No.

1 Republic of the Philippines SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 85985 August 13, 1993 PHILIPPINE 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 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; and 3. 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 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 businessoriented 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 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's conformity 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. Feliciano, Bidin, Romero and Vitug, JJ., concur.
The Lawphil Project - Arellano Law Foundation

No. 2

Republic of the Philippines SUPREME COURT

Manila

EN BANC G.R. No. L-22723 April 30, 1970 CONFEDERATION 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 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. 3076ULP, 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, entitled MAGALIT, 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 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 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.

No. 3 Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9031 May 22, 1922

THE DIRECTOR OF THE BUREAU OF COMMERCE AND INDUSTRY, petitioner, vs. Honorable PEDRO CONCEPCION, Judge of the Court of First Instance of the city of Manila, ET AL., respondents. Attorney-General Villa-Real for petitioner. Vicente J. Francisco for respondents. MALCOLM, J.: In this case the question is distinctly presented, whether or not the salary due from the Government of the Philippine Islands to a public officer or employee can by garnishment, be seized before being paid to him and appropriated to the payment of his judgment debts. Alfredo S. Galvez, an officer in the coastguard service in the employ of the Bureau of Commerce and Industry, had, on November 21, 1921, to his credit, accrued leave salary of P1,359.92, which had not been paid to him because of the loss of equipment for which he was accountable. Shortly after the above-mentioned date, Benito Gimenez Zoboli instituted an action in the Court of First Instance of Manila against Galvez for the recovery of the sum of P1,230. Judge of First Instance Concepcion, at the instance of plaintiff Gimenez, issued a writ of attachment which authorized the sheriff of Manila to attach all the rights of defendant Galvez to his accrued leave salary in a sum no in excess of P1,300. The said merit of attachment was served on the Director of the Bureau of Commerce and Industry, on January 6, 1922. The Attorney-General, on behalf of the Director of this Bureau, presented a motion in the Court of First Instance to dissolve the attachment on the ground that it was improperly issued, because officers of the Government are not subject to such process. This motion was denied by Judge Concepcion. The Director of the Bureau of Commerce and Industry has now instituted an action in certiorari in this court, in which it is contended that the order of attachment of the accrued leave salary of Galvez is improper, unauthorized, and illegal, because ( a) it is an indirect suit against the Government of the Philippine Islands without its consent; ( b) the money garnished does not belong to Galvez until paid over to him; (c) it is embarrassing and sometimes fatal to public service; and (d) it is contrary to public policy. It is then prayed that the order of attachment which has been issued be revoked and discharged. The respondents have interposed a demurrer. The first ground of the demurrer is based on the premise that a plain, speedy, and adequate remedy, which is by appeal to this court, exists. No time need, however, be taken up with a discussion on this point, in view of the decision in the case of Leung Ben vs. O'Brien ([1918]), 38 Phil., 182) On the authority of this decision, the petitioner may, by means of certiorari, ask the dissolution of an attachment

which, it is contended, is unauthorized by law. The second ground of the demurrer, going to the merits of the case, is based on the principal premise that the Code of Civil Procedure, in enumerating the property which is exempt from execution, fails to name the salary of a government employee. The case is not at all difficult of resolution if fundamental principles are kept to the forefront. The proceeding known in American civil procedure as the process of garnishment, while not mentioned by that name in the Philippine Code of Civil Procedure, is nevertheless, covered by the provisions of the Code. By the process of garnishment, the plaintiff virtually sues the garnishee for a debt due to defendant. The debtor stranger becomes a forced intervenor. The Director of the Bureau of Commerce and Industry, an officer of the Government of the Philippine Islands, when served with the writ of attachment, thus became a party to the action. (Tayabas Land Co. vs. Sharruf [1921], 41 Phil., 382.)
lvvph1n+

A rule, which has never been seriously questioned, is that money in the hands of public officers, although it may be due government employees, is not liable to the creditors of these employees in the process of garnishment. One reason is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express authorization by the Legislature, and to subject its officers to garnishment would be to permit indirectly what is prohibited directly. Another reason is that moneys sought to be garnished, as long as they remain in the hands of the disbursing office of the Government, belong to the latter, although the defendant in garnishment may be entitled to a specific portion thereof. And still another reason which covers both of the foregoing is that every consideration of public policy forbids it. The United States Supreme Court, in the leading case of Buchanan vs. Alexander ([1846], 4 How., 19), in speaking of the right of creditors of seamen, by process of attachment, to divert the public money from its legitimate and appropriate object, said: To state such a principle is to refute it. No government can sanction it. At all times it would be found embarrassing, and under some circumstances it might be fatal to the public service. . . . So long as money remains in the hands of a disbursing officer, it is as much the money of the United States, as if it had not been drawn from the treasury. Until paid over by the agent of the government to the person entitled to it, the fund cannot, in any legal sense, be considered a part of his effects. ( See, further, 12 R. C. L., p. 841; Keene vs. Smith [1904], 44 Ore., 525, Wild vs. Ferguson [1871], 23 La. Ann., 752; Bank of Tennessee vs. Dibrell [1855], 3 Sneed [Tenn.], 379.) The first mistake made by the trial judge in his analysis of the citations invoked in favor of the motion of the Attorney-General for the dissolution of the order of garnishment, was in considering it essential that the official be a party defendant. As explained, the order of garnishment had the effect of drawing the officer into the case. The second mistake of the trial judge was in considering it essential that the Code of Civil Procedure exclude salaries of government officials from execution, whereas the principle governing the case is one lying at the foundation of orderly government, and requiring no express statement in legislation. It results, therefore, that the order of attachment was improperly and illegally issued. Accordingly, the demurrer must be overruled and unless the respondents shall, within five days, file an answer, the writ prayed for shall issue, with costs against the respondents. So ordered.

Araullo, C.J., Avancea, Villamor, Ostrand and Romualdez, JJ., concur.

No. 4 Republic of the Philippines SUPREME COURT

Manila

SECOND DIVISION

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

REGALADO, J.: The instant petition for certiorari seeks to set aside the decision of The National Labor Relations Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11, 1986, 1 containing the following disposition: WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and another one entered, declaring the suspension of complainants to be illegal and consequently, respondent PAL is directed to pay complainants their salaries corresponding to the respective period(s) of their suspension, and to delete the disciplinary action from complainants' service records. 2 These material facts recited in the basic petition are virtually undisputed and we reproduce the same hereunder: 1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services Department of petitioner. Their duties and responsibilities, among others, are: Prepares meal orders and checklists, setting up standard equipment in accordance with the requirements of the type of service for each flight; skiing, binning, and inventorying of Commissary supplies and equipment. 2. On various occasions, several deductions were made from their salary. The deductions represented losses of inventoried items charged to them for mishandling of company properties . . . which respondents resented. Such that on August 21, 1984, individual

respondents, represented by the union, made a formal notice regarding the deductions to petitioner thru Mr. Reynaldo Abad, Manager for Catering. . . . 3. As there was no action taken on said representation, private respondents filed a formal grievance on November 4, 1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining Agreement between petitioner and the union. . . . The topics which the union wanted to be discussed in the said grievance were the illegal/questionable salary deductions and inventory of bonded goods and merchandise being done by catering service personnel which they believed should not be their duty. 4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad, Manager for Catering, who at the time was on vacation leave. . . . 5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that inasmuch as no reply was made to their grievance which "was duly received by your secretary" and considering that petitioner had only five days to resolve the grievance as provided for in the CBA, said grievance as believed by them (private respondents) was deemed resolved in their favor. . . . 6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and scheduled a meeting on December 12, 1984. . . . 7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did not conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp inventory on December 10. In like manner, Regino Duran and Houdiel Magadia did not conduct the same on December 10 and 12. 8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved the grievance by denying the petition of individual respondents and adopted the position that inventory of bonded goods is part of their duty as catering service personnel, and as for the salary deductions for losses, he rationalized: 1. It was only proper that employees are charged for the amount due to mishandling of company property which resulted to losses. However, loss may be cost price 1/10 selling price. 9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3, 1985 wrote by an inter-office memorandum addressed to the grievants, individual respondents herein, for them to explain on (sic) why no disciplinary action should be taken against them for not conducting ramp inventory. . . . 10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth as: 4. Since the grievance step 1 was not decided and no action was done by your office within 5 days from November 21, 1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is deemed resolved in PALEA's favor. 11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension ranging from 7 days to 30 days were (sic) imposed depending on the number of infractions committed. * 12. After the penalty of suspension was meted down, PALEA filed another grievance asking for lifting of, or at least, holding in abeyance the execution of said penalty. The said grievance was forthwith denied but the penalty of suspension with respect to respondent Ramos was modified, such that his suspension which was originally from January 15,

1985 to April 5, 1985 was shortened by one month and was lifted on March 5, 1985. The union, however, made a demand for the reimbursement of the salaries of individual respondents during the period of their suspension. 13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspension was filed before the Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March 17, 1986, ruled in favor of petitioner by dismissing the complaint. . . . 3 Private respondents appealed the decision of the labor arbiter to respondent commission which rendered the aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's motion for reconsideration having been denied, it interposed the present petition. The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the aforementioned decision. Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based his or its determination, but is limited to issues of jurisdiction and grave abuse of discretion. 4 It has not been shown that respondent NLRC has unlawfully neglected the performance of an act which the law specifically enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner from the exercise of a right to which it is entitled. The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective Bargaining Agreement, (hereinafter, CBA), to wit: Sec. 2 Processing of Grievances xxx xxx xxx STEP 1 Any employee who believes that he has a justifiable grievance shall take the matter up with his shop steward. If the shop steward feels there is justification for taking the matter up with the Company, he shall record the grievance on the grievance form heretofore agreed upon by the parties. Two (2) copies of the grievance form properly filled, accepted, and signed shall then be presented to and discussed by the shop steward with the division head. The division head shall answer the grievance within five (5) days from the date of presentation by inserting his decision on the grievance form, signing and dating same, and returning one copy to the shop steward. If the division head fails to act within the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party. If the division head's decision is not appealed to Step II, the grievance shall be considered settled on the basis of the decision made, and shall not be eligible for further appeal. 5 (Emphasis ours.) Petitioner submits that since the grievance machinery was established for both labor and management as a vehicle to thresh out whatever problems may arise in the course of their relationship, every employee is duty bound to present the matter before management and give the latter an opportunity to impose whatever corrective measure is possible. Under normal circumstances, an employee should not preempt the resolution of his grievance; rather, he has the duty to observe the status quo. 6 Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the obligation, just as management has, to settle all labor disputes through friendly negotiations. Thus, Section 2 of the CBA should not be narrowly interpreted. 7 Before the prescriptive period of five days begins to run, two concurrent requirements must be met, i.e., presentment of the grievance and its discussion between the shop steward and the division head who in this case is Mr. Abad. Section 2 is not self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive period. 8 Petitioner has sorely missed the point.

It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes such sympathy, but because of the one-sided relation between labor and capital. 9 The constitutional mandate for the promotion of labor is as explicit as it is demanding. The purpose is to place the workingman on an equal plane with management with all its power and influence in negotiating for the advancement of his interests and the defense of his rights. 10 Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privileges in life should have more privileges in law. 11 It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section 2 of the CBA aforequoted, the division head shall act on the grievance within five (5) days from the date of presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved party." It is not disputed that the grievants knew that division head Reynaldo Abad was then "on leave" when they filed their grievance which was received by Abad's secretary. 13 This knowledge, however, should not prevent the application of the CBA. On this score, respondent NLRC aptly ruled: . . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of complainants within five days from 21 November 1984. Therefore, when Reynaldo Abad, failed to act within the reglementary period, complainants, believing in good faith that the effect of the CBA had already set in, cannot be blamed if they did not conduct ramp inventory for the days thereafter. In this regard, respondent PAL argued that Reynaldo Abad was on leave at the time the grievance was presented. This, however, is of no moment, for it is hard to believe that everything under Abad's authority would have to stand still during his absence from office. To be sure, it is to be expected that someone has to be left to attend to Abad's duties. Of course, this may be a product of inadvertence on the part of PAL management, but certainly, complainants should not be made to suffer the consequences. 14 Contrary to petitioner's submission, 15 the grievance of employees is not a matter which requires the personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have assigned an officer-in-charge to look into the grievance and possibly make his recommendation to Mr. Abad. It is of no moment that Mr. Abad immediately looked into the grievance upon returning to work, for it must be remembered that the grievants are workingmen who suffered salary deductions and who rely so much on their meager income for their daily subsistence and survival. Besides, it is noteworthy that when these employees first presented their complaint on August 21, 1984, petitioner failed to act on it. It was only after a formal grievance was filed and after Mr. Abad returned to work on December 7, 1984 that petitioner decided to turn an ear to their plaints. As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to petitioner's inadvertence, 16 but it is clearly too much of an injustice if the employees be made to bear the dire effects thereof. Much as the latter were willing to discuss their grievance with their employer, the latter closed the door to this possibility by not assigning someone else to look into the matter during Abad's absence. Thus, private respondents should not be faulted for believing that the effects of the CBA in their favor had already stepped into the controversy. If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay the resolution of labor problems, the complaints of the workers in particular, and hide under the cloak of its officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If this should be allowed, the workingmen will suffer great injustice for they will necessarily be at the mercy of their employer. That could not have been the intendment of the pertinent provision of the CBA, much less the benevolent policy underlying our labor laws. ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed decision of respondent National Labor Relations Commission is AFFIRMED. This judgment is immediately executory. SO ORDERED.

Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.

No. 5 Republic of the Philippines SUPREME COURT

Manila

EN BANC

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

GUTIERREZ, JR., J.: This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor in the computation of benefits from 251 to 261 days. On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]). Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to: pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. (Rollo, p. 31) Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145) Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor. Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P. Blg. 130. However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986. Hence, this petition. The petitioner union raises the following issues: 1) Whether or not Nestle's sales personnel are entitled to holiday pay; and 2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and sick leave pay. The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The respondent company controverts this assertion. Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "nonagritultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty." The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty. The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work. We concur with the following disquisition by the respondent arbitrator: The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of determination on the actual field work of the employees which can be reasonably ascertained. The theoretical analysis that salesmen and other

similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of which are subject to their individual capacity and industry and which "cannot be determined with reasonable certainty." This is the reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay award. (Rollo, pp. 36-37) Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: Rule IV Holidays with Pay Sec. 1. Coverage This rule shall apply to all employees except: xxx xxx xxx (e) Field personnel and other employees whose time and performance is unsupervised by the employer . . . (Emphasis supplied) While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55). Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer. The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and performance are supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m. Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an employee through the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984. The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of work in the field can be determined with reasonable certainty. The Court thinks otherwise. The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190).

The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination. In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated: The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day. While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field personnel from holiday pay benefits also applies. The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10 holidays and the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor. Arbitrator Vivar's rationale for his decision is as follows: . . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or accelerates the basis of conversion and computation by ten days. With the inclusion of ten holidays as paid days, the divisor is no longer 251 but 261 or 262 if election day is counted. This is indeed an extremely difficult legal question of interpretation which accounts for what is claimed as falling within the concept of "solutio indebti." When the claim of the Union for payment of ten holidays was granted, there was a consequent need to abandon that 251 divisor. To maintain it would create an impossible situation where the employees would benefit with additional ten days with pay but would simultaneously enjoy higher benefits by discarding the same ten days for purposes of computing overtime and night time services and considering sick and vacation leave credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor arises concomitant with the award of ten holidays with pay. (Rollo, p. 34) The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We held: It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends otherwise. One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251. In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows: monthly rate x 12 months

 251 days Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261. It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays. The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay. Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day working schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify its error, if ever there was one but did not do so. It is now too late to allege payment by mistake. Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision was favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the issues so that the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle. Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle, we find its claim meritorious. In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added the "divisor" test. However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid rule and policy instruction.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a legislative or executive act subsequently declared invalid: xxx xxx xxx . . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the government organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication. In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of [unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435) The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To require various companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts of this case. Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of the implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved to grant other concessions to its employees, especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among the highest paid in the industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault. The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case. WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED. SO ORDERED. Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin, Medialdea, Grio-Aquino, Regalado, Davide, Jr. and Romero, JJ., concur. Cruz and Nocon, JJ., took no part.

No. 7 Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-16600 December 27, 1961

ILOILO CHINESE COMMERCIAL SCHOOL, petitioner, vs. LEONORA FABRIGAR and THE WORKMEN'S COMPENSATION COMMISSION, respondents. Luis G. Hofilea for petitioner. J. T. de Leon for respondents. PAREDES, J.: As a result of the death of Santiago Fabrigar, on June 28, 1956, his heirs in the person of Leonora Fabrigar (common-law wife) and their children, filed a claim for compensation with the Workmen's Compensation Commission, Case No. 1085, W.C.C., entitled "Leonora Fabrigar, et al., Claimants, vs. Iloilo Chinese Commercial School, Respondent." In this claim, it was alleged that the cause of death was " pulmonary tuberculosis contracted during and as a result of his employment as janitor." The Hearing Officer of the WCC denied the claim and dismissed the case, finding that the claimant failed to prove the casual effect of employment and death; nothing was shown that the disease was contracted in line of duty; that whatever evidence claimant presented about the cause of death was only a mere suggestion that progressively developed from tuberculosis with heart trouble to a sudden fatal turn, ending up for the cause of "beriberi adult" at the time of death, as per certification of Sanitary Inspector Dr. P. E. Labitoria, of Dao, Capiz (Exhibits C & 4). The heirs of Santiago Fabrigar appealed the decision with the Workmen's Compensation Commission which, on November 12, 1959, rendered judgment reversing the decision of its Hearing Officer, making the following findings of facts: That Santiago Fabrigar had been employed from 1947 to March 12, 1956, as a janitormessenger of the respondent Iloilo Chinese Commercial School, his work consisting of sweeping and scrubbing the floors, cleaning the classrooms and the school premises, and other janitorial chores; on March 11, 1956, preparatory to graduation day, he carried desks and chairs from the classrooms to the auditorium, set the curtains and worked harder and faster than usual; that although he felt shortness of breath and did not feel very well that day, he continued working at the request of the overseer of respondent, that on the following day he reported for work, but on March 13, he spat blood and stopped working; that from April 29, 1956 to May 15, 1956, he was under treatment by Dr. Quirico Villareal "for far advanced pulmonary tuberculosis and for heart disease"; and that previous to said treatment, he was attended by Dr. Jaranilla for pulmonary tuberculosis. The Commission concluded that the short period of intervention between his last day of work (March 13, 1956) when he spat

blood and his death on June 28, 1956, due to pulmonary tuberculosis, indicated that he had been suffering from such disease even during the time he was employed by the respondent and considering the strenuous work he performed, his employment as janitor aggravated his pre-existing illness; that although here is a discrepancy between the cause of death "beriberi adult," as appearing in the death Certificate and the testimony of Dr. Villareal, the latter deserves more credence, because the information (cause of death) was given by the sanitary inspector who did not, in any way, examine the deceased before or after his death. The Commission, therefore, ordered the respondent Chinese Commercial School, Inc., in said case 1. To pay to the claimant, for and in behalf of her minor children by the deceased, namely, Carlito, Gloria, Rosita and Ernesto, all surnamed Fabrigar, the amount of TWO THOUSAND FOUR HUNDRED NINETY SIX and 00/00 Pesos (P2,496.00) as Death benefits; and 2. To pay to the Commission the amount of P25.00 as fees pursuant to Section 55 of Act 3428, as amended. The above decision is now before Us for Review on a Writ of Certiorari, after the motion for reconsideration had been denied, petitioner alleging that the Commission erred: 1. In disregarding completely the evidentiary value of the death certificate of the attending physician which was presented as evidence by both claimants and respondent (Exhibits C & 4) to prove the cause of death; 2. In finding that the cause of death of said Santiago Fabrigar was tuberculosis and was contracted during and as a result of the nature of his employment; 3. In holding that the herein petitioner was the employer of the deceased Santiago Fabrigar; and 4. In not holding that the herein petitioner is exempt from the scope of the Workmen's Compensation Law.
lawphil.net

Petitioner contends that the preponderance of evidence on the matters involved in this case, militates in its favor. Considering the doctrine that the Commission, like the Court of Industrial Relations, is bound not by the rule of preponderance of evidence as in ordinary civil cases, but by the rule of substantial evidence (Ang Tibay vs. CIR, 69 Phil. 635; Phil. Newspaper Guild vs. Evening News, 47 Off. Gaz. No. 12, p. 6188; Secs. 43 & 46 Rep. Act No. 772, W.C. Act), petitioner's pretension is without merit. Substantial evidence supports the decision of the Commission. While seemingly there exists an inconsistency in the cause of death, as appearing in the death certificate by Dr. Labitoria and in Dr. Villareal's diagnosis, it is a fact found by the Commission, that the Sanitary Inspector did not examine the deceased before and after his death. "Undoubtedly," says the Commission, "the information that he died of beriberi adult, as appearing in the death certificate was given because it appears that the deceased had also edema of the extremities (swollen legs)." The evidence of record sustains the following findings of the Commission, is Fabrigar's cause of death to wit The short period of time intervening between his last day of work (March 13, 1956) when he spat blood and his death June 28, 1956 due to pulmonary tuberculosis indicates that he had been suffering from the disease even during the time that he

was employed by the respondent. Considering the strenuous work that he performed while in the service of the respondents and the unusually long hours of work he rendered (6:00 p.m. to 1:30 p.m. and from 2:00 p.m. to 6:00 p.m. or 7:00 p.m.) beyond the normal and legal working hours, we find that his employment aggravated his pre-existing illness and brought about his death. Moreover, our conclusion finds support in the fact that immediately preceding his last day of work with the respondent, he had an unusually hard day lifting desks and other furnitures and assisting in the preparations for the graduation exercises of the school. Considering also his complaints during that day (March 11), among which was "shortness of breath", we may also say that his work affected an already existing heart ailment. We find no plausible reason for altering or disturbing the above factual findings of the Commission, in the present appeal by certiorari. It is claimed that actually the deceased was not an employee of the petitioner, but by the Iloilo Chinese Chamber of Commerce which was the one that furnished the janitor service in the premises of its buildings, including the part thereof occupied by the petitioner; that the Chamber of Commerce paid the salaries of janitors, including the deceased; that the petitioner could not afford to pay rentals of its premises and janitor due to limited finances depended largely on funds raised among its Board of Directors, the Chinese Chamber of Commerce and Chinese nationals who helped the school. In other words, it is pretended that the deceased was not an employee of the school but of the Chinese Chamber of Commerce which should be the one responsible for the compensation of the deceased. On one hand, according to the Commission, there is substantial proof to the effect that Fabrigar was employed by and rendered service for the petitioner and was an employee within the purview of the Workmen's Compensation Law. On the other hand, the most important test of employer-employee relation is the power to control the employee's conduct. The records disclose that the person in charge (encargado) of the respondent school supervised the deceased in his work and had control over the manner he performed the same. It is finally contended that petitioner is an institution devoted solely for learning and is not an industry within the meaning of the Workmen's Compensation Law. Consequently, it is argued, it is exempt from the scope of the same law. Considering that this factual question has not been properly put in issue before the Commission, it may not now be entertained in this appeal for the first time (Atlantic Gulf, etc. vs. CIR, et al., L-16992, Dec. 23, 1961, citing International Oil Factory Union v. Hon. Martinez, et al., L-15560, Dec. 31, 1960). The decision of the Commission does not show that the matter was taken up. We are at a loss to state whether the issue was raised in the motion for reconsideration filed with the Commission, because the said motion is not found in the record before us. And the resolution to the motion for reconsideration does not touch this question. IN VIEW HEREOF, the appeal interposed by the petitioner is dismissed, and the decision appealed from is affirmed, with costs against the herein petitioner. Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and De Leon, JJ., concur. Padilla, J., took no part.

NO. 8 Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. L-28609 January 17, 1974 ZOILA DE CHAVEZ, petitioner, vs. ENRIQUE ZOBEL and COURT OF APPEALS, respondents. G.R. No. L-28610 January 17, 1974 BARTOLOME DIMAALA, RUFO GARCIA, PAULINO ESGUERRA, FERNANDO VEROYA, WILSON ZAPATERO, RUFINO ZAPATERO, ALMARIO ALAB, ROMAN BEROYA, and ROMANA VIZCONDE, petitioners, vs. ENRIQUE ZOBEL and COURT OF APPEALS, respondents. Pedro N. Belmi for petitioners. Salvador J. Lorayes for private respondent.

FERNANDO, J.:1wph1.t These two petitions 1 for the review of a joint decision of respondent Court of Appeals, sustaining the right of respondent-landholder, Enrique Zobel to eject petitioner-tenants and thus reversing a judgment in their favor by the Court of Agrarian Relations, present the crucial issue of how far this Tribunal is bound by the cardinal policy set forth in a presidential decree 2 that ordains the emancipation of tenants and confers on them ownership of the lands they till, upheld as part of the law of the land under the Revised Constitution. 3 This too, in the face of its avowed primordial objective: "The State shall formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the soil and achieving the goals enunciated in this Constitution." 4 As thus posed, its resolution is rather obvious. We cannot sustain respondent Court of Appeals. Private respondent Zobel, as the registered owner of a parcel of land located at Calatagan, Batangas, known Hacienda Bigaa, with an aggregate area of more than five hundred hectares, sought to eject petitioners, his tenants tilling lands in a portion thereof, relying on the provision of Republic Act No. 1199, which would justify such a move where the land is suited for mechanization. 5 Petitioners, as tenants, vigorously objected to such petition not only on the

ground that the small areas they are occupying were not suited for mechanization, but likewise on the allegation that the true intention of respondent as landholder was to utilize the same for pasture and for the raising of sorghum. The Court of Agrarian Relations dismissed the petition for ejectment, doubting such an intent to mechanize and at the same time holding that mechanization during rainy season of the year was not practicable. The matter was elevated to respondent Court of Appeals, which reversed the Court of Agrarian Relations and granted such petition for ejectment. Hence this petition for review. There is no question as to the tenancy relationship well as to the areas occupied by petitioners as tenants. For the decision of the Court of Appeals now sought to reviewed did clearly specify: "At the hearing of these cases on July 15, 1963, the litigants, through their counsels, entered into the following stipulation of facts: 1. That the relation of landholder and tenant between the petitioner and the respondents is admitted; 2. That the respective area cultivated by each of the respondents is as indicated ... follows: Bartolome Dimaala 1 lot with an approximate area of 1.1440 hectare; Rufo Garcia area of lot is more or less one (1) hectare; Paulino Esguerra two (2) lots with an aggregate area of about two (2) hectares; Fernando Veroya one (1) lot with an area of about hectare; Wilson Zapatero one(1) lot with an area of about less than 1- hectares; Rufino Zapatero one (1) lot with an area of about one (1) hectare; Almario Alab three (3) lots with an area of about 3 hectares; Roman Veroya one (1) lot of about hectare; Romana Vizconde one (1) lot with an area of about hectare and Zoila de Chavez four (4) lots with an aggregate area of about 6 hectares." 6 That is why, as set forth at the outset, the applicability of Presidential Decree No. 27 decreeing the emancipation of tenants from the bondage of the soil and transferring to them the ownership of the land they till and providing the instruments and mechanism therefor is unavoidable. 7 Hence, again, as was made mention of at the outset, the decision of the Court of Appeals cannot be sustained. 1. The tenancy problem in the Philippines is of ancient vintage. The opinion of Justice Tuason in the leading case of Guido v. Rural Progress Administration 8 made reference to the concern shown by our great patriot and hero Jose Rizal, one arising from first-hand knowledge and bitter personal experience of his family. As was so vividly expressed by Justice Labrador, speaking for this Court, in De Ramas v. Court of Agrarian Relations: 9 "The history of land tenancy, especially in Central Luzon, is a dark spot in the social life and history of the people. It was among the tenants of Central Luzon that the late Pedro Abad Santos, acting as a saviour of the tenant class, which generations has been relegated to a life of bondage, without hope of salvation or improvement, enunciated a form of socialism as a remedy for the pitiful condition of the tenants forming the PKM organization of tenants and, during the war, the Hukbalahap, rose in arms against the constituted authority as their only salvation from permanent thralldom. According to statistics, whereas at the beginning of the century we had only 19% of the people belonging to the tenant class, after 60 years, the prevailing percentage has reached 39%." 10 Such situation calls to mind this apt observation of Laski, "of the normal life of the poor, their perpetual fear of the morrow, their haunting sense of impending disaster, their fitful search for beauty which perpetually eludes." 11 The 1935 delegates to the Constitutional Convention were not unaware of the gravity of the problem. Under the Commonwealth and under the Republic therefore, the appropriate legislation was enacted. 12 Progress in the solution of this serious social malady, while considerable, did not supply the necessary corrective. On this vital policy question, one of the utmost concern, the need for what for some is a radical solution in its pristine sense, one that goes at the root, was apparent. Presidential Decree No. 27 was thus conceived. It was issued in October of 1972. The very next month, the 1971 Constitutional Convention voiced its overwhelming approval. There is no doubt then, as set forth expressly therein, that the goal is emancipation. 13 What is more, the decree is now part and parcel of the law of the land according to the revised Constitution itself. 14 Ejectment therefore of petitioners is simply out of the question. That would be to set at naught an express mandate of the Constitution. Once it has spoken, our duty is clear; obedience is unavoidable. This is not only

so because of the cardinal postulate of constitutionalism, the supremacy of the fundamental law. It is also because any other approach would run the risk of setting at naught this basic aspiration to do away with all remnants of a feudalistic order at war with the promise and the hope associated with an open society. To deprive petitioners of the small landholdings in the face of a presidential decree considered ratified by the new Constitution and precisely in accordance with its avowed objective could indeed be contributory to perpetuating the misery that tenancy had spawned in the past as well as the grave social problems thereby created.<re||an1w> There can be no justification for any other decision then whether predicated on a juridical norm or on the traditional role assigned to the judiciary of implementing and not thwarting fundamental policy goals. 2. With the disposition of these petitions for review thus so clearly indicated by the controlling constitutional provisions, a discussion of the errors assigned by petitioners would be fruitless. Nonetheless, insofar as they would stress the basic doctrine that the findings of fact of the Court of Agrarian Relations, supported by substantial evidence, is well-nigh conclusive on an appellate tribunal, is undeniable that such a submission is supported and butressed by a host of our decisions dating back to 1958. 15 WHEREFORE, the joint decision in these two petition of respondent Court of Appeals of November 23, 1967 is reversed and set aside, and the joint decision of the Court of Agrarian Relations of October 1, 1964 dismissing the actions filed by respondent Enrique Zobel is reinstated and given full force and effect. Costs against respondent Enrique Zobel. Zaldivar (Chairman) and Aquino, JJ., concur.1wph1.t

Separate Opinions

BARREDO, J., concurring: I fully concur, except as to all references made by Justice Fernando to a "revised constitution", it being my unequivocal position that the constitution now in force and effect, which I am sure is the one being cited, is indeed a new constitution, as contra-distinguished from another that is merely amended, which would be what could be termed as "revised". The new charter should always be called simply as the New Constitution of the Philippines or the Philippine Constitution of 1973. This nomenclature does away with any question as to whether or not its ratification was accomplished in accordance with the provision on amendments of the old charter. In the language of its Section 16, Article XVII, "this Constitution ... shall supersede the Constitution of nineteen hundred and thirty five and all amendments thereto." In other words, the replacement is integral, and, accordingly, the ratification and approval of the new one should be determined by its own effectivity clause, it being undeniable that the previous constitution, while it provides for an amending process, is completely silent as to how an integral replacement thereof may be effected. Which is how it ought to be, for it is to me but logical, if it cannot be deemed axiomatic, that as a new fundamental law is ordained precisely in disregard, if not in repudiation, of its predecessor, it is incongruous that the latter should in any way bind the hands of the people

in enacting the former. I have said once before that a constitution is by its very nature always self-born or comes into effect by the force of its own authority, expressive of the people's sovereignty, 1 and I have not yet been shown any reason why I should believe otherwise. Actually, if one must be accurate, the innovations introduced by the new constitution in its underlying principles as well as in the provisions regarding the form and theory of our government, the rights and obligations of the citizens, the conditions of citizenship, the voting age, the national economy and society in general, but more particularly, the eradication of social injustice, the judicial set up, the accountability of public officers, the autonomy local governments, the preservation and protection of national patrimony and the reorientation of the educational system, to mention only some of them, are so substantial and far reaching that only blind loyalty to the old could make anyone insist that the former charter has merely suffered amendments of form and language and the Philippine Constitution of 1973 is not a new one. Withal, having taken a sacred oath on October 29, 1973 that "aking itataguyod at ipagtatanggol ang bagong SaligangBatas", I am as solemnly bound not to ever consider the present charter as anything less than new. Barredo and Antonio, JJ., concur.1wph1.t

Separate Opinions BARREDO, J., concurring: I fully concur, except as to all references made by Justice Fernando to a "revised constitution", it being my unequivocal position that the constitution now in force and effect, which I am sure is the one being cited, is indeed a new constitution, as contra-distinguished from another that is merely amended, which would be what could be termed as "revised". The new charter should always be called simply as the New Constitution of the Philippines or the Philippine Constitution of 1973. This nomenclature does away with any question as to whether or not its ratification was accomplished in accordance with the provision on amendments of the old charter. In the language of its Section 16, Article XVII, "this Constitution ... shall supersede the Constitution of nineteen hundred and thirty five and all amendments thereto." In other words, the replacement is integral, and, accordingly, the ratification and approval of the new one should be determined by its own effectivity clause, it being undeniable that the previous constitution, while it provides for an amending process, is completely silent as to how an integral replacement thereof may be effected. Which is how it ought to be, for it is to me but logical, if it cannot be deemed axiomatic, that as a new fundamental law is ordained precisely in disregard, if not in repudiation, of its predecessor, it is incongruous that the latter should in any way bind the hands of the people in enacting the former. I have said once before that a constitution is by its very nature always self-born or comes into effect by the force of its own authority, expressive of the people's sovereignty, 1 and I have not yet been shown any reason why I should believe otherwise. Actually, if one must be accurate, the innovations introduced by the new constitution in its underlying principles as well as in the provisions regarding the form and theory of our government, the rights and obligations of the citizens, the conditions of citizenship, the voting age, the national economy and society in general, but more particularly, the eradication of social injustice, the judicial set up, the accountability of public officers, the autonomy local governments, the preservation and protection of national patrimony and the reorientation of the educational system, to mention only some of them, are so substantial and far reaching that only blind loyalty to the old could make anyone insist that the former charter has merely suffered amendments of form and language and the Philippine Constitution of 1973 is not a new one. Withal, having taken

a sacred oath on October 29, 1973 that "aking itataguyod at ipagtatanggol ang bagong SaligangBatas", I am as solemnly bound not to ever consider the present charter as anything less than new. Barredo and Antonio, JJ., concur.1wph1.t Footnotes 1 L-28609 is entitled Zoila de Chavez v. Enrique Zobel, et al. and L-28610 is entitled Bartolome Dimaala, et al. v. Enrique Zobel, et al. 2 Presidential Decree No. 27, entitled "Decreeing the Emancipation of Tenants From the Bondage of the Soil, Transferring to Them the Ownership of the Land They Till and Providing The Instruments and Mechanism Therefor" (October 21, 1972). 3 According to Article XVII, Section 3, par. (2) of the Revised Constitution: "All proclamations, orders, decrees, instructions, and acts promulgated, issued, or done by the incumbent President shall be part of the law of the land, and shall remain valid, legal, binding, and effective even after lifting of martial law or the ratification of this Constitution, unless modified, revoked, or superseded by subsequent proclamations, orders, decrees, instructions, or other acts of the incumbent President, or unless expressly and explicitly modified or repealed by the regular National Assembly." 4 Article XIV, Section 12 of the Revised Constitution. 5 Section 50 of Republic Act No. 1199 (1954). 6 Decision, Annex A of Petition, 2-3. 7 Presidential Decree No. 27 reads as follows: "Inasmuch as the old concept of land ownership by a few has spawned valid and legitimate grievances that gave rise to violent conflict and social tension, [t]he redress of such legitimate grievances being one of the fundamental objectives of the New Society, (s)ince Reformation must start with the emancipation of the tiller of the soil from his bondage, [n]ow, [t]herefor, I, Ferdinand E. Marcos, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972, and General Order No. 1 dated September 22, 1972, as amended do hereby decree and order the emancipation of all tenant farmers as of this day, October 21, 1972; This shall apply to tenant farmers of private agricultural lands primarily devoted to rice and corn under a system of share-crop or lease-tenancy, whether classified as landed estate or not; The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion constituting a family-size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated; In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate it; For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant to this Decree, the value of the land shall be equivalent to two and one hall (2-) times the average harvest of three normal crop years immediately preceding the promulgation of this Decree; The total cost of the land, including harvest at the rate of six (6) percentum per annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal

annual amortizations; In case of default, the amortizations due shall be paid by the farmers' cooperative in which the defaulting tenant-farmer is a member, with the cooperative having a right of recourse against him; The government shall guarantee such amortizations with shares of stock in government-owned and government-controlled corporations; No title to the land owned by the tenantfarmers under this Decree shall be actually issued to a tenant-farmer unless and until the tenant-farmer has become a full-fledged member of a duly recognized farmers' cooperative; Title to land acquired pursuant to this Decree or the Land Reform Program of the Government shall not be transferable except by hereditary succession or to the Government in accordance with the provisions of this Decree, the Code of Agrarian Reforms and other existing law and regulations; The Department of Agrarian Reform through its Secretary is hereby empowered to promulgate rules and regulations for the implementation of this Decree; All laws, executive orders, decrees and rules and regulations, or parts thereof, inconsistent with this Decree are hereby repealed and or modified accordingly. Done in the City of Manila this 21st day of October, in the year of Our Lord, nineteen hundred and seventy-two. 8 84 Phil. 847 (1949). 9 L-19555, May 29, 1964, 11 SCRA 171. 10 Ibid, 177-178. 11 Laski, Liberty in the Modern State, 34 (1949). 12 Cf. Commonwealth Acts Nos. 34 (1936), 178 (1936), 461 (1939). Also, Republic Acts 1199 (1954) and 3844 (1963). 13 Cf. Art. XIV, Section 12 reading thus: "The State shall formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the soil and achieving the goals enunciated in this Constitution." 14 Cf. Art. XVII, Section 12. 15 The 1958 decisions are Atayde v. De Guzman, 103 Phil 187; and De Miranda v. Reyes, 103 Phil. 207. The other decisions follow: Cahilo v. De Guzman, 106 Phil. 520 (1959); Yusay v. Alojado, 107 Phil. 1156 (1960) ; Ulpiendo v. Court Agrarian Relations, 109 Phil. 964 (1960) ; Canada v. Rubi, 110 Phil. 505 (1960); Mateo v. Duran, L-14314, Feb. 22, 1961, SCRA 508 De Domingo v. Court of Agrarian Relations, L-12116, April 28, 1962, 4 SCRA 1151; Silva v. Cabagon, L-14801, Jan 31, 1963, 7 SCRA 33; Bermudez v. Fernando, L-18610, April 1963, 7 SCRA 682; Toledo v. Court of Agrarian Relations, L-16054, July 31, 1963, 8 SCRA 499; Lustre v. Court of Agrarian Relations, L-19654, March 31, 1964, 10 SCRA 659; Gagola v. Court of Agrarian Relations, L-19740, Dec. 17, 1966, 18 SCRA 992; Lapina v. Court of Agrarian Relations, L-20706, Sept. 25, 1967, 21 SCRA 194; Ibaviosa v. Tuazon, L-21641, Dec. 29, 1967, 21 SCRA 1438: Picardal v. Lladas, L-21309, Dec. 29, 1967, 21 SCRA 1483; Del Rosario v. De los Santos, L-20589-90, March 21, 1968, 22 SCRA 1196; Beltran v. Cruz, L20973, October 26, 1968, 25 SCRA 607; Teodoro v. Macaraeg, L-20700, Feb. 27, 1969, 2 SCRA 7; Lim v. Secretary of Agriculture and Natural Resources, L26990, Aug. 31, 1970, 34 SCRA 751. BARREDO, J., concurring:

N0. 9 Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 123417 June 10, 1999

JAIME MORTA, SR. and PURIFICACION PADILLA, petitioners, vs. JAIME OCCIDENTAL, ATTY. MARIANO BARANDA, JR., and DANIEL CORRAL, respondents. PARDO, J.: What is before us is a petition for review on certiorari of the decision1 of the Court of Appeals and the resolution,2 denying petitioners' motion for reconsideration and supplemental motion for reconsideration. In its decision, the Court of Appeals dismissed the petition for review filed before it, ruling that the cases below fall within the jurisdiction of the DARAB. The antecedent facts are as follows: On January 10 and 21, 1994, 3 petitioners Jaime Morta, Sr. and Purificacion Padilla filed two (2) cases4 for damages with preliminary injunction, with the Municipal Trial Court, Guinobatan, Albay, against respondents Jaime Occidental, Atty. Mariano Baranda, Jr. and Daniel Corral, which were consolidated pursuant to Rule 31 of the Revised Rules of Court. In the complaints, petitioners alleged that respondents through the instigation of Atty. Baranda, gathered pilinuts, anahaw leaves, and coconuts from their respective land, delivered the produce to Atty. Mariano Baranda, Jr., and destroyed their banana and pineapple plants. In Civil Case No. 481, petitioners claimed damages amounting to P8,930.00, plus costs of suit; in Civil Case No. 482, petitioners claimed P9,950.00, as damages. The court considered the cases covered by the Rule on Summary Procedure and ordered respondents to file their answer. In their answer, respondents claimed that petitioners were not the owners of the land in question. They alleged that the torrens titles of the land indicated a certain Gil Opiana as the registered owner. Gil Opiana was the father of Josefina Opiana-Baraclan who inherited the lots upon the former's death. Respondent Jaime Occidental contended that he was a bona fide tenant of Josefina Opiana-Baraclan. Respondents stated that there was no annotation on the titles establishing petitioners' right over the land. They denied harvesting the anahaw leaves and coconuts, as well as delivering the produce to Atty. Baranda, Jr.

Thereafter, the Municipal Trial Court ordered the parties to submit affidavits of their witnesses and other evidence on the factual issues, together with their respective position papers. After respondents' failure to file their position papers within the prescribed period, the trial court considered the case submitted for decision. On March 29, 1994, the Municipal Trial Court rendered decision 5 in favor of petitioners. It held that petitioners had been in actual, continuous, open and adverse possession of the land in question for forty-five (45) years. The decretal portion of the decision reads: WHEREFORE, in view of the foregoing considerations, judgment is rendered in favor of the plaintiffs and against the defendants in both cases as follows: 1) Ordering the defendants not to molest and disturb the peaceful possession of the plaintiffs in the lands in question situated at San Rafael, Guinobatan; 2) Condemning the defendants in Civil Cases No. 481 to jointly and severally pay the plaintiffs the total amount of P8,130.00 representing the value of the coconuts, pilinuts and anahaw leaves and for the destroyed plants; 3) Ordering the defendants in Civil Cases No. 481 jointly and severally to reimburse the plaintiffs the amount of P202.00 as legal expenses incurred filing this suit; 4) Condemning the defendants in Civil Case No. 482 jointly and severally to pay the plaintiffs the total amount of P9,950.00 representing the value of the coconuts and anahaw leaves; 5) Ordering the said defendants in Civil Case No. 482 to jointly and severally reimburse the plaintiffs the sum of P202.00 as legal expenses in filing this suit. Guinobatan, Albay, March 29, 1994. (signed) JAIME R. REMONTE Judge6 Respondents appealed to the Regional Trial Court, Ligao, Albay. They questioned the trial court's jurisdiction contending that the case was cognizable by the Department of Agrarian Reform Adjudicatory Board (DARAB). They alleged that petitioners engaged in forum shopping and that the trial court erred in granting the reliefs prayed for. On August 10, 1994, the Regional Trial Court rendered decision reversing that of the Municipal Trial Court and dismissing the above cases,7 ruling that these cases for damages are tenancy-related problems which fall under the original and exclusive jurisdiction of the DARAB. The court also declared that the filing of Civil Cases Nos. 481 and 482, while a case involving the same issue was pending before the DARAB, amounted to forum shopping. On September 9, 1994, petitioners filed a petition for review8 with the Court of Appeals, contesting the decision of the Regional Trial Court. On May 31, 1995, the Court of Appeals 9 rendered decision affirming the lower's court ruling that the cases fall within the original and

exclusive jurisdiction of DARAB. However, it ruled that petitioners did not engage in forum shopping. On June 6, 1995, petitioners filed a motion for reconsideration. 10 On June 13, 1995, they filed a supplemental motion for reconsideration,11 stressing that there was no tenancy relationship between the parties, as certified by the Municipal Agrarian Reform Office (MARO). 12 On December 8, 1995, the Court of Appeals denied the motions. 13 Hence, this petition for review on certiorari. Petitioners claim that Morta is not a tenant of either Jaime Occidental or Josefina OpianaBaraclan, as shown by the MARO certification. They argue that the civil actions for damages are not tenancy-related, and, hence, are properly cognizable by the trial court, not the DARAB. We resolve to grant the petition. It is axiomatic that what determines the nature of an action as well as which court has jurisdiction over it, are the allegations in the complaint and the character of the relief sought. 14 "Jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether the plaintiff is entitled to recover upon a claim asserted therein a matter resolved only after and as a result of the trial. Neither can the jurisdiction of the court be made to depend upon the defenses made by the defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the defendant."15 The complaint filed by petitioners before the Municipal Trial Court is an action for damages for illegal gathering of anahaw leaves, pilinuts and coconuts, and the destruction of their banana and pineapple plantations. The respondents did not question the municipal trial court's jurisdiction in their answer. The issue of jurisdiction was raised for the first time on appeal. For DARAB to have jurisdiction over a case, there must exist a tenancy relationship between the parties. In order for a tenancy agreement to take hold over a dispute, it would be essential to establish all its indispensable elements, to wit: 1) that the parties are the landowner and the tenant or agricultural lessee; 2) that the subject matter of the relationship is an agricultural land; 3) that there is consent between the parties to the relationship; 4) that the purpose of the relationship is to bring about agricultural production; 5) that there is personal cultivation on the part of the tenant or agricultural lessee; and 6) that the harvest is shared between the landowner and the tenant or agricultural lessee. 16 In Vda. de Tangub v. Court of Appeals,17 we held that the jurisdiction of the Department of Agrarian Reforms is limited to the following: a) adjudication of all matters involving implementation of agrarian reform; b) resolution of agrarian conflicts and land-tenure related problems; and c) approval and disapproval of the conversion, restructuring or readjustment of agricultural lands into residential, commercial, industrial, and other non-agricultural uses.

The regional trial court ruled that the issue involved is tenancy-related that falls within the exclusive jurisdiction of the DARAB. It relied on the findings in DARAB Case No. 2413 that Josefina Opiana-Baraclan appears to be the lawful owner of the land and Jaime Occidental was her recognized tenant. However, petitioner Morta claimed that he is the owner of the land. Thus, there is even a dispute as to who is the rightful owner of the land, Josefina Opiana-Baraclan or petitioner Morta. The issue of ownership cannot be settled by the DARAB since it is definitely outside its jurisdiction. Whatever findings made by the DARAB regarding the ownership of the land are not conclusive to settle the matter. The issue of ownership shall be resolved in a separate proceeding before the appropriate trial court between the claimants thereof. At any rate, whoever is declared to be the rightful owner of the land, the case can not be considered as tenancy-related for it still fails to comply with the other requirements. Assuming arguendo that Josefina Opiana-Baraclan is the owner, then the case is not between the landowner and tenant. If, however, Morta is the landowner, Occidental can not claim that there is consent to a landowner-tenant relationship between him and Morta. Thus, for failure to comply with the above requisites, we conclude that the issue involved is not tenancy-related cognizable by the DARAB. WHEREFORE, the Court SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP No. 35300 and that of the Regional Trial Court in Civil Cases Nos. 1751 and 1752. The Court AFFIRMS the decision of the Municipal Trial Court, Guinobatan, Albay, in Civil Cases Nos. 481 and 482, for damages. SO ORDERED. Kapunan and Ynares-Santiago, JJ., concur. Davide, Jr., C.J., pls. see dissenting opinion. Melo, J., I join Chief Justice Davide in his dissent.

Separate Opinions DAVIDE, JR., C.J., dissenting opinion; I beg to dissent. I agree with both the Regional Trial Court and the Court of Appeals that the cases before the Municipal Trial Court involved an agrarian dispute exclusively cognizable by the DARAB. It had, in fact, been determined in DARAB Case No. 2413 that respondent Jaime Occidental a defendant in one of the MTC cases is the tenant of Josefina Opiniana-Baraclan (1st par., p. 7 of ponencia). There is at all no showing that this determination by DARAB has been set aside by some higher authorities. The claim of petitioner Morta that he is the owner of the land is of no moment, for whether it is Josefina or Morta who is the owner does not affect Occidental's right as tenancy. Tenancy attaches to the land. As I see it, the cases filed by petitioners Morta and Padilla were a clever way to defeat the agrarian law. While the cases were ostensibly for damages, they were, at bottom, a fight on issues incident to or arising from an agrarian relationship. The first relief granted by the MTC, to wit:

1) Ordering the defendants not to molest and disturb the peaceful possession of the plaintiffs in the lands in question situated at San Rafael, Guinobatan; mirrors the true nature of the controversy. WHEREFORE, I vote to DENY the instant petition since no reversible error was committed by the Court of Appeals in its challenged decision.