner Corporation with the Ministry of Labor and Employment for clearance to suspend or terminate the services of Mr. Calangi, cited as ground therefor "[Calangi's] frustrated plan to poison Mr. Antonio Santos and Mr. Melchor Meliton last June 5, 1983." This ground, so far as can be gathered from the allegations of petitioners in their pleadings and from the evidence of record, both in the public respondent Commission and in this Court, is anchored mainly, if not wholly on Mr. Torrena's sworn statement, given to the Cainta police authorities, that both he (Torrena) and private respondent had conspired with each other to inflict physical harm upon the persons of Messrs. Meliton and Santos. A finding of private respondent's participation in the alleged criminal conspiracy cannot, however, be made to rest solely on the unilateral declaration of Mr. Torrena himself a confirmed "co-conspirator." Such declaration must be corroborated by other competent and convincing evidence. In. the absence of such

other evidence, Mr. Torrena's "confession" implicating Mr. Calangi must be received with considerable caution. The very least that petitioner Corporation should have done was to confront private respondent with Torrena's sworn statement; the record does not show that petitioner Corporation did so. The burden of showing the existence of a just cause for terminating the services of private respondent Calangi lay on the petitioners. Petitioners have not discharged that burden.It remains only to note that the criminal complaint for attempted murder against Mr. Calangi was dismissed by the Provincial Fiscal of Rizal. 10Coming now to the second issue raised by petitioners in their Pleadings, Article 280 of the Labor Code, as amended states:Art. 280. -Security of Tenure. — In case of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his backwages computed from the time his compensation was withheld from him up to the time of his reinstatement. (Emphasis supplied)We have held in the past that both reinstatement, without loss of seniority rights, and payment of backwages are the normal consequences of a finding that an employee has been illegaly dismissed, and which remedies together make the dismissed employee whole. 11 A finding of illegal dismissal having been correctly made in this case by public respondent Commission, private respondent is, as a matter of right, entitled to receive both types of relief made available in Article 280 of the Labor Code, as amended. It matters not that private respondent Calangi had omitted in his complaint filed in Case No. NLRC-NCR-10-4518-83 a claim for reinstatement without loss of seniority rights for he is entitled to such relief as the facts alleged and proved warrant. 12In view of the finding of illegal dismissal in this case, petitioner Corporation is liable to private respondent Calangi for payment of the latter's backwages for three (3) years, without qualification and deduction. Considering the circumstances of this case, however, the Court beheves that reinstatement of private respondent to his former position—or to any other equivalent position in the company — will not serve the best interests of the parties involved. Petitioner Corporation should not be compelled to take back in its fold an employee who, at least in the minds of his employers, poses a significant threat to the lives and safety of company workers. Consequently, we hold that private respondent should be given his separation pay in lieu of such reinstatement. The amount of separation pay shall be equal to private respondent's one-half (1/2) month's salary for every year of service, to be computed from 13 December 1974 (date of first employment) until 10 June 1986 (three years after date of illegal dismissal). 13WHEREFORE, the Petition for certiorari is DISMISSED. The Temporary Restraining Order and the Resolutions issued on 8 April 1987 and 24 August 1987, respectively, by the Court in

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this case are WITHDRAWN. The Decision of public rAshville respondent Commission in Case No. NLRC-NCR-10-4518-83 is hereby AFFIRMED, subject the the modifications that petitioners shall pay private respondent Calangi: (a) three (3) years backwages without qualification or deduction, and (b) separation pay, computed as above indicated, in lieu of reinstatement. No pronouncement as to costs.SO ORDERED.6. G.R. No. L-22723 April 30, 1970CONFEDERATION OF UNIONS IN GOVERNMENT CORPORATIONS AND OFFICES (CUGCO) and GERONIMO Q. QUADRA, petitioners, vs.ABELARDO SUBIDO, Acting Commissioner of Civil Service, TOMAS P. MATIC, JR., Government Corporate Counsel, PEDRO M. GIMENEZ, Auditor General and PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO),respondents.Jose C. Espinas for petitioner.Geronimo Q. Quadra in his own behalf.Francisco L. Cuevas for respondent Philippine Charity Sweepstakes Office.Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Francisco J. Bautista and Special Attorney Raymundo R. Villones for respondent Abelardo Subido.Government Corporate Counsel Tomas P. Matic, Jr. for himself. DIZON, J.:This is an original petition for prohibition, with a prayer for the issuance of a writ of preliminary injunction filed by (1) Confederation of Unions in Government Corporations and Offices (CUGCO), (2) Philippine Charity Sweepstakes Employees Association (PCSEA-CUGCO) and (3) Geronimo Q. Quadra, against Abelardo Subido in his capacity as Acting Commissioner of Civil Service, Tomas P. Matic, Jr., Government Corporate Counsel, Pedro M. Gimenez, Auditor General, and Philippine Charity Sweepstakes Office (PCSO), Praying that, upon the reasons therein set forth and after due proceedings, judgment be rendered as follows:(a) Give due course to this PETITION.(b) That an order be issued commanding the respondent Government Corporate Counsel to desist from proceeding in the administrative investigation instituted against petitioner GERONIMO Q. QUADRA to be conducted on April 23, 1964 and for respondents from further proceeding administratively against the members of the petitioner unions who are employed in the Legal and Auditing Departments of the Philippine Charity Sweepstakes Office, and in the other government-owned or controlled corporations during the pendency of this petition.(c) That after hearing on the merits, to command the respondents to desist from proceeding with the administrative investigation that has been commenced against petitioner GERONIMO Q. QUADRA and against the members of the petitioner unions who are employed in the legal and Auditing

Departments of the Philippine Charity Sweepstakes Office and other government-owned or controlled corporations who have refused to resign their membership from the petitioner unions or to renounce the benefits they are receiving and enjoying under the Collective Bargaining Agreements.The petitioners pray for any other remedy as may be just and equitable in the premises.The Philippine Charity Sweepstakes Employees Association (PCSEA-CUGCO), however, filed on July 21, 1965 a motion to be allowed to withdraw as party-petitioner. Said motion was granted in our resolution of August 5 of the same year.On April 30, 1964 ACA WORKERS ASSOCIATION and ACA SUPERVISORS ASSOCIATION filed a motion praying that they be allowed to intervene. Finding the reasons alleged in support thereof to be sufficient, their intervention was allowed.While the petition was given due course, no writ of preliminary injunction was issued. Moreover, on July 16, 1965 petitioner Quadra filed an urgent petition for the issuance of a writ of preliminary prohibitory and mandatory injunction to prohibit the respondents from enforcing the decision of the Commissioner of Civil Service rendered on July 14, 1965 in AC No. R-28341 against him, and/or to compel said respondents to reinstate him, if said decision had already been enforced. This motion was denied in our resolution of July 20 of the same year.The facts upon which the remaining petitioners base their right to the reliefs prayed for in the petition are set forth in the latter as follows:5. That the respondent PCSO as early as August 18, 1956, and up to the filing of this PETITION, has recognized the petitioner PCSEA (CUGCO) represented by petitioner GERONIMO Q. QUADRA, as PCSEA (CUGCO) President and CUGCO General Secretary, as the sole and exclusive bargaining agent for all personnel of the PCSO who are eligible for membership with the petitioner PCSEA (CUGCO) with respect to all matters involving terms and conditions of employment, especially on salaries and/or rates of pay, a copy of the latest Collective Bargaining Agreement entered into between the PCSO and the PCSEA (CUGCO) is hereto attached as ANNEX "A" of this petition.6. That on March 23, 1964, the respondent Abelardo Subido, Acting Commissioner of Civil Service, issued a Memorandum-Circular to the "AUDITOR GENERAL, THE GOVERNMENT CORPORATE COUNSEL, AND ALL CHAIRMEN OF BOARDS AND GENERAL MANAGERS OF GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS PERFORMING PROPRIETARY FUNCTIONS,"RULING that under Rep. Act Nos. 2266 and 2327, the Auditor General and the Government Corporate Counsel are considered the employers of the personnel employed in the Auditing as well as in the Legal Departments of government-owned and controlled corporations although they perform proprietary functions and that in view thereof he directs and orders the Auditor General, the Government Corporate Counsel, and all the Chairmen of the Boards, and

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General Managers of Government-owned or controlled corporations performing proprietary functions to require all union members of the petitioner unions employed in the Auditing and Legal Departments of said government corporations to sever their membership from the legitimate local employees' unions therein and to renounce all collective bargaining benefits or face disciplinary actions, the severest penalty of which shall be dismissal from the service. A copy of this Memorandum-Circular is hereto attached as ANNEX "B" of this petition.7. That on April 1, 1964 the respondent Auditor General in Memorandum-Circular No. 487, ORDERED "ALL CHAIRMEN OF THE BOARDS OF DIRECTORS, MANAGING HEADS AND AUDITORS OF GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS PERFORMING PROPRIETARY FUNCTIONS, AND OTHERS CONCERNED" to comply with the aforesaid Memorandum-Circular No. 15 of the respondent Acting Commissioner of Civil Service.8. That on April 2, 1964, the respondent Government Corporate Counsel, wrote a letter to the Board of Directors and General Manager of the Philippine Charity Sweepstakes Office, inviting their attention to the Memorandum-Circular No. 15 of the respondent Acting Commissioner of Civil Service and DIRECTING all lawyers employed in the Legal Department of the PCSO to sever their membership with the petitioner PCSEA (CUGCO) and to renounce at once all benefits said lawyers are receiving and enjoying under the collective bargaining agreement entered into between the PCSO and the PCSEA (CUGCO) and failure to secede from the union or to renounce the benefits they are receiving and enjoying under the Collective Bargaining Agreement shall be a ground for disciplinary action, the severest penalty of which shall be dismissal from the service. A copy of this letter is hereto attached as ANNEX "C" of this petition.9. That on April 10, 1964, the Corporate Auditor of the Philippine Charity Sweepstakes Office wrote a letter to the President of the Philippine Charity Sweepstakes Employees Association requiring compliance with the Memorandum-Circular of the Auditor General. A copy of this Circular and letter are hereto attached as ANNEXES "D" and "D-1" of this petition.10. That on April 13, 1964, the petitioners sent to the Board of Directors, thru the Acting General Manager of the Philippine Charity Sweepstakes Office and the Auditor General thru the PCSO Corporation Auditor, a reply protesting to the actuations of the respondent Acting Commissioner of Civil Service, the Auditor General and the Government Corporate Counsel. A copy of said letter-memorandum is hereto attached and integrated as ANNEXES "E" and "E-1" of this petition.11. That notwithstanding said protest the Government Corporate Counsel thru his assistant on the same date, instead initiated administrative proceedings against the petitioner GERONIMO Q. QUADRA, and for him to appear and submit for investigation, the hearing of which is scheduled to be held at

the Office of the Government Corporate Counsel on April 23, 1964. A copy of this Order and complaint is hereto attached as ANNEXES "F" and "F-1" of this petition.12. That in view of the above-stated Circulars of the respondents, members of the affiliate local unions of the CUGCO who are employed in the Auditing and Legal Departments in the various government-owned or controlled corporations performing proprietary functions, stand to lose their employment (let alone all the benefits that would be lost which they are now receiving and enjoying under a Collective Bargaining Agreement as well as the other resultant benefits and incidents of union membership), UNLESS they follow the directives of the respondents requiring them to sever their membership with the local employees' unions and to renounce all the benefit they are now enjoying under the Collective Bargaining Agreement within seventy-two (72) hours from receipt of notification to that effect as contained in the circulars of the respondents Acting Commissioner of Civil Service, Auditor General and the Government Corporate Counsel above-mentioned.In the PCSO alone, there are about ONE HUNDRED TWENTY (120) members of the petitioner unions employed in the Legal and Auditing Departments of the said Office who are adversely affected by the directives of the respondents.13. That because of the Memorandum-Circular of Abelardo Subido, the respondent Government Corporate Counsel Tomas P. Matic, Jr. is subjecting petitioner GERONIMO Q. QUADRA, the principal leader of the aforementioned petitioner unions to an administrative proceeding in connection with his union activities as PCSEA (CUGCO) President and as General Secretary of the CUGCO where he appeared in the Court of Industrial Relations in Case No. 2701-ULP, PCSEA (CUGCO-KMP) vs. PCSO, Case No. 3442-ULP, CUGCO & PCSEA vs. PCSO & IGNACIO SANTOS DIAZ, and Case No. 3076-ULP, MAGALIT, ET AL. vs. PCSEA, ET AL. of which the latter now is pending consideration on appeal before this Honorable Tribunal in G.R. No. L-20448, entitledMAGALIT, et al. vs. CIR, PCSEA, QUADRA, et al.14. That the proceedings of the respondents Government Corporate Counsel and Auditor General occasioned by the Memorandum Circular of the Acting Commissioner of Civil Service to subject members of the petitioner unions and petitioner GERONIMO Q. QUADRA to administrative proceedings is without jurisdiction, in excess of their jurisdiction and conducted with grave abuse of discretion.From the above facts and the prayer for relief contained in the petition, it appears that petitioners' main objective is to prohibit respondents, particularly the Government Corporate Counsel, from proceeding with the administrative investigation against petitioner Quadra, and to prohibit them further from taking any administrative or punitive action against the personnel of the auditing and legal staffs of government owned or controlled corporations who had not complied with Memorandum Circular No. 15, series of 1964 of respondent Commissioner of the Civil Service by severing their connection

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with the Unions existing in said corporations affiliated with CUGCO.It is not disputed that on March 23, 1964 the respondent, the Acting Commissioner of Civil Service, issued Memorandum Circular No. 15, series of 1964, whose pertinent portion reads as follows:In view of the foregoing, all personnel of the General Auditing Office as well as of the legal staffs of all government-owned or controlled corporations are hereby declared to be embraced in the Civil Service and they belong either to the classified or unclassified service unless otherwise provided by law. They are therefore not within the coverage of Memorandum Circular Nos. 1 and 3, current series, of this Office. Appointments of these personnel should be forwarded to this Office for approval in accordance with the Civil Service Law and Rules.The said personnel may belong to any labor organization which does not impose the obligation to strike or to join strikes. If any of these personnel have previously joined any labor union which imposes the obligation to strike or to join strikes, he should sever his membership within seventy-two (72) hours from receipt of this Memorandum Circular by the corporations concerned. Moreover, if any member of the legal staff of said corporations is receiving benefits under a collective bargaining contract entered into between management and the union, he should renounce such benefit at once. Failure to secede from the union which imposes the obligation to strike or to join strikes or to renounce the benefits of the collective bargaining agreements shall be a ground for disciplinary action for conduct prejudicial to the best interest of the service, the severest penalty of which shall be dismissal from the service.New appointments should be issued to employees who have renounced benefits under a collective bargaining contract, which must conform with the Civil Service Law and Rules, and submitted to this Office for approval.A list of personnel covered by this Memorandum Circular should be submitted to this Office within thirty (30) days from receipt hereof by the corporations concerned.Neither is it questioned that on April 1, 1964 the Auditor General issued his own Memorandum Circular No. 487 ordering all chairmen of the board of directors, managing heads and auditors of government owned or controlled corporations performing proprietary functions, and others concerned, to comply with Memorandum Circular No. 15 mentioned heretofore, and that sometime prior to April 23, 1964 the Government Corporate Counsel initiated administrative proceedings against petitioner Quadra for misconduct in office and/or conduct prejudicial to the service.In so far as the present action was intended to prohibit the respondent Government Corporate Counsel and the respondent Commissioner of Civil Service from continuing with the administrative investigation against Quadra (AC No. R-28341), the same has practically become moot and academic because on July 14, 1965 the aforesaid Commissioner of Civil Service rendered judgment in said case finding Quadra "guilty

as charged", and imposed upon him "the penalty of dismissal from the service effective upon receipt of this decision" (record pp. 134 and 137). Moreover, from the facts stated in said decision, it appears that the charges investigated in that administrative case have no bearing upon Memorandum Circular No. 15 because they involved Quadra's actuations as Chief Legal Officer of the Philippine Charity Sweepstakes Office. Specifically he was charged with having represented in several particular cases interests adverse to the Philippine Charity Sweepstakes Office of which he was the Chief Legal Officer; with neglect of duty and practicing his profession as lawyer without permission from competent authority; all in violation of pertinent provisions of the Civil Service Law, rules and regulations.The above notwithstanding, of course, the main question raised in the petition remains, and it is whether Memorandum Circular No. 15, series of 1964, issued by the respondent Commissioner of Civil Service, is valid. While, on the one hand, petitioners claim that said respondent had no authority nor jurisdiction to issue said circular; that the provisions thereof are in violation of the Constitution and of pertinent laws guaranteeing their right to form associations or societies for purposes not contrary to law and the right of government employees and workers to form, join and assist labor unions of their own choosing for the purpose of collective bargaining, and to engage in concerted activities to secure and effect changes or modifications in their terms and conditions of employment, on the other hand, the respondents contend that the questioned memorandum circular was issued to give life to the civil service law and related legislations, particularly Republic Act No. 2266, affecting the auditing personnel in government owned or controlled corporations, and Republic Act No. 2337, as amended by Republic Act No. 3838, affecting the legal staffs of said corporations.We agree with respondents' view.Under the provisions of Republic Act 2266 the Auditor General appoints and fixes the salaries and the number of the personnel to assist his representative in government owned and controlled corporations, although the expenses for the maintenance and operation of the Auditing Office are to be borne by the corporations. On the other hand, under Section 1 of Republic Act 2327, as amended by Republic Act No. 3838, the position of Government Corporate Counsel is made "distinct and separate from the office of the Solicitor General" and is made the principal law officer of all government owned or controlled corporations, and exercises control and supervision over all legal divisions maintained separately by said corporations.Clearly deducible from the foregoing is that the personnel of the auditing staff in the different government owned or controlled corporations are under the office of the Auditor General, while those of the legal staff of said corporations are under the office of the Government Corporate Counsel, and that all of them are embraced and covered by the civil service

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law, whether they belong to the classified or the unclassified service. This view is in line with our ruling in National Marketing Corporation, etc. vs. CIR and PRISCO Workers Union, et al. (G.R. No. L-17004, January 31, 1963) where We held as follows:We agree with appellants that members of the auditing force cannot be regarded as employees of PRISCO in matters relating to their compensation. They are appointed and supervised by the Auditor General, have an independent tenure, and work subject to his orders and instructions, and not to those of the management of appellants. Above all, the nature of their functions and duties, for the purpose of fiscal control of appellants' operations, imperatively demands, as a matter of policy, their positions be completely independent from interference or inducement on the part of the supervised management, in order to assure a maximum of impartiality in the auditing functions. Both independence and impartiality require that the employees in question be utterly free from apprehension as to their tenure and from expectancy of benefits resulting from any action of the management, since in either case there would be an influence at work that could possibly lead, if not be positive malfeasance, to laxity and indifference that would gradually erode and endanger the critical supervision entrusted to these auditing employees.While the ruling cited above affected members of the auditing force working in government owned or controlled corporations, it should likewise apply to the case of the personnel of the legal staffs or divisions of the same corporations, for obvious reasons.But petitioners claim that the questioned circular is unconstitutional because it violates their right to form or join associations or labor unions of their choice. We believe otherwise. It is worth remembering that the right to form and join associations and unions is not absolute or unlimited. Thus, if a person accepts employment that falls under the civil service law and his employer performs governmental functions — such as the General Auditing Office and the Government Corporate Counsel's Office — he may not resort to and exercise the right to strike, because that is prohibited by law. Having accepted the employment freely and being chargeable with knowledge of the fact that he has no right to resort to strike to enforce his demands against his employer, his only recourse is either to respect and comply with that condition or resign.IN VIEW OF ALL THE FOREGOING, the writ prayed for is denied and the petition for prohibition under consideration is dismissed, with costs.7. G.R. No. 75662 September 15, 1989MERCURY DRUG CORPORATION, petitioner vs.NATIONAL LABOR RELATIONS COMMISSION, NLRC SHERIFF and CESAR E. LADISLA, respondents.Veronica G. de Vera for petitioner.David B. Agoncillo for private respondent.

FERNAN, C.J.:Petitioner assails in this petition for review on certiorari the Resolution dated July 24, 1986 of the National Labor Relations Commission in NLRC Case No. RB-IV-19301-78-T denying petitioner's motion for reconsideration of its decision dated April 30, 1986 which reversed the decision of Labor Arbiter Ceferina J. Diosana and ordered the reinstatement of private respondent Cesar E. Ladisla to his former position with full backwages.Records show that private respondent Cesar E. Ladisla was employed by petitioner Mercury Drug Corporation as a Stock Analyst at its Claro M. Recto Branch. He had been with the company for two years and nine months when on August 15, 1977 he was apprehended by representatives of Mercury Drug while in the act of pilfering company property consisting of three (3) bottles of Persantin and one (1) bottle of Valoron at 100 tablets per bottle with a total value of P272.00. He admitted his guilt to the investigating representatives of petitioner company and executed a handwritten admission. Said admission was repeated verbally at the police station before the arresting officer as shown in the Booking Sheet and Arrest Report which was signed and authenticated by Ladisla. 1 Thus, on August 19, 1977, petitioner, while simultaneously placing private respondent on preventive suspension, filed before the Department of Labor an application for the termination of private respondent's employment on grounds of dishonesty and breach of trust.Private respondent opposed the aforesaid application for clearance to terminate his services alleging among others, that his suspension and proposed dismissal were unfounded and baseless being premised on the machinations and incriminatory acts of Ms. Leonora Suarez and Edgardo Imperial, Manager and Retail Supervisor, respectively, of petitioner's Claro M. Recto Branch; and that he was not given the opportunity to be heard nor allowed to explain his side before he was summarily suspended.The parties were then required by the Arbitration Branch of the Department of Labor to file their respective position papers. While the case was being heard by Labor Arbiter Ceferina J. Diosana petitioner filed a criminal complaint for attempted qualified theft against private respondent before the Fiscal's Office of Manila but this was dismissed by the court before the arraignment of the accused. However, the case was refiled and docketed as Criminal Case No. 43096 before Judge Pedro A. Ramirez of the then Court of First Instance, subsequently the Regional Trial Court of Manila, Branch XXX.In a decision dated November 8, 1979. 2 Labor Arbiter Ceferina J. Diosana sustained the validity of private respondent's dismissal and granted petitioner's application for clearance to terminate, the services of the former. Private respondent appealed his aforesaid dismissal to the National Labor Relations Commission. Pending resolution of the appeal, herein petitioner filed a Manifestation with said Commission notifying the latter of the ongoing trial in Criminal Case No. 43096

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against private respondent. On September 15, 1983, judgment was rendered in Criminal Case No. 43096, finding private respondent accused guilty of the crime of simple theft. 3 No appeal was taken from the decision in the subject criminal case, private respondent having availed himself of the benefits of the Probation Law. He was eventually discharged from probation on December 27, 1984, after complying with the terms and conditions thereof. 4On April 30, 1986, public respondent National Labor Relations Commission reversed the decision of the Labor Arbiter because it found no substantial evidence establishing the charge against private respondent Ladisla stating thus:WHEREFORE, the Decision appealed from is hereby set aside and a new one entered ordering respondent to immediately reinstate him in (sic) his former position with full back wages.SO ORDERED. 5Petitioner filed a motion for reconsideration of the aforementioned decision, which was denied by public respondent Commission in its resolution dated July 24, 1986. 6 Hence, this petition assailing the latter's reversal of the labor arbiter's decision and its order for the reinstatement with full back wages of private respondent.Petitioner submits that it was serious legal error on the part of public respondent to order the reinstatement of private respondent who was convicted of the crime of simple theft by Judge Pedro Ramirez in Criminal Case No. 43096 filed by petitioner against said private respondent-employee involving the same facts obtaining in the present case for termination. On the other hand, private respondent maintains that he was a victim of revenge and incriminatory machinations as the charge of qualified theft of company property was a frame-up.We hold that public respondent National Labor Relations Commission committed a grave abuse of discretion amounting to lack of jurisdiction in finding no substantial evidence to sustain the charge against private respondent. This conclusion is in complete and utter disregard of the Regional Trial Court's conviction of private respondent for the crime of simple theft which decision was rendered prior to its own assailed decision. It must be remembered that proceedings in criminal cases such as that held in the subject criminal case require proof beyond reasonable doubt to establish the guilt of the accused and findings of fact of the trial court on this matter are generally accorded great weight by appellate courts most especially where no appeal had been filed thereafter, thus rendering the said findings final. As mentioned earlier, private respondent did not appeal from the decision of the lower court but instead availed himself of the benefits of the probation law which was correspondingly granted by the Regional Trial Court.Dismissal of a dishonest employee is to the best interest not only of management but also of labor. As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees. An employer cannot be compelled to continue in employment an employee guilty of acts inimical to its interest, justifying loss of confidence in him.

The law does not impose unjust situations on either labor or management. 7We therefore find justification in the termination of private respondent Cesar E. Ladisla's employment by petitioner Mercury Drug Corporation.Under Article 282(c) of the Labor Code, an employer may terminate an employment for "fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative." Loss of confidence is established as a valid ground for the dismissal of an employee. The law does not require proof beyond reasonable doubt of the employee's misconduct to invoke such a justification. It is sufficient that there is some basis for the loss of trust or that the employer has reasonable grounds to believe that the employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and confidence demanded of his position. 8Private respondent's admission of his guilt as earlier stated, his subsequent conviction in Criminal Case No. 43096 and his acceptance of the same as implied in the absence of an appeal therefrom and his subsequent application for probation established beyond reasonable doubt his guilt for the crime of simple theft. It was this same act which gave rise to his conviction by the trial court that was the basis for the termination of his employment by petitioner.We have held that the eventual conviction of the employee who is prosecuted for his misconduct is not indispensable to warrant his dismissal by his employer. 9 More specifically, an employee who has been exonerated from a criminal charge of theft of gasoline on the basis of technicality may still be dismissed from employment if the employer has ample reason to mistrust him. 10 If acquittal from the criminal charge does not negate the existence of a ground for loss of trust and confidence, with more reason should conviction for such criminal charge fortify said mistrust.Anent private respondent's claim of summary suspension without being given the opportunity to be heard, the Court takes note that, in addition to the fact that his suspension was merely preventive pending approval by the Department of Labor of its application for clearance to terminate the services of private respondent, the latter was given the chance to defend himself in several instances: at the Police Precinct No. III, Western Police District, Metro Manila where he was brought for investigation or questioning immediately after the occurrence of the alleged pilferage of medicines and where he was given the opportunity to state his defenses, and thereafter, before the arbitration branch of the Department of Labor where he was required and did submit his position paper.The law in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer.11 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

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its own rights, which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, the Supreme Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine . 12WHEREFORE, the assailed resolution of the National Labor Relations Commission is reversed and set aside and the Labor Arbiter's decision of November 8, 1979 dismissing Cesar E. Ladisla as petitioner's stock analyst is hereby reinstated. No costs.SO ORDERED.8. ANGELINA FRANCISCO, G.R. No. 170087Petitioner,Present:Panganiban, C.J. (Chairperson),- versus - Ynares-Santiago,Austria-Martinez,Callejo, Sr., andChico-Nazario, JJ.NATIONAL LABOR RELATIONSCOMMISSION, KASEI CORPORATION,SEIICHIRO TAKAHASHI, TIMOTEOACEDO, DELFIN LIZA, IRENEBALLESTEROS, TRINIDAD LIZA Promulgated:and RAMON ESCUETA,Respondents.August 31, 2006x ---------------------------------------------------------------------------------------- x DECISION YNARES-SANTIAGO, J.: This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision and Resolution of the Court of Appeals dated October 29, 2004[1] and October 7, 2005,[2] respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by herein petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the National Labor Relations Commission (NLRC) dated April 15, 2003,[3] in NLRC NCR CA No. 032766-02 which affirmed with modification the decision of the Labor Arbiter dated July 31, 2002,[4] in NLRC-NCR Case No. 30-10-0-489-01, finding that private respondents were liable for constructive dismissal.

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company.[5] Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so.She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company.[6] In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.[7] For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation.[8] In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all employees of Kasei Corporation and announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters.[9] Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001.Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well.[10] On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company.[11]

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Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted. The company never interfered with her work except that from time to time, the management would ask her opinion on matters relating to her profession. Petitioner did not go through the usual procedure of selection of employees, but her services were engaged through a Board Resolution designating her as technical consultant. The money received by petitioner from the corporation was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was not one of those reported to the BIR or SSS as one of the companys employees.[12] Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation. To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji Corporation.[13] The Labor Arbiter found that petitioner was illegally dismissed, thus: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. finding complainant an employee of respondent corporation;2. declaring complainants dismissal as illegal;3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly and severally pay complainant her money claims in accordance with the following computation: a. Backwages 10/2001 07/2002 275,000.00(27,500 x 10 mos.)

b. Salary Differentials (01/2001 09/2001) 22,500.00c. Housing Allowance (01/2001 07/2002) 57,000.00d. Midyear Bonus 2001 27,500.00e. 13th Month Pay 27,500.00f. 10% share in the profits of KaseiCorp. from 1996-2001 361,175.00g. Moral and exemplary damages 100,000.00h. 10% Attorneys fees 87,076.50P957,742.50 If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional backwages that would accrue up to actual payment of separation pay. SO ORDERED.[14] On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which reads: PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows: 1) Respondents are directed to pay complainant separation pay computed at one month per year of service in addition to full backwages from October 2001 to July 31, 2002; 2) The awards representing moral and exemplary damages and 10% share in profit in the respective accounts of P100,000.00 and P361,175.00 are deleted; 3) The award of 10% attorneys fees shall be based on salary differential award only; 4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay are AFFIRMED. SO ORDERED.[15] On appeal, the Court of Appeals reversed the NLRC decision, thus: WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal. SO ORDERED.[16] The appellate court denied petitioners motion for reconsideration, hence, the present recourse.

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The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed. Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on one hand, and the Court of Appeals on the other, there is a need to reexamine the records to determine which of the propositions espoused by the contending parties is supported by substantial evidence.[17] We held in Sevilla v. Court of Appeals[18] that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship. However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment. The control test initially found application in the case of Viaa v. Al-Lagadan and Piga,[19] and lately in Leonardo v. Court of Appeals,[20] where we held that there is an employer-

employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. In Sevilla v. Court of Appeals,[21] we observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity,[22] such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.[23] The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business.[24] In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency.[25] By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer. By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security

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contributions from August 1, 1999 to December 18, 2000.[26] When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation.[27] It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business. In Domasig v. National Labor Relations Commission,[28] we held that in a business establishment, an identification card is provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of private respondent. We likewise ruled in Flores v. Nuestro[29] that a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The coverage of Social Security Law is predicated on the existence of an employer-employee relationship. Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as Corporate Secretary and that her designation as such was only for convenience. The actual nature of petitioners job was as Kamuras direct assistant with the duty of acting as Liaison Officer in representing the company to secure construction permits, license to operate and other requirements imposed by government agencies. Petitioner was never entrusted with corporate documents of the company, nor required to attend the meeting of the corporation. She was never privy to the preparation of any document for the corporation, although once in a while she was required to sign prepared documentation for the company.[30] The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself from the records of the case.[31] Regardless of this fact, we are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an employee of Kasei Corporation. Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look with favor on any retraction or recanted testimony, for it could have been secured by considerations other than to tell the truth and

would make solemn trials a mockery and place the investigation of the truth at the mercy of unscrupulous witnesses.[32] A recantation does not necessarily cancel an earlier declaration, but like any other testimony the same is subject to the test of credibility and should be received with caution.[33] Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to respondent corporation on a regular basis over an indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, respondent corporation had the power to control petitioner with the means and methods by which the work is to be accomplished. The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement.[34]A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee.[35] In Globe Telecom, Inc. v. Florendo-Flores,[36] we ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making and therefore amounted to an illegal termination of employment. In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and

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reaffirming it as a primary social economic force in furtherance of social justice and national development. WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE. The Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02, isREINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation of petitioner Angelina Franciscos full backwages from the time she was illegally terminated until the date of finality of this decision, and separation pay representing one-half month pay for every year of service, where a fraction of at least six months shall be considered as one whole year. SO ORDERED.9. JENNY M. AGABON and G.R. No. 158693VIRGILIO C. AGABON,Petitioners, Present: Davide, Jr., C.J.,Puno,Panganiban,Quisumbing,Ynares-Santiago,Sandoval-Gutierrez,- versus - Carpio,Austria-Martinez,Corona,Carpio-Morales,Callejo, Sr.,Azcuna,Tinga,Chico-Nazario, andGarcia, JJ.NATIONAL LABOR RELATIONSCOMMISSION (NLRC), RIVIERAHOME IMPROVEMENTS, INC. Promulgated:and VICENTE ANGELES,Respondents. November 17, 2004x ---------------------------------------------------------------------------------------- x DECISION YNARES-SANTIAGO, J.: This petition for review seeks to reverse the decision[1] of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992[2] until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states: WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of: 1. Jenny M. Agabon - P56, 231.932. Virgilio C. Agabon - 56, 231.93 and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999. Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabons 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR. SO ORDERED.[4] On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.[5]Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads:

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WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioners money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabons 13th month pay for 1998 in the amount of P2,150.00. SO ORDERED.[6] Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7] Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.[8] Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work.[9] In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.[10]It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.[12] Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a just cause. They had abandoned their employment and were already working for another employer.To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.[13] Article 282 of the Labor Code enumerates the just causes for termination by the employer:

(a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.[14] It is a form of neglect of duty, hence, a just cause for termination of employment by the employer.[15] For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.[16]In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.[17] In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were absent because they were already working in another company.The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct[19] and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.[20]

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After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed. The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and (c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employees last known address. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address.[21] Thus, it should be held liable for non-compliance with the procedural requirements of due process. A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission.[22] Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,[23] we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him.

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We concluded that reinstating the employee and awarding backwages may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe.[24] We further held that: Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.[25] The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule. On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states:

ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just.[26] It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10.[27] Breaches of these due processrequirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on

27

the facts of each case and the gravity of the omission committed by the employer. In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorneys fees. Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission,[30] which opinion he reiterated in Serrano, stated: C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x.[31] After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or

threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as in this case.[32] Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer.[33] It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the greatest good to the greatest number.[34] This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances. Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and dispense justice with an even hand in every case: We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy

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and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike, according to the mandate of the law.[35] Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.[37] As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employees one month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the employees right to statutory due process which was violated by the employer.[39] The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.[40] Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would

serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay, service incentive leave pay and 13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer.[41] In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed.[42] Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners.Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same[43] so as to further protect the level of real wages from the ravages of world-wide inflation.[44] Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit: (f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other method of calculating the

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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 from which an employer is prohibited under Article 113[45] of the same Code from making any deductions without the employees knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00. WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process. No costs. SO ORDERED. 10. G.R. No. L-50999 March 23, 1990JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners, vsNATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.Raul E. Espinosa for petitioners.Lucas Emmanuel B. Canilao for petitioner A. Manuel.Atienza, Tabora, Del Rosario & Castillo for private respondent.

MEDIALDEA, J.:This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service.The antecedent facts are as follows:Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They alleged further that they are being dismissed because of their membership in the union. At the last hearing of the case, however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made.The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of which petitioners are members, contains the following provision (p. 71, Rollo):ARTICLE XIV — Retirement GratuitySection l(a)-Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salaryas used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total service credits, a fraction of at least six months being considered one year, including probationary employment. (Emphasis supplied)On the other hand, Article 284 of the Labor Code then prevailing provides:Art. 284. Reduction of personnel. — The termination of employment of any employee due to the installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar causes, shall entitle the employee affected thereby to separation pay. In case of termination due to the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one (1) month pay or to

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at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:x x xSec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to prevent losses or other similar causes, or where the employee suffers from a disease and his continued employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year.x x xSec. 10. Basis of termination pay. — The computation of the termination pay of an employee as provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat the intention of the Code, in which case the basis of computation shall be the rate before its deduction. (Emphasis supplied)On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo):RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company.SO ORDERED.The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit.Hence, the present petition.On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by the decision appealed from" since he had "received, to his full and complete satisfaction, his separation pay," resolved to dismiss the petition as to him.The issue is whether or not earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay.The petition is impressed with merit.Petitioners' position was that in arriving at the correct and legal amount of separation pay due them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's salary, to wit;

(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. 'Fair reasonable value' shall not include any profit to the employer or to any person affiliated with the employer.Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or designations attached to the word remuneration or earnings.Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation and emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989.We shall concern ourselves now with the issue of whether or not earned sales commission should be included in the monthly salary of petitioner for the purpose of computation of their separation pay.Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same does

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not show any indication that commission is part of salary. We can say that commission by itself may be considered a wage. This is not something novel for it cannot be gainsaid that certain types of employees like agents, field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but rely mainly on commission earned.Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination pay due to one who is sought to be legally separated from the service is 'his latest salary rates.x x x.Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.The above terms found in those Articles and the particular Rules were intentionally used to express the intent of the framers of the law that for purposes of separation pay they mean to be specifically referring to salary only..... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is attached to simplify matters that may arise there from. The general guidelines in (sic) the formation of specific rules for particular purpose. Thus, that what should be controlling in matters concerning termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate, settled is the rule that in matters of conflict between the general provision of law and that of a particular- or specific provision, the latter should prevail.On its part, the NLRC ruled (p. 110, Rollo):From the aforequoted provisions of the law and the implementing rules, it could be deduced that wage is used in its generic sense and obviously refers to the basic wage rate to be ascertained on a time, task, piece or commission basis or other method of calculating the same. It does not, however, mean that commission, allowances or analogous income necessarily forms part of the employee's salary because to do so would lead to anomalies (sic), if not absurd, construction of the word "salary." For what will prevent the employee from insisting that emergency living allowance, 13th month pay, overtime, and premium pay, and other fringe benefits should be added to the computation of their separation pay. This situation, to our mind, is not the real intent of the Code and its rules.We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation

for services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions.The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners.We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remuneration services rendered which contributed to the increase of income of Zuellig . Commission is the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact that some salesman do not received any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do not form part of wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary and therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd? This narrow interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown the the streets to face the harsh necessities of life.Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in computing the separation pay, We held that:

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The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner.Applying this by analogy, since the commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment.The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper computation of said separation pay.SO ORDERED.11. G.R. No. L-63915 April 24, 1985LORENZO M. TAÑADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners, vs.HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacañang Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents. ESCOLIN, J.:Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of instructions, general

orders, proclamations, executive orders, letter of implementation and administrative orders.Specifically, the publication of the following presidential issuances is sought:a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123.g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.The respondents, through the Solicitor General, would have this case dismissed outright on the ground that petitioners have no legal personality or standing to bring the instant petition. The view is submitted that in the absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged non-publication of the presidential issuances in question 2 said petitioners are without the requisite legal personality to institute this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:

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SEC. 3. Petition for Mandamus.—When any tribunal, corporation, board or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to Protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant.Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is to compel the performance of a public duty, they need not show any specific interest for their petition to be given due course.The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this Court held that while the general rule is that "a writ of mandamus would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the mandamus proceedings brought to compel the Governor General to call a special election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:We are therefore of the opinion that the weight of authority supports the proposition that the relator is a proper party to proceedings of this character when a public right is sought to be enforced. If the general rule in America were otherwise, we think that it would not be applicable to the case at bar for the reason 'that it is always dangerous to apply a general rule to a particular case without keeping in mind the reason for the rule, because, if under the particular circumstances the reason for the rule does not exist, the rule itself is not applicable and reliance upon the rule may well lead to error'No reason exists in the case at bar for applying the general rule insisted upon by counsel for the respondent. The

circumstances which surround this case are different from those in the United States, inasmuch as if the relator is not a proper party to these proceedings no other person could be, as we have seen that it is not the duty of the law officer of the Government to appear and represent the people in cases of this character.The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the Solicitor General, the government officer generally empowered to represent the people, has entered his appearance for respondents in this case.Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since the presidential issuances in question contain special provisions as to the date they are to take effect, publication in the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code:Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, ...The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in those cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into effect.Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows:Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and resolutions of a public nature of the, Congress of the Philippines; [2] all executive and administrative orders and proclamations, except such as have no general applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts of sufficient importance to be so published; [4] such documents or classes of documents as may be required so to be published by law; and [5] such documents or classes of documents as the President of the Philippines

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shall determine from time to time to have general applicability and legal effect, or which he may authorize so to be published. ...The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan Pambansa—and for the diligent ones, ready access to the legislative records—no such publicity accompanies the law-making process of the President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of informing themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. 5The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion whatsoever as to what must be included or excluded from such publication.The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential issuances which apply only to particular persons or class of persons such as administrative and executive orders need not be published on the assumption that they have been circularized to all concerned. 6It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7:

In a time of proliferating decrees, orders and letters of instructions which all form part of the law of the land, the requirement of due process and the Rule of Law demand that the Official Gazette as the official government repository promulgate and publish the texts of all such decrees, orders and instructions so that the people may know where to obtain their official and specific contents.The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling effect this decision might have on acts done in reliance of the validity of those presidential decrees which were published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank 8 to wit:The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects-with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this Court.Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is "an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified."From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by petitioners

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to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neither the subject matters nor the texts of these PDs can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has ever been implemented or enforced by the government. In Pesigan vs. Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of this holding is apparently recognized by respondent officials considering the manifestation in their comment that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until the same shall have been published in the Official Gazette or in some other publication, even though some criminal laws provide that they shall take effect immediately.WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect.SO ORDERED.Relova, J., concurs.Aquino, J., took no part.Concepcion, Jr., J., is on leave. Separate Opinions FERNANDO, C.J., concurring (with qualification):There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I am unable, however, to concur insofar as it would unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect.I shall explain why.1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette. From the pragmatic standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the

Constitution as Justice Plana so aptly pointed out. It is true that what is decided now applies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity.2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. 1 I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. 23. It suffices, as was stated by Judge Learned Hand, that law as the command of the government "must be ascertainable in some form if it is to be enforced at all. 3 It would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, "if it is unknown and unknowable. 4 Publication, to repeat, is thus essential. What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential Issuances" could be open to question. Matters deemed settled could still be inquired into. I am not prepared to hold that such an effect is contemplated by our decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex post facto character becomes evident. 5 In civil cases though, retroactivity as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged presidential decree or executive act was issued under the police power, the non-impairment clause of the Constitution may not always be successfully invoked. There must still be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. 6 In traditional terminology, there could arise then a question of unconstitutional application. That is as far as it goes.

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4. Let me make therefore that my qualified concurrence goes no further than to affirm that publication is essential to the effectivity of a legislative or executive act of a general application. I am not in agreement with the view that such publication must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a constitutional command. A later legislative or executive act which has the force and effect of law can legally provide for a different rule.5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I find myself therefore unable to yield assent to such a pronouncement.I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion.Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur. TEEHANKEE, J., concurring:I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are commanded to obey before they can be punished for its violation, 1 citing the settled principle based on due process enunciated in earlier cases that "before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said contents and its penalties.Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public and official repository where they are duly published) that "Ignorance of the law excuses no one from compliance therewith.Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the completion of their publication in the

Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the law itself. This proviso perforce refers to a law that has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such publication. 2 To sustain respondents' misreading that "most laws or decrees specify the date of their effectivity and for this reason, publication in the Official Gazette is not necessary for their effectivity 3 would be to nullify and render nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate effectivity or an earlier effectivity date in the law itself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for its proper dissemination. MELENCIO-HERRERA, J., concurring:I agree. There cannot be any question but that even if a decree provides for a date of effectivity, it has to be published. What I would like to state in connection with that proposition is that when a date of effectivity is mentioned in the decree but the decree becomes effective only fifteen (15) days after its publication in the Official Gazette, it will not mean that the decree can have retroactive effect to the date of effectivity mentioned in the decree itself. There should be no retroactivity if the retroactivity will run counter to constitutional rights or shall destroy vested rights. PLANA, J., concurring (with qualification):The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazette required by any statute as a prerequisite for their effectivity, if said laws already provide for their effectivity date.Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided " Two things may be said of this provision: Firstly, it obviously does not apply to a law with a built-in provision as to when it will take effect. Secondly, it clearly recognizes that each law may provide not only a different period for reckoning its effectivity date but also a different mode of notice. Thus, a law may prescribe that it shall be published elsewhere than in the Official Gazette.Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said law is simply "An Act

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to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said law does not provide that publication in the Official Gazette is essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and how it will take effect. Only a higher law, which is the Constitution, can assume that role.In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette.Cuevas and Alampay, JJ., concur. GUTIERREZ, Jr., J., concurring:I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette. DE LA FUENTE, J., concurring:I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof. Separate OpinionsFERNANDO, C.J., concurring (with qualification):There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I am unable, however, to concur insofar as it would unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect.I shall explain why.1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette. From the pragmatic

standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the Constitution as Justice Plana so aptly pointed out. It is true that what is decided now applies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity.2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. 1 I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. 23. It suffices, as was stated by Judge Learned Hand, that law as the command of the government "must be ascertainable in some form if it is to be enforced at all. 3 It would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, "if it is unknown and unknowable. 4 Publication, to repeat, is thus essential. What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential Issuances" could be open to question. Matters deemed settled could still be inquired into. I am not prepared to hold that such an effect is contemplated by our decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex post facto character becomes evident. 5 In civil cases though, retroactivity

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as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged presidential decree or executive act was issued under the police power, the non-impairment clause of the Constitution may not always be successfully invoked. There must still be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. 6 In traditional terminology, there could arise then a question of unconstitutional application. That is as far as it goes.4. Let me make therefore that my qualified concurrence goes no further than to affirm that publication is essential to the effectivity of a legislative or executive act of a general application. I am not in agreement with the view that such publication must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a constitutional command. A later legislative or executive act which has the force and effect of law can legally provide for a different rule.5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I find myself therefore unable to yield assent to such a pronouncement.I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion.Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur. TEEHANKEE, J., concurring:I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are commanded to obey before they can be punished for its violation, 1 citing the settled principle based on due process enunciated in earlier cases that "before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said contents and its penalties.Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public

and official repository where they are duly published) that "Ignorance of the law excuses no one from compliance therewith.Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the law itself. This proviso perforce refers to a law that has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such publication. 2 To sustain respondents' misreading that "most laws or decrees specify the date of their effectivity and for this reason, publication in the Official Gazette is not necessary for their effectivity 3 would be to nullify and render nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate effectivity or an earlier effectivity date in the law itself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for its proper dissemination. MELENCIO-HERRERA, J., concurring:I agree. There cannot be any question but that even if a decree provides for a date of effectivity, it has to be published. What I would like to state in connection with that proposition is that when a date of effectivity is mentioned in the decree but the decree becomes effective only fifteen (15) days after its publication in the Official Gazette, it will not mean that the decree can have retroactive effect to the date of effectivity mentioned in the decree itself. There should be no retroactivity if the retroactivity will run counter to constitutional rights or shall destroy vested rights. PLANA, J., concurring (with qualification):The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazette required by any statute as a prerequisite for their effectivity, if said laws already provide for their effectivity date.Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided " Two things may be said of this provision: Firstly, it obviously does

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not apply to a law with a built-in provision as to when it will take effect. Secondly, it clearly recognizes that each law may provide not only a different period for reckoning its effectivity date but also a different mode of notice. Thus, a law may prescribe that it shall be published elsewhere than in the Official Gazette.Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said law is simply "An Act to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said law does not provide that publication in the Official Gazette is essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and how it will take effect. Only a higher law, which is the Constitution, can assume that role.In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette.Cuevas and Alampay, JJ., concur. GUTIERREZ, Jr., J., concurring:I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette. DE LA FUENTE, J., concurring:I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof.G.R. No. L-75038 August 23, 199312. ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and DOMINGO SAGUIT, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION)

and BROAD STREET TAILORING and/or RODOLFO ZAPANTA, respondents.Balguma, Macasaet & Associates for petitioners.Teresita Gandionco Oledan for private respondents. NOCON, J.:A basic factor underlying the exercise of rights and the filing of claims for benefits under the Labor Code and other presidential issuances or labor legislations is the status and nature of one's employment. Whether an employer-employee relationship exist and whether such employment is managerial in character or that of a rank and file employee are primordial considerations before extending labor benefits. Thus, petitioners in this case seek a definitive ruling on the status and nature of their employment with Broad Street Tailoring and pray for the nullification of the resolution dated May 12, 1986 of the National Labor Relations Commissions in NLRC Case No. RB-IV- 21558-78-T affirming the decision of Labor Arbiter Ernilo V. Peñalosa dated May 28, 1979, which held eleven of them as independent contractors and the remaining one as employee but of managerial rank.The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring shop owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00 and a monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the shop's manager and assistant manager would be absent. He saw to it that their work conformed with the pattern he had prepared and if not, he had them redone, repaired or resewn.The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task. Petitioners did not fill up any time record since they did not observe regular or fixed hours of work. They were allowed to perform their work at home especially when the volume of work, which depended on the number of job orders, could no longer be coped up with.From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For not properly notifying his employer, he was considered to have abandoned his work.In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor, Villuga claimed that he was refused admittance when he reported for work after his absence, allegedly due to his active participation in the union organized by private respondent's tailors. He further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service incentive leave pay and 13th month pay.Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that they were dismissed from

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their employment because they joined the Philippine Social Security Labor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stopped working because private respondents gave them few pieces of work to do after learning of their membership with PSSLU. All the petitioners laid claims under the different labor standard laws which private respondent allegedly violated.On May 28, 1979, Labor Arbiter Ernilo V. Peñalosa rendered a decision ordering the dismissal of the complaint for unfair labor practices, illegal dismissal and other money claims except petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive portion of the decision states as follows:WHEREFORE, premises considered, the respondent Broad Street Tailoring and/or Rodolfo Zapanta are hereby ordered to pay complainant Elias Villuga the sum of ONE THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th month pay for the years 1976, 1977 and 1978. His other claims in this case are hereby denied for lack of merit.The complaint insofar as the other eleven (11) complainants are concerned should be, as it is hereby dismissed for want of jurisdiction. 1On appeal, the National Labor Relations Commission affirmed the questioned decision in a resolution dated May 12, 1986, the dispositive portion of which states as follows:WHEREFORE, premises considered, the decision appealed from is, as it is hereby AFFIRMED, and the appeal dismissed. 2Presiding Commissioner Guillermo C. Medina merely concurred in the result while Commissioner Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:I am for upholding employer-employee relationship as argued by the complainants before the Labor Arbiter and on appeal. The further fact that the proposed decision recognizes complainant's status as piece-rate worker all the more crystallizes employer-employee relationship the benefits prayed for must be granted. 3Hence, petitioners filed this instant certiorari case on the following grounds:1. That the respondent National Labor Relations Commission abused its discretion when it ruled that petitioner/complainant, Elias Villuga falls within the category of a managerial employee;2. . . . when it ruled that the herein petitioners were not dismissed by reason of their union activities;3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit were not employees of private respondents but were contractors.4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and services for Sundays and Legal Holidays; and

5. . . . when it failed to grant petitioners their respective claims under the provisions of P.D. Nos. 925, 1123 and 851. 4Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty consists of the performance of work directly related to management policies; (2) that he customarily and regularly exercises discretion and independent judgment in the performance of his functions; (3) that he regularly and directly assists in the management of the establishment; and (4) that he does not devote his twenty per cent of his time to work other than those described above.Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary work or duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any of the management policies, as there is a manager and an assistant manager who perform said functions. It is true that in the absence of the manager the assistant manager, he distributes and assigns work to employees but such duty, though involving discretion, is occasional and not regular or customary. He had also the authority to order the repair or resewing of defective item but such authority is part and parcel of his function as cutter to see to it that the items cut are sewn correctly lest the defective nature of the workmanship be attributed to his "poor cutting." Elias Villuga does not participate in policy-making. Rather, the functions of his position involve execution of approved and established policies. InFranklin Baker Company of the Philippines v. Trajano, 5 it was held that employees who do not participate in policy-making but are given ready policies to execute and standard practices to observe are not managerial employees. The test of "supervisory or managerial status" depends on whether a person possesses authority that is not merely routinary or clerical in nature but one that requires use of independent judgment. In other words, the functions of the position are not managerial in nature if they only execute approved and established policies leaving little or no discretion at all whether to implement said policies or not. 6Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay and premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the Labor Code, on the ground that he is a managerial employee is unwarranted. He is definitely a rank and file employee hired to perform the work of the cutter and not hired to perform supervisory or managerial functions. The fact that he is uniformly paid by the month does not exclude him from the benefits of holiday pay as held in the case ofInsular Bank of America Employees Union v. Inciong. 7 He should therefore be paid in addition to the 13th month pay, his overtime pay, holiday pay, premium pay for holiday and rest day, and service incentive leave pay.As to the dismissal of the charge for unfair labor practices of private respondent consisting of termination of employment of petitioners and acts of discrimination against members of the

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labor union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta was aware of petitioners' alleged union membership on February 22, 1978 as the notice of union existence in the establishment with proposal for recognition and collective bargaining negotiation was received by management only an March 3, 1978. Indeed, self-serving allegations without concrete proof that the private respondent knew of their membership in the union and accordingly reacted against their membership do not suffice.Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified refusal of the employee to resume his employment. Mere absence is not sufficient, it must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. 8 At any rate, dismissal of an employee due to his prolonged absence without leave by reason of illness duly established by the presentation of a medical certificate is not justified. 9 In the case at bar, however, considering that petitioner Villuga absented himself for four (4) days without leave and without submitting a medical certificate to support his claim of illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the fact that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should be paid separation pay where reinstatement can no longer be effected in view of the long passage of time or because of the realities of the situation. 10 But petitioner should not be granted backwages in addition to reinstatement as the same is not just and equitable under the circumstances considering that he was not entirely free from blame. 11As to the other eleven petitioners, there is no clear showing that they were dismissed because the circumstances surrounding their dismissal were not even alleged. However, we disagree with the finding of respondent Commission that the eleven petitioners are independent contractors.For an employer-employee relationship to exist, the following elements are generally considered: "(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." 12Noting that the herein petitioners were oftentimes allowed to perform their work at home and were paid wages on a piece-rate basis, the respondent Commission apparently found the second and fourth elements lacking and ruled that "there is no employer-employee relationship, for it is clear that respondents are interested only in the result and not in the means and manner and how the result is obtained."Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis is no argument that herein petitioners were not employees. The term "wage" has been broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or

commission basis. . . ." The facts of this case indicate that payment by the piece is just a method of compensation and does not define the essence of the relation. 13 The petitioners were allowed to perform their work at home does not likewise imply absence of control and supervision. The control test calls merely for the existence of a right to control the manner of doing the work, not the actual exercise of the right. 14In determining whether the relationship is that of employer and employee or one of an independent contractor, "each case must be determined on its own facts and all the features of the relationship are to be considered." 15Considering that petitioners who are either sewers, repairmen or ironer, have been in the employ of private respondent as early as 1972 or at the latest in 1976, faithfully rendering services which are desirable or necessary for the business of private respondent, and observing management's approved standards set for their respective lines of work as well as the customers' specifications, petitioners should be considered employees, not independent contractors.Independent contractors are those who exercise independent employment, contracting to do a piece of work according to their own methods and without being subjected to control of their employer except as to the result of their work. By the nature of the different phases of work in a tailoring shop where the customers' specifications must be followed to the letter, it is inconceivable that the workers therein would not be subjected to control.In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the tailoring department, although paid weekly wages on piece work basis, are employees not independent contractors. Accordingly, as regular employees, paid on a piece-rate basis, petitioners are not entitled to overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. Their claim for separation pay should also be defined for lack of evidence that they were in fact dismissed by private respondent. They should be paid, however, their 13th month pay under P.D. 851, since they are employees not independent contractors.WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National Labor Relations Commission is hereby MODIFIED by awarding —(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay and separation pay, in addition to his 13th month pay; and(b) in favor of the rest of the petitioners, their respective 13th month pay.The case is hereby REMANDED to the National Labor Relations Commission for the computation of the claims herein-above mentioned.SO ORDERED.13. G.R. No. L-59229 August 22, 1991

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HIJOS DE F. ESCAÑO INC., and PIER 8 ARRASTRE AND STEVEDORING SERVICES, INC., petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, NATIONAL ORGANIZATION OF WORKINGMEN (NOWM) PSSLU-TUCP and ROLANDO VILLALOBOS, respondents.Beltran, Beltran & Beltran for petitioners.Bautista, Santiago & Associates for private respondents. FELICIANO, J.:pPetitioners seek to set aside the Decision of the National Labor Relations Commission ("NLRC") dated 11 November 1981, which affirmed the Decision of the Labor Arbiter dated 28 February 1980.Private respondent National Organization of Workingmen ("NOWM") PSSLU-TUCP is a labor organization that counts among its members a majority of the laborers of petitioner Pier 8 Arrastre & Stevedoring Services, Inc. ("PIER 8 A&S") consisting, among others, of stevedores, dockworkers, sweepers and forklift operators (hereinafter collectively referred to as "the stevedores"). On 31 July 1978, NOWM PSSLU-TUCP and about 300 stevedores filed with the then Ministry of Labor and Employment ("MOLE") a complaint 1 for unfair labor practice ULP and illegal dismissal against PIER 8 A&S.On 8 September 1978, NOWM PSSLU-TUCP amended its complaint to include the monetary claims of the stevedores for overtime compensation, legal holiday pay, emergency cost of living allowance, 13th month pay, night shift differential pay, and the difference between the salaries they received and that prescribed under the minimum wage law. The complaint was also amended to implead petitioner Hijos de F. Escaño, Inc. (Escaño) as respondent before the MOLE. 2The MOLE Director in the National Capital Region certified for compulsory arbitration only the claims for illegal dismissal and ULP Considering that NOWM PSSLU-TUCP wanted to include as well the other issues it had raised in the amended complaint, it filed a motion for reconsideration. The motion was denied because money claims, according to the MOLE Director, should be brought against Escaño and PIER 8 A&S in a separate complaint.On the basis of the position papers submitted by the parties and the annexes attached thereto, the case was considered submitted for resolution. On 28 February 1980, the Labor Arbiter rendered a Decision 3 with the following dispositive portion:WHEREFORE, consonant with the foregoing premises, the respondents Hijos de F. Escaño and Pier 8 Arrastre and Stevedoring Services, Inc. are hereby found guilty of committing acts of unfair labor practice and are ordered to jointly and severally reinstate all of the petitioners named in the amended complaint, with payment of full backwages counted from the time they were illegally dismissed which was on August 10, 1978 up to March 27, 1979, inclusive, when the

petitioners admitted having received return to work notice from the respondent but refused to comply in view of the pendency of the present case, based on their individual rate at the time of their dismissal or on the minimum wage then prevailing whichever is more beneficial to them.For purposes of this decision, the Socio-Economic Analyst of this branch is hereby directed to compute the backwages of the individual petitioners as mandated herein, and to submit his report within ten 10 days from receipt hereof which shall form part of this award.SO ORDERED.Petitioners appealed to the NLRC which, however, affirmed the Decision of the Labor Arbiter.The instant Petition for certiorari imputes grave abuse of discretion to the NLRC in upholding the finding of the Labor Arbiter that the stevedores are employees not only of PIER 8 A&S but also of Escaño. Petitioners also assail that portion of the Decision which directed them to reinstate the dismissed stevedores with the obligation to pay backwages from 10 August 1978 to 27 March 1979.In his Decision, the Labor Arbiter took the view that PIER 8 A&S was a labor only contractor and held that Escaño was the principal employer of the stevedores. For that reason, the Labor Arbiter adjudged the petitioners solidarily liable for payment of backwages to the stevedores as well as for reinstatement.While petitioner PIER 8 A&S does not dispute that the stevedores were its employees, petitioner Escaño denies the existence of an employer-employee relationship between it and the stevedores. Escaño therefore contends that liability, if any, should attach only to PIER 8 A&S.PIER 8 A&S is a corporation providing Arrastre and stevedoring services to vessels docked at Pier 8 of the Manila North Harbor. Prior to the incorporation of PIER 8 A&S two (2) stevedoring companies had been servicing vessels docking at Pier 8. One of these was the Manila Integrated Services, Inc. MISI which was servicing Escaño vessels, then berthing at Pier 8. The other was the San Nicolas Stevedoring and Arrastre Services, Inc. (SNSASI) which was servicing Compania Maritima vessels. Aside, of course, from MISI and SNSASI there were individual contractors known as the "cabos" who were operating in Pier 8.On 11 July 1974, the Philippine Port Authority ("PPA") was created pursuant to the policy of the State to implement an integrated program of port development for the entire country. 4 Towards this end, the PPA issued Administrative Order No. 1377 specifically adopting the policy of "one pier, one Arrastre and/or stevedoring company." MISI and SNSASI merged to form the Pier 8 Arrastre and Stevedoring Services, Inc.Sometime in June 1978, Escaño had transferred berth to Pier 16 with the approval of the PPA. PIER 8 A&S then started to encounter problems; it found its business severely reduced with only Compania Maritima vessels to service. Even if it had wanted to continue servicing the vessels of Escaño at Pier 16,

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that was simply not possible as there was another company exclusively authorized to handle and render Arrastre and stevedoring services at Pier 16.Because of its resulting manpower surplus, PIER 8 A&S altered the work schedule of its stevedores by rotating them. The rotation scheme was resisted by the stevedores, especially those formerly assigned to service Escaño vessels. It appears that the employees formerly belonging to MISI continued to service Escaño vessels in like manner that those employees formerly belonging to SNSASI continued to service Compania Maritima vessels, although MISI and SNSASI had already merged to form PIER 8 A&S The affected stevedores boycotted Pier 8 leading to their severance from employment by PIER 8 A&S on 10 August 1978. Their refusal to work continued even after they were served with a return-to-work order.The stevedores claim that since they had long been servicing Escaño vessels, i.e. from the time Escaño was exclusively serviced by MISI until the time MISI was merged with SNSASI to form PIER 8 A&S they should also be considered as employees of Escaño. Escaño disclaimed any employment relationship with the stevedores. In its Position Paper, Escaño alleged that the stevedores are included in the payroll of PIER 8 A&S and that the SSS and Medicare contributions of the stevedores are paid by PIER 8 A&S as well.It is firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of a power to control the putative employee's conduct. 5The Court notes that in finding against PIER 8 A&S and Escaño the Labor Arbiter relied solely on the position paper of the parties. The record of the case is bare of evidence tending to support such allegations; what is found in the record instead are the self-serving statements from both parties. It is not clear to the Court from examination of the record which entity paid the salaries of the stevedores. While the stevedores attached to their amended complaint a list of their daily wages set forth opposite their individual names under the heading "Hijos de F. Escaño Inc. and/or Pier 8 Arrastre and Stevedoring Services, Inc. 6 apparently to show that they are paid for their services by either or both of petitioners, they did not submit direct evidence, e.g., copies of payrolls and remittances to the SSS and Medicare, establishing this fact. Further, the stevedores failed to substantiate their allegation that the supervisors of Escaño had control over them while discharging their (stevedores') duties. On the contrary, their Position Paper submitted to the Labor Arbiter disclosed that the supervisors of Escaño "merely supervised" them.The record includes letters written by the National President of NOWM PSSLU-TUC— to which the stevedores belong-relating to collective bargaining and other operating matters, were all

addressed to the management of PIER 8 A&S indicating that they recognized PIER 8 A&S as their employer. Specifically, in the letter dated 21 May 1977, the stevedores proposed that PIER 8 A&S recognize their union as the sole and exclusive representative of the stevedores for the purpose of collective bargaining. They also sought to submit for collective bargaining with PIER 8 A&S such other labor standard issues as wage increases, 13th month pay and vacation and sick leave pay. 7The stevedores, however, now contend that PIER 8 A&S is not an independent contract but a labor only contractor. In their Amended Complaint and Position Paper, the stevedores alleged that:(1) They perform their duties or work assignments under the close supervision of supervisors of respondent Hijos de F. Escaño Inc.;(2) The machineries, equipment, tools and other facilities complainants used, while in the performance of their jobs, are owned by respondent Hijos de F. Escaño, Inc.;(3) The jobs they were performing from the time they were first employed, until their dismissals, are principal phases of respondent's operations; and(4) The so-called Pier 8 Arrastre & Stevedoring Services, Inc. is a mere middleman; its vital role is purely one of supplying workers to respondent Hijos de F. Escaño, Inc. in short, a mere recruiting agent. Plainly, said contractor can be categorized as an agent of respondent Hijos de F. Escaño, Inc. as it performs activities directly related to the principal business of said Hijos de F. Escaño, Inc.Although the record does not show that the stevedores had submitted any evidence to fortify their claim that PIER 8 A&S is a labor only contractor, the Labor Arbiter simply conceded that claim to be factual. The Labor Arbiter added that the business of PIER 8 A&S is "desirable and indispensable in the business of Hijos de F. Escaño and without [the stevedores], its vessels could not be operated."The Court is unable to agree with the conclusion reached by the Labor Arbiter, particularly that portion where the Labor Arbiter supposed stevedoring to be an indispensable part of the business of Escaño. Escaño is a corporation engaged in inter-island shipping business, being the operator of the Escaño Shipping Lines. It was not alleged, nor has it been shown, that Escaño or any other shipping company is also engaged in Arrastre and stevedoring services. Stevedoring is not ordinarily included in the business of transporting goods, it (stevedoring) being a special kind of service which involves the loading unloading of cargo on or from a vessel on port. It consists of the handling of cargo from the hold of the ship to the dock, in case of pier-side unloading, or to a barge, in case of unloading at sea. The loading on a ship of outgoing cargo is also part of stevedoring work. 8Arrastre, upon the other hand, involves the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ships tackle. 9 Considering that a shipping company is not normally or customarily engaged in stevedoring and arrastre activities

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either for itself or other vessels, it contracts with other companies offering those services. The employees, however, of the stevedoring and/or arrastre company should not be deemed the employees of the shipping company, in the absence of any showing, that the arrastre and/or stevedoring company in fact acted as an agent only of the shipping company. No such showing was made in this case.We turn next to the stevedores' contention that PIER 8 A&S is guilty of ULP. In this respect, the Labor Arbiter had found that:Now comes the issue of unfair labor practice. This Labor Arbiter believes that respondents are guilty as charged. The unfair labor practice acts of the respondents started when they came to know that the petitioners have organized themselves and affiliated with the NOWM Subsequent acts of the respondents like requiring the petitioners to disaffiliate with the NOWM and affiliate with the General Maritime Stevedores Union and later on to Independent Workers Union, requiring them to sign applications for membership therein, they were threatened and coerced, are all acts of unfair labor practices. Thereafter, the petitioners' working schedules were rotated when the respondent Hijos de F. Escaño transferred to Pier 16 through the alleged approval of the Philippine Port Authority and later on the said petitioners were left without work, were all in furtherance of such unfair labor practice acts. ... 10Both the Constitution and the Labor Code guarantee to the stevedores a right to self-organization. It was unlawful for PIER 8 A&S to deprive them of that right by its undue interference. The Constitution (Article III, Section 7) expressly recognizes the right of employees, whether of the public or the private sector, to form unions. Article 248 of the Labor Code provides:Art. 248. Unfair labor practices of employers. — It shall be unlawful for an employer to commit any of the following unfair labor practice:(a) To interfere with, restrain or coerce employees in the exercise of their right to self- organization;(b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs;(c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization;(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizations or supporters;(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization.xxx xxx xxx(Emphasis supplied.)Not only was PIER 8 A&S guilty of ULP; it was also liable for illegal dismissal. PIER 8 A&S did not obtain prior clearance from

the MOLE before it dismissed the stevedores, as required by the law then in force which read:Section 1. Requirement for shutdown or dismissal. — No employer may shut down his establishment or dismiss any of his employees with at least one year of service during the last two years, whether the service is broken or continuous, without prior clearance issued therefor in accordance with this Rule. Any provision in a collective bargaining agreement dispensing with the clearance requirement shall be null and void.Section 2. Shutdown or dismissal without clearance. — Any shutdown or dismissal without prior clearance shall be conclusively presumed to be a termination of employment without a just cause. The Regional Director shall, in such case, order the immediate reinstatement of the employee and the payment of his wages from the time of the shutdown or dismissal until the time of reinstatement.11B.P. Blg. 130 amended the Labor Code on 4 September 1981 by abolishing the requirement of prior clearance from the MOLE but since the dismissal of the stevedores was effected prior to the promulgation of B.P. Blg. 130, PIER 8 A&S was then bound to comply with the old law. The Court, interpreting Sections 1 and 2 above quoted, has consistently held that a dismissal without said clearance shall be conclusively presumed a termination without just cause. 12 The record is bare of any evidence that could compel the Court to overturn the factual findings of the Labor Arbiter on this point.WHEREFORE, considering the absence of an employer-employee relationship between Hijos de F. Escaño, Inc. and private respondents, the Decision of the Labor Arbiter dated 28 February 1980 in NLRC Case No. RB-IV-2326-79 and the Decision of the NLRC dated 11 November 1981 are hereby MODIFIED so that only Pier 8 Arrastre & Stevedoring Services, Inc. shall be liable for reinstatement and payment of backwages. As so modified, both Decisions are hereby AFFIRMED. No costs.SO ORDERED.15. G.R. No. L-69870 November 29, 1988NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners, vs.THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO, respondents.G.R. No. 70295 November 29,1988EUGENIA C. CREDO, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L. PEREZ, respondents.The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.Melchor R. Flores for petitioner Eugenia C. Credo. PADILLA, J.:

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Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division, National Labor Relations Commission in Case No. 11-4944-83 dated 28 November 1984 and its resolution dated 16 January 1985 denying motions for reconsideration of said decision.Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation which provides security guards as well as messengerial, janitorial and other similar manpower services to the Philippine National Bank (PNB) and its agencies. She was first employed with NASECO as a lady guard on 18 July 1975. Through the years, she was promoted to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records, on 10 March 1980. 1Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of Finance and Special Project and Evaluation Department of NASECO, stemming from her non-compliance with Lloren's memorandum, dated 11 October 1983, regarding certain entry procedures in the company's Statement of Billings Adjustment. Said charges alleged that Credo "did not comply with Lloren's instructions to place some corrections/additional remarks in the Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to explain further the said instructions, [Credo] showed resentment and behaved in a scandalous manner by shouting and uttering remarks of disrespect in the presence of her co-employees." 2On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs in connection with the administrative charges filed against her. After said meeting, on the same date, Credo was placed on "Forced Leave" status for 1 5 days, effective 8 November 1983. 3Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint, docketed as Case No. 114944-83, with the Arbitration Branch, National Capital Region, Ministry of Labor and Employment, Manila, against NASECO for placing her on forced leave, without due process. 4Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on Personnel Affairs deliberated and evaluated a number of past acts of misconduct or infractions attributed to her. 5 As a result of this deliberation, said committee resolved:1. That, respondent [Credo] committed the following offenses in the Code of Discipline, viz:OFFENSE vs. Company Interest & PoliciesNo. 3 — Any discourteous act to customer, officer and employee of client company or officer of the Corporation.OFFENSE vs. Public MoralNo. 7 — Exhibit marked discourtesy in the course of official duties or use of profane or insulting language to any superior officer.OFFENSE vs. Authority

No. 3 — Failure to comply with any lawful order or any instructions of a superior officer.2. That, Management has already given due consideration to respondent's [Credo] scandalous actuations for several times in the past. Records also show that she was reprimanded for some offense and did not question it. Management at this juncture, has already met its maximum tolerance point so it has decided to put an end to respondent's [Credo] being an undesirable employee. 6The committee recommended Credo's termination, with forfeiture of benefits. 7On 1 December 1983, Credo was called age to the office of Perez to be informed that she was being charged with certain offenses. Notably, these offenses were those which NASECO's Committee on Personnel Affairs already resolved, on 22 November 1983 to have been committed by Credo.In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was made to explain her side in connection with the charges filed against her; however, due to her failure to do so, 8 she was handed a Notice of Termination, dated 24 November 1983, and made effective 1 December 1983. 9 Hence, on 6 December 1983, Credo filed a supplemental complaint for illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for her dismissal and lack of opportunity to be heard. 10After both parties had submitted their respective position papers, affidavits and other documentary evidence in support of their claims and defenses, on 9 May 1984, the labor arbiter rendered a decision: 1) dismissing Credo's complaint, and 2) directing NASECO to pay Credo separation pay equivalent to one half month's pay for every year of service. 11Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28 November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former position, or substantially equivalent position, with six (6) months' backwages and without loss of seniority rights and other privileges appertaining thereto, and 2) dismissing Credo's claim for attorney's fees, moral and exemplary damages. As a consequence, both parties filed their respective motions for reconsideration, 12 which the NLRC denied in a resolution of 16 January 1985. 13Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave abuse of discretion the dispositive portion of the 28 November 1984 decision which ordered Credo's reinstatement with backwages. 14 Petitioners contend that in arriving at said questioned order, the NLRC acted with grave abuse of discretion in finding that: 1) petitioners violated the requirements mandated by law on termination, 2) petitioners failed in the burden of proving that the termination of Credo was for a valid or authorized cause, 3) the alleged infractions committed by Credo were not proven or, even if proved, could be considered to have been condoned by petitioners, and 4) the termination of Credo was not for a valid or authorized cause. 15

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On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion the dispositive portion of the 28 November 1984 decision which dismissed her claim for attorney's fees, moral and exemplary damages and limited her right to backwages to only six (6) months. 16As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law provides that:Section 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal.xxx xxx xxxSection 5. Answer and Hearing. — The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.Section 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor. 17These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written notices of dismissal before a termination of employment can be legally effected. These are the notice which apprises the employee of the particular acts or omissions for which his dismissal is sought and the subsequent notice which informs the employee of the employer's decision to dismiss him.Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to labor 18(which encompasses the right to security of tenure) and the broader dictates of procedural due process necessarily mandate that notice of the employer's decision to dismiss an employee, with reasons therefor, can only be issued after the employer has afforded the employee concerned ample opportunity to be heard and to defend himself.In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal. Although she was apprised and "given the chance to explain her side" of the charges filed against her, this chance was given so perfunctorily, thus rendering illusory Credo's right to security of tenure. That Credo was not given ample opportunity to be heard and to defend herself is evident from the fact that the compliance with the injunction to apprise her of the charges filed against her and to afford her a chance to prepare for her defense was dispensed in only a day. This is not effective compliance with the legal requirements aforementioned.The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was dated 24 November 1983 and made effective 1 December 1983 shows that NASECO was already bent on terminating her services when she was informed on 1 December 1983 of the charges against her, and that any hearing which NASECO thought of

affording her after 24 November 1983 would merely be pro forma or an exercise in futility.Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures in the company's Statement of Billings Adjustment did not warrant the severe penalty of dismissal of the NLRC correctly held that:... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November 1983 that, "In the process of her testimony/explanations she again exhibited a conduct unbecoming in front of NASECO Officers and argued to Mr. S. S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact that she was inside the office of the Acctg. General Manager." Let it be noted, however, that the Report did not even describe how the so called "conduct unbecoming" or "discourteous manner" was done by complainant. Anent the "sarcastic" argument of complainant, the purported transcript 19 of the meeting held on 7 November 1983 does not indicate any sarcasm on the part of complainant. At the most, complainant may have sounded insistent or emphatic about her work being more complete than the work of Ms. de Castro, yet, the complaining officer signed the work of Ms. de Castro and did not sign hers.As to the charge of insubordination, it may be conceded, albeit unclear, that complainant failed to place same corrections/additional remarks in the Statement of Billings Adjustments as instructed. However, under the circumstances obtaining, where complainant strongly felt that she was being discriminated against by her superior in relation to other employees, we are of the considered view and so hold, that a reprimand would have sufficed for the infraction, but certainly not termination from services. 20As this Court has ruled:... where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. It is not only because of the law's concern for the working man. There is, in addition, his family to consider. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. 21Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful causes for dismissal Credo's previous and repeated acts of insubordination, discourtesy and sarcasm towards her superior officers, alleged to have been committed from 1980 to July 1983. 22If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a scandalous manner and raised her voice" in a discussion with NASECO's Acting head of the Personnel Administration 23 no disciplinary measure was taken or meted against her. Nor was she even reprimanded when she allegedly talked 'in a shouting or yelling manner" with the Acting Manager of NASECO's Building Maintenance and Services Department in 1980 24 or when she allegedly "shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying arrogance and unruly

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behavior" in 1980, or when she allegedly shouted at NASECO's Internal Control Consultant in 1981. 25 But then, in sharp contrast to NASECO's penchant for ignoring the aforesaid acts of misconduct, when Credo committed frequent tardiness in August and September 1983, she was reprimanded. 26Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven, NASECO's condonation thereof is gleaned from the fact that on 4 October 1983, Credo was given a salary adjustment for having performed in the job "at least [satisfactorily]" 27 and she was then rated "Very Satisfactory" 28as regards job performance, particularly in terms of quality of work, quantity of work, dependability, cooperation, resourcefulness and attendance.Considering that the acts or omissions for which Credo's employment was sought to be legally terminated were insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent the reason which gave rise to [the employee's] separation from employment, there is no intention on the part of the employer to dismiss the employee concerned." 29 And, as a result of having been wrongfully dismissed, Credo is entitled to three (3) years of backwages without deduction and qualification. 30However, while Credo's dismissal was effected without procedural fairness, an award of exemplary damages in her favor can only be justified if her dismissal was effected in a wanton, fraudulent, oppressive or malevolent manner. 31 A judicious examination of the record manifests no such conduct on the part of management. However, in view of the attendant circumstances in the case, i.e., lack of due process in effecting her dismissal, it is reasonable to award her moral damages. And, for having been compelled to litigate because of the unlawful actuations of NASECO, a reasonable award for attorney's fees in her favor is in order.In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to order Credo's reinstatement. NASECO claims that, as a government corporation (by virtue of its being a subsidiary of the National Investment and Development Corporation (NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in turn is a government owned corporation), the terms and conditions of employment of its employees are governed by the Civil Service Law, rules and regulations. In support of this argument, NASECO cites National Housing Corporation vs. JUCO, 33 where this Court held that "There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil service law and civil service rifles and regulations."It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect, that is, to cases that arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to Credo and other employees similarly situated, because under the same 1973 Constitution ,but prior to the ruling in National Housing Corporation vs. Juco, this Court had recognized the applicability

of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes involving terms and conditions of employment in government owned or controlled corporations, among them, the National Service Corporation (NASECO).<äre||anº•1àw> 34Furthermore, in the matter of coverage by the civil service of government-owned or controlled corporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon which National Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was provided that:The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation. ... 35On the other hand, the 1987 Constitution provides that:The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charter. 36(Emphasis supplied)Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National Housing . Corporation case in the following manner —The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article XII-B of the constitution. It would be possible for a regular ministry of government to create a host of subsidiary corporations under the Corporation Code funded by a willing legislature. A government-owned corporation could create several subsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the competitive restrains of the open market nor to the terms and conditions of civil service employment. Conceivably, all government-owned or controlled corporations could be created, no longer by special charters, but through incorporations under the general law. The Constitutional amendment including such corporations in the embrace of the civil service would cease to have application. Certainly, such a situation cannot be allowed to exist. 37appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces government-owned or controlled corporations with original charter; and, therefore, by clear implication, the Civil Service does not include government-owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the general corporation law.The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and meaning in the use of the phrase "with original charter." ThusTHE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized.

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MR. ROMULO. I beg the indulgence of the Committee. I was reading the wrong provision.I refer to Section 1, subparagraph I which reads:The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations.My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the Commissioner please state his previous question?MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under the Civil Service Commission, says: "including government-owned or controlled corporations.' Does that include a corporation, like the Philippine Airlines which is government-owned or controlled?MR. FOZ. I would like to throw a question to the Commissioner. Is the Philippine Airlines controlled by the government in the sense that the majority of stocks are owned by the government?MR. ROMULO. It is owned by the GSIS. So, this is what we might call a tertiary corporation. The GSIS is owned by the government. Would this be covered because the provision says "including government-owned or controlled corporations."MR. FOZ. The Philippine Airlines was established as a private corporation. Later on, the government, through the GSIS, acquired the controlling stocks. Is that not the correct situation?MR. ROMULO. That is true as Commissioner Ople is about to explain. There was apparently a Supreme Court decision that destroyed that distinction between a government-owned corporation created under the Corporation Law and a government-owned corporation created by its own charter.MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs. Juco to the effect that all government corporations irrespective of the manner of creation, whether by special charter or by the private Corporation Law, are deemed to be covered by the civil service because of the wide-embracing definition made in this section of the existing 1973 Constitution. But we recall the response to the question of Commissioner Ople that our intendment in this provision is just to give a general description of the civil service. We are not here to make any declaration as to whether employees of government-owned or controlled corporations are barred from the operation of laws, such as the Labor Code of the Philippines.MR. ROMULO. Yes.MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name has been mentioned by both sides.MR. ROMULO. I yield part of my time.THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized.MR. OPLE. In connection with the coverage of the Civil Service Law in Section 1 (1), may I volunteer some information that may be helpful both to the interpellator and to the Committee. Following the proclamation of martial law on September 21, 1972, this issue of the coverage of the Labor Code of the

Philippines and of the Civil Service Law almost immediately arose. I am, in particular, referring to the period following the coming into force and effect of the Constitution of 1973, where the Article on the Civil Service was supposed to take immediate force and effect. In the case of LUZTEVECO, there was a strike at the time. This was a government-controlled and government-owned corporation. I think it was owned by the PNOC with just the minuscule private shares left. So, the Secretary of Justice at that time, Secretary Abad Santos, and myself sat down, and the result of that meeting was an opinion of the Secretary of Justice which 9 became binding immediately on the government that government corporations with original charters, such as the GSIS, were covered by the Civil Service Law and corporations spun off from the GSIS, which we called second generation corporations functioning as private subsidiaries, were covered by the Labor Code. Samples of such second generation corporations were the Philippine Airlines, the ManilaHotel and the Hyatt. And that demarcation worked very well. In fact, all of these companies I have mentioned as examples, except for the Manila Hotel, had collective bargaining agreements. In the Philippine Airlines, there were, in fact, three collective bargaining agreements; one, for the ground people or the PALIA one, for the flight attendants or the PASAC and one for the pilots of the ALPAC How then could a corporation like that be covered by the Civil Service law? But, as the Chairman of the Committee pointed out, the Supreme Court decision in the case of NHA vs. Juco unrobed the whole thing. Accordingly, the Philippine Airlines, the Manila Hotel and the Hyatt are now considered under that decision covered by the Civil Service Law. I also recall that in the emergency meeting of the Cabinet convened for this purpose at the initiative of the Chairman of the Reorganization Commission, Armand Fabella, they agreed to allow the CBA's to lapse before applying the full force and effect of the Supreme Court decision. So, we were in the awkward situation when the new government took over. I can agree with Commissioner Romulo when he said that this is a problem which I am not exactly sure we should address in the deliberations on the Civil Service Law or whether we should be content with what the Chairman said that Section 1 (1) of the Article on the Civil Service is just a general description of the coverage of the Civil Service and no more.Thank you, Mr. Presiding Officer.MR. ROMULO. Mr. Presiding Officer, for the moment, I would be satisfied if the Committee puts on records that it is not their intent by this provision and the phrase "including government-owned or controlled corporations" to cover such companies as the Philippine Airlines.MR. FOZ. Personally, that is my view. As a matter of fact, when this draft was made, my proposal was really to eliminate, to drop from the provision, the phrase "including government- owned or controlled corporations."MR. ROMULO. Would the Committee indicate that is the intent of this provision?

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MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can make such a statement in the face of an absolute exclusion of government-owned or controlled corporations. However, this does not preclude the Civil Service Law to prescribe different rules and procedures, including emoluments for employees of proprietary corporations, taking into consideration the nature of their operations. So, it is a general coverage but it does not preclude a distinction of the rules between the two types of enterprises.MR. FOZ. In other words, it is something that should be left to the legislature to decide. As I said before, this is just a general description and we are not making any declaration whatsoever.MR. MONSOD. Perhaps if Commissioner Romulo would like a definitive understanding of the coverage and the Gentleman wants to exclude government-owned or controlled corporations like Philippine Airlines, then the recourse is to offer an amendment as to the coverage, if the Commissioner does not accept the explanation that there could be a distinction of the rules, including salaries and emoluments.MR. ROMULO. So as not to delay the proceedings, I will reserve my right to submit such an amendment.xxx xxx xxxTHE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.MR. ROMULO. On page 2, line 5, I suggest the following amendment after "corporations": Add a comma (,) and the phrase EXCEPT THOSE EXERCISING PROPRIETARY FUNCTIONS.THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?SUSPENSION OF SESSIONMR. MONSOD. May we have a suspension of the session?THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.It was 7:16 p.m.RESUMPTION OF SESSIONAt 7:21 p.m., the session was resumed.THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.Commissioner Romulo is recognized.MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to now read as follows: "including government-owned or controlled corporations WITH ORIGINAL CHARTERS." The purpose of this amendment is to indicate that government corporations such as the GSIS and SSS, which have original charters, fall within the ambit of the civil service. However, corporations which are subsidiaries of these chartered agencies such as the Philippine Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civil service.THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," what exactly do we mean?MR. ROMULO. We mean that they were created by law, by an act of Congress, or by special law.MR. FOZ. And not under the general corporation law.

MR. ROMULO. That is correct. Mr. Presiding Officer.MR. FOZ. With that understanding and clarification, the Committee accepts the amendment.MR. NATIVIDAD. Mr. Presiding officer, so those created by the general corporation law are out.MR. ROMULO. That is correct: 38On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a government-owned or controlled corporation without original charter.Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion in Gomez vs. Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687, 2694; also published in 78 Phil. 221) on the effectivity of the principle of social justice embodied in the 1935 Constitution, said:Certainly, this principle of social justice in our Constitution as generously conceived and so tersely phrased, was not included in the fundamental law as a mere popular gesture. It was meant to (be) a vital, articulate, compelling principle of public policy. It should be observed in the interpretation not only of future legislation, but also of all laws already existing on November 15, 1935. It was intended to change the spirit of our laws, present and future. Thus, all the laws which on the great historic event when the Commonwealth of the Philippines was born, were susceptible of two interpretations strict or liberal, against or in favor of social justice, now have to be construed broadly in order to promote and achieve social justice. This may seem novel to our friends, the advocates of legalism but it is the only way to give life and significance to the above-quoted principle of the Constitution. If it was not designed to apply to these existing laws, then it would be necessary to wait for generations until all our codes and all our statutes shall have been completely charred by removing every provision inimical to social justice, before the policy of social justice can become really effective. That would be an absurd conclusion. It is more reasonable to hold that this constitutional principle applies to all legislation in force on November 15, 1935, and all laws thereafter passed.WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of her termination, or if such reinstatement is not possible, to place her in a substantially equivalent position, with three (3) years backwages, from 1 December 1983, without qualification or deduction, and without loss of seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney's fees.If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No. 69870, who are the

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private respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in addition to her backwages and damages as above described, separation pay equivalent to one-half month's salary for every year of service, to be computed on her monthly salary at the time of her termination on 1 December 1983.SO ORDERED.