G.R. No. 102132. March 19, 1993.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V. ABARQUEZ, in his capacity as an accredited
Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents.

Libron, Gaspar & Associates for petitioner.

Bansalan B. Metilla for Association of Trade Unions (ATUTUCP).

SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS; COLLECTIVE BARGAINING AGREEMENT; DEFINED; NATURE THEREOF;
CONSTRUCTION TO BE PLACED THEREON. — A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code,
refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the
agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions arising under such agreement. While the terms and conditions of a CBA
constitute the law between the parties, it is not, however, an ordinary contract to which is applied the principles of law governing
ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must
yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is
intended to serve.

2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from
the other related section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or
withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular
intermittent workers. The manner they were deprived of the privilege previously recognized and extended to them by petitioner-
company during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of
three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory in nature. It must be noted that
the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's
company, namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the company
and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor
pool and the present regular extra labor pool as of the signing of the agreement on April 15, 1989 or those workers who have
irregular working days and are governed by Section 3, Article VIII of the 1989 CBA. It is not disputed that both classes of workers are
entitled to sick leave with pay benefits provided they comply with the conditions set forth under Section 1 in relation to the last
paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with
the company; and (2) the application must be accompanied by a certification from a company-designated physician. the phrase
"herein sick leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with
pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick leave with pay benefit
should be distinguished from the variable number of days of sick leave, not to exceed 15 days, extended to intermittent workers
under Section 3 depending on the number of hours of service rendered to the company, including overtime pursuant to the
schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for
its regular intermittent workers since, as the term "intermittent" implies, there is irregularity in their work-days. Reasonable and
practical interpretation must be placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather than fail.

3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. — Sick leave benefits, like other economic benefits stipulated in the
CBA such as maternity leave and vacation leave benefits, among others, are by their nature, intended to be replacements for regular
income which otherwise would not be earned because an employee is not working during the period of said leaves. They are non-
contributory in nature, in the sense that the employees contribute nothing to the operation of the benefits. By their nature, upon
agreement of the parties, they are intended to alleviate the economic condition of the workers.

4. ID.; ID.; JURISDICTION OF VOLUNTARY ARBITRATOR; CASE AT BAR. — Petitioner-company's objection to the authority of the
Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers
in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein public respondent is the
necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and
decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement." We,
therefore, find that no grave abuse of discretion was committed by public respondent in issuing the award (decision). Moreover, his
interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.

5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS; BENEFITS GRANTED
PURSUANT TO COMPANY PRACTICE OR POLICY CANNOT BE PEREMPTORILY WITHDRAWN. — Whatever doubt there may have been
early on was clearly obliterated when petitioner-company recognized the said privilege and paid its intermittent workers the cash
equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or conversion to cash,
being an existing benefit, the petitioner-company may not unilaterally withdraw, or diminish such benefits. It is a fact that
petitioner-company had, on several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick
1
leave benefits of some intermittent workers. Under the circumstances, these may be deemed to have ripened into company practice
or policy which cannot be peremptorily withdrawn.

DECISION

ROMERO, J p:

In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to reverse the Award 1 issued on
September 10, 1991 by respondent Ruben V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and
Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which directed petitioner to grant
and extend the privilege of commutation of the unenjoyed portion of the sick leave with pay benefits to its intermittent field
workers who are members of the regular labor pool and the present regular extra pool in accordance with the Collective Bargaining
Agreement (CBA) executed between petitioner and private respondent Association of Trade Unions (ATU-TUCP), from the time it
was discontinued and henceforth.

The facts are as follows:

Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent ATU-TUCP (Union), the
exclusive collective bargaining agent of the rank and file workers of petitioner-company, entered into a collective bargaining
agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits
each year to its employees who have rendered at least one (1) year of service with the company, thus:

"ARTICLE VIII

Section 1. Sick Leaves — The Company agrees to grant 15 days sick leave with pay each year to every regular non-intermittent
worker who already rendered at least one year of service with the company. However, such sick leave can only be enjoyed upon
certification by a company designated physician, and if the same is not enjoyed within one year period of the current year, any
unenjoyed portion thereof, shall be converted to cash and shall be paid at the end of the said one year period. And provided
however, that only those regular workers of the company whose work are not intermittent, are entitled to the herein sick leave
privilege.

xxx xxx xxx

Section 3. — All intermittent field workers of the company who are members of the Regular Labor Pool shall be entitled to vacation
and sick leaves per year of service with pay under the following schedule based on the number of hours rendered including
overtime, to wit:

Hours of Service Per Vacation Sick Leave

Calendar Year Leave

Less than 750 NII NII

751 — 825 6 days 6 days

826 — 900 7 7

901 — 925 8 8

926 — 1,050 9 9

1,051 — 1,125 10 10

1,126 — 1,200 11 11

1,201 — 1,275 12 12

1,276 — 1,350 13 13

1,351 — 1,425 14 14

1,426 — 1,500 15 15

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1
and 2 hereof, respectively."
2
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced under Sections 1 and 3, Article
VIII of the new CBA, but the coverage of the said benefits was expanded to include the "present Regular Extra Labor Pool as of the
signing of this Agreement." Section 3, Article VIII, as revised, provides, thus:

"Section 3. — All intermittent field workers of the company who are members of the Regular Labor Pool and present Regular Extra
Labor Pool as of the signing of this agreement shall be entitled to vacation and sick leaves per year of service with pay under the
following schedule based on the number of hours rendered including overtime, to wit:

Hours of Service Per Vacation Sick Leave

Calendar Year Leave

Less than 750 NII NII

751 — 825 6 days 6 days

826 — 900 7 7

901 — 925 8 8

926 — 1,050 9 9

1,051 — 1,125 10 10

1,126 — 1,200 11 11

1,201 — 1,275 12 12

1,276 — 1,350 13 13

1,351 — 1,425 14 14

1,426 — 1,500 15 15

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1
and 2 hereof, respectively."

During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April 15, 1989, or until July 1989 (a
total of three (3) years and nine (9) months), all the field workers of petitioner who are members of the regular labor pool and the
present regular extra labor pool who had rendered at least 750 hours up to 1,500 hours were extended sick leave with pay benefits.
Any unenjoyed portion thereof at the end of the current year was converted to cash and paid at the end of the said one-year period
pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days of their sick leave per year depends on the number of hours
of service per calendar year in accordance with the schedule provided in Section 3, Article VIII of the CBA.

The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent workers or its conversion to cash
was, however, discontinued or withdrawn when petitioner-company under a new assistant manager, Mr. Benjamin Marzo (who
replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June 1989), stopped the payment of its cash equivalent on the
ground that they are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.

The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed sick leave with pay benefits
of petitioner's intermittent workers contending that it is a deviation from the true intent of the parties that negotiated the CBA; that
it would violate the principle in labor laws that benefits already extended shall not be taken away and that it would result in
discrimination between the non-intermittent and the intermittent workers of the petitioner-company.

Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3, Article VIII of the 1989 CBA, the
Union brought the matter for voluntary arbitration before the National Conciliation and Mediation Board, Regional Arbitration
Branch XI at Davao City by way of complaint for enforcement of the CBA. The parties mutually designated public respondent Ruben
Abarquez, Jr. to act as voluntary arbitrator.

After the parties had filed their respective position papers, 2 public respondent Ruben Abarquez, Jr. issued on September 10, 1991
an Award in favor of the Union ruling that the regular intermittent workers are entitled to commutation of their unenjoyed sick
leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the dispositive portion of which reads:

"WHEREFORE, premises considered, the management of the respondent Davao Integrated Port Stevedoring Services Corporation is
hereby directed to grant and extend the sick leave privilege of the commutation of the unenjoyed portion of the sick leave of all the
3
intermittent field workers who are members of the regular labor pool and the present extra pool in accordance with the CBA from
the time it was discontinued and henceforth.

SO ORDERED."

Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the instant petition.

Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1, Article VIII of the 1989 CBA
that only the regular workers whose work are not intermittent are entitled to the benefit of conversion to cash of the unenjoyed
portion of sick leave, thus: ". . . And provided, however, that only those regular workers of the Company whose work are not
intermittent are entitled to the herein sick leave privilege."

Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of their unenjoyed sick leave
with pay benefits during the previous management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of the 1985
CBA, it was well within petitioner-company's rights to rectify the error it had committed and stop the payment of the said sick leave
with pay benefits. An error in payment, according to petitioner-company, can never ripen into a practice.

We find the arguments unmeritorious.

A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed upon request of
either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect
to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or
questions arising under such agreement.

While the terms and conditions of a CBA constitute the law between the parties, 3 it is not, however, an ordinary contract to which
is applied the principles of law governing ordinary contracts. 4 A CBA, as a labor contract within the contemplation of Article 1700 of
the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but
impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly
and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to serve. 5

It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related section on sick leave with
pay benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of commutation
or conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent workers. The manner they were
deprived of the privilege previously recognized and extended to them by petitioner-company during the lifetime of the CBA of
October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9) months, is not
only tainted with arbitrariness but likewise discriminatory in nature. Petitioner-company is of the mistaken notion that since the
privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1,
Article VIII, only the regular non-intermittent workers and no other can avail of the said privilege because of the proviso found in the
last sentence thereof.

It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of
workers in petitioner's company, namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour
service to the company and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are
members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on April 15, 1989 or
those workers who have irregular working days and are governed by Section 3, Article VIII of the 1989 CBA.

It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with the conditions
set forth under Section 1 in relation to the last paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must
have rendered at least one year of service with the company; and (2) the application must be accompanied by a certification from a
company-designated physician.

Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among
others, are by their nature, intended to be replacements for regular income which otherwise would not be earned because an
employee is not working during the period of said leaves. 6 They are non-contributory in nature, in the sense that the employees
contribute nothing to the operation of the benefits. 7 By their nature, upon agreement of the parties, they are intended to alleviate
the economic condition of the workers.

After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of the facts and circumstances
attendant in the instant case, we find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA, invoked by
petitioner-company does not bar the regular intermittent workers from the privilege of commutation or conversion to cash of the
unenjoyed portion of their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as used in the last
sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which, as mandated by Section 1, only the
non-intermittent workers are entitled to. This fixed 15-day sick leave with pay benefit should be distinguished from the variable
number of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3 depending on the number of
hours of service rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair and

4
reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as
the term "intermittent" implies, there is irregularity in their work-days. Reasonable and practical interpretation must be placed on
contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the thing
may continue to have efficacy rather than fail. 8

We find the same to be a reasonable and practical distinction readily discernible in Section 1, in relation to Section 3, Article VIII of
the 1989 CBA between the two classes of workers in the company insofar as sick leave with pay benefits are concerned. Any other
distinction would cause discrimination on the part of intermittent workers contrary to the intention of the parties that mutually
agreed in incorporating the questioned provisions in the 1989 CBA.

Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave privilege to be accorded the
intermittent workers in the same way that they are both given the same treatment with respect to vacation leaves - non-
commutable and non-cumulative. If they are treated equally with respect to vacation leave privilege, with more reason should they
be on par with each other with respect to sick leave privileges. 9 Besides, if the intention were otherwise, during its renegotiation,
why did not the parties expressly stipulate in the 1989 CBA that regular intermittent workers are not entitled to commutation of the
unenjoyed portion of their sick leave with pay benefits?

Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said privilege and
paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of
the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner-company may not unilaterally withdraw, or diminish
such benefits. 10 It is a fact that petitioner-company had, on several instances in the past, granted and paid the cash equivalent of
the unenjoyed portion of the sick leave benefits of some intermittent workers. 11 Under the circumstances, these may be deemed
to have ripened into company practice or policy which cannot be peremptorily withdrawn. 12

Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed
portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor Code is clear.
The questioned directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as
Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of discretion was
committed by public respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the
1989 CBA cannot be faulted with and is absolutely correct.

WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public respondent dated September 10,
1991 is hereby AFFIRMED. No costs.

SO ORDERED.

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

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

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams, Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF LEGISLATIVE POWER;
AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES
AND REGULATIONS. — The provisions of section 1 of Commonwealth Act No. 648 do not confer legislative power upon the Director
of Public Works and the Secretary of Public Works and Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to
carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon, and avoid
obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the
President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon
which the application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to
determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic thereon
and the requirements of public convenience and interest, is an administrative function which cannot be directly discharged by the
National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining
whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of
5
the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — Commonwealth Act No. 548 was passed by the
National Assembly in the exercise of the paramount police power of the state. Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to public
safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote the general welfare
may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all
kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomer Jesus, 31
Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without
which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither
should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the
required balance of liberty and authority in his mind through education and, personal discipline, so that there may be established
the resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact
that the apparent curtailment of liberty is precisely the very means of insuring its preservation.

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

DECISION

LAUREL, J.:

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

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

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, is authorized to promulgate rules and regulations for the regulation and control of
the use of and traffic on national roads and streets is unconstitutional because it constitutes an undue delegation of legislative
power. This contention is untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The
rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of
cases, namely: ’The true distinction therefore is between the delegation of power to make the law, which necessarily involves a
discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance
of the law. The first cannot be done; to the latter no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton
County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the
6
Legislature to an executive department or official. The Legislature may make decisions of executive departments or subordinate
officials thereof, to whom it has committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.)
The growing tendency in the decisions is to give prominence to the ’necessity’ of the case."cralaw virtua1aw library

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

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

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

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

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

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

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v. Los Angeles (195 U.S. 223,

7
238; 49 L. ed. 169), "the right to exercise the police power is a continuing one, and a business lawful today may in the future,
because of the changed situation, the growth of population or other causes, become a menace to the public health and welfare, and
be required to yield to the public good." And in People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is
bringing within the police power of the state today things which were not thought of as being within such power yesterday. The
development of civilization, the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of
the masses and of the government to look after and care for the interests of the individuals of the state, have brought within the
police power many questions for regulation which formerly were not so considered."cralaw virtua1aw library

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

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

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

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

GREGORIO V. TONGKO, G.R. No. 167622

Petitioner,

Present:

CORONA, C.J.,

CARPIO,

CARPIO MORALES,

VELASCO, JR.,

NACHURA,

- versus - LEONARDO-DE CASTRO,

BRION,

PERALTA,

BERSAMIN,

DEL CASTILLO,

ABAD,

VILLARAMA, JR.,

PEREZ,

THE MANUFACTURERS LIFE INSURANCE CO. MENDOZA, and

8
(PHILS.), INC. and RENATO A. VERGEL DE DIOS, SERENO, JJ.

Respondents. Promulgated:

January 25, 2011

x-----------------------------------------------------------------------------------------x

RESOLUTION

BRION, J.:

We resolve petitioner Gregorio V. Tongkos bid, through his Motion for Reconsideration,[1] to set aside our June 29, 2010 Resolution
that reversed our Decision of November 7, 2008.[2] With the reversal, the assailed June 29, 2010 Resolution effectively affirmed the
Court of Appeals ruling[3] in CA-G.R. SP No. 88253 that the petitioner was an insurance agent, not the employee, of the respondent
The Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife).

In his Motion for Reconsideration, petitioner reiterates the arguments he had belabored in his petition and various other
submissions. He argues that for 19 years, he performed administrative functions and exercised supervisory authority over
employees and agents of Manulife, in addition to his insurance agent functions.[4] In these 19 years, he was designated as a Unit
Manager, a Branch Manager and a Regional Sales Manager, and now posits that he was not only an insurance agent for Manulife but
was its employee as well.

We find no basis or any error to merit the reconsideration of our June 29, 2010 Resolution.

A. Labor Law Control = Employment Relationship

Control over the performance of the task of one providing service both with respect to the means and manner, and the results of the
service is the primary element in determining whether an employment relationship exists. We resolve the petitioners Motion
against his favor since he failed to show that the control Manulife exercised over him was the control required to exist in an
employer-employee relationship; Manulifes control fell short of this norm and carried only the characteristic of the relationship
between an insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.

The petitioner asserts in his Motion that Manulifes labor law control over him was demonstrated (1) when it set the objectives and
sales targets regarding production, recruitment and training programs; and (2) when it prescribed the Code of Conduct for Agents
and the Manulife Financial Code of Conduct to govern his activities.[5] We find no merit in these contentions.

In our June 29, 2010 Resolution, we noted that there are built-in elements of control specific to an insurance agency, which do not
amount to the elements of control that characterize an employment relationship governed by the Labor Code. The Insurance Code
provides definite parameters in the way an agent negotiates for the sale of the companys insurance products, his collection activities
and his delivery of the insurance contract or policy.[6] In addition, the Civil Code defines an agent as a person who binds himself to do
something in behalf of another, with the consent or authority of the latter. [7] Article 1887 of the Civil Code also provides that in the
execution of the agency, the agent shall act in accordance with the instructions of the principal.

All these, read without any clear understanding of fine legal distinctions, appear to speak of control by the insurance company over
its agents. They are, however, controls aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters
set by law in defining an insurance agency and the attendant duties and responsibilities an insurance agent must observe and
undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes
an employment relationship as defined by labor law. From this perspective, the petitioners contentions cannot prevail.

To reiterate, guidelines indicative of labor law control do not merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the
result.[8] Tested by this norm, Manulifes instructions regarding the objectives and sales targets, in connection with the training and
engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned
tasks. They are targeted results that Manulife wishes to attain through its agents. Manulifes codes of conduct, likewise, do not
necessarily intrude into the insurance agents means and manner of conducting their sales. Codes of conduct are norms or standards
of behavior rather than employer directives into how specific tasks are to be done. These codes, as well as insurance industry rules
and regulations, are not per se indicative of labor law control under our jurisprudence.[9]

The duties[10] that the petitioner enumerated in his Motion are not supported by evidence and, therefore, deserve scant
consideration.Even assuming their existence, however, they mostly pertain to the duties of an insurance agent such as remitting
insurance fees to Manulife, delivering policies to the insured, and after-sale services. For agents leading other agents, these include
the task of overseeing other insurance agents, the recruitment of other insurance agents engaged by Manulife as principal, and
9
ensuring that these other agents comply with the paperwork necessary in selling insurance. That Manulife exercises the power to
assign and remove agents under the petitioners supervision is in keeping with its role as a principal in an agency relationship; they
are Manulife agents in the same manner that the petitioner had all along been a Manulife agent.

The petitioner also questions Manulifes act of investing him with different titles and positions in the course of their relationship,
given the respondents position that he simply functioned as an insurance agent. [11] He also considers it an unjust and inequitable
situation that he would be unrewarded for the years he spent as a unit manager, a branch manager, and a regional sales manager.[12]

Based on the evidence on record, the petitioners occupation was to sell Manulifes insurance policies and products from 1977 until
the termination of the Career Agents Agreement (Agreement). The evidence also shows that through the years, Manulife permitted
him to exercise guiding authority over other agents who operate under their own agency agreements with Manulife and whose
commissions he shared.[13] Under this scheme an arrangement that pervades the insurance industry petitioner in effect became a
lead agent and his own commissions increased as they included his share in the commissions of the other agents;[14] he also received
greater reimbursements for expenses and was allowed to use Manulifes facilities. His designation also changed from unit manager
to branch manager and then to regional sales manager, to reflect the increase in the number of agents he recruited and guided, as
well as the increase in the area where these agents operated.

As our assailed Resolution concluded and as we now similarly conclude, these arrangements, and the titles and positions the
petitioner was invested with, did not change his status from the insurance agent that he had always been (as evidenced by the
Agreement that governed his relationship with Manulife from the start to its disagreeable end). The petitioner simply progressed
from his individual agency to being a lead agent who could use other agents in selling insurance and share in the earnings of these
other agents.

In sum, we find absolutely no evidence of labor law control, as extensively discussed in our Resolution of June 29, 2010, granting
Manulifes motion for reconsideration. The Dissent, unfortunately, misses this point.

B. No Resulting Inequity

We also do not agree that our assailed Resolution has the effect of fostering an inequitable or unjust situation. The records show
that the petitioner was very amply paid for his services as an insurance agent, who also shared in the commissions of the other
agents under his guidance. In 1997, his income was P2,822,620; in 1998, P4,805,166.34; in 1999, P6,797,814.05; in
2001, P6,214,737.11; and in 2002, P8,003,180.38. All these he earned as an insurance agent, as he failed to ever prove that he
earned these sums as an employee. In technical terms, he could not have earned all these as an employee because he failed to
provide the substantial evidence required in administrative cases to support the finding that he was a Manulife employee. No
inequity results under this legal situation; what would be unjust is an award of backwages and separation pay amounts that are not
due him because he was never an employee.

The Dissents discussion on this aspect of the case begins with the wide disparity in the status of the parties that Manulife is a big
Canadian insurance company while Tongko is but a single agent of Manulife. The Dissent then went on to say that [i]f is but just, it is
but right, that the Court interprets the relationship between Tongko and Manulife as one of employment under labor laws and to
uphold his constitutionally protected right, as an employee, to security of tenure and entitlement to monetary award should such
right be infringed.[15] We cannot simply invoke the magical formula by creating an employment relationship even when there is none
because of the unavoidable and inherently weak position of an individual over a giant corporation.

The Dissent likewise alluded to an ambiguity in the true relationship of the parties after Tongkos successive appointments. We
already pointed out that the legal significance of these appointments had not been sufficiently explained and that it did not help that
Tongko never bothered to present evidence on this point. The Dissent recognized this but tried to excuse Tongko from this failure in
the subsequent discussion, as follows:

[o]ther evidence was adduced to show such duties and responsibilities. For one, in his letter of November 6, 2001, respondent De
Dios addressed petitioner as sales manager. And as I wrote in my Dissent to the June 29, 2010 Resolution, it is difficult to imagine
that Manulife did not issue promotional appointments to petitioner as unit manager, branch manager, and, eventually, regional
sales manager. Sound management practice simply requires an appointment for any upward personnel movement, particularly
when additional functions and the corresponding increase in compensation are involved.Then, too, the adverted affidavits of the
managers of Manulife as to the duties and responsibilities of a unit manager, such as petitioner, point to the conclusion that these
managers were employees of Manulife, applying the four-fold test.[16]

This Court (and all adjudicators for that matter) cannot and should not fill in the evidentiary gaps in a partys case that the party
failed to support; we cannot and should not take the cudgels for any party. Tongko failed to support his cause and we should simply
view him and his case as they are; our duty is to sit as a judge in the case that he and the respondent presented.

To support its arguments on equity, the Dissent uses the Constitution and the Civil Code, using provisions and principles that are all
motherhood statements. The mandate of the Court, of course, is to decide cases based on the facts and the law, and not to base its
conclusions on fundamental precepts that are far removed from the particular case presented before it. When there is no room for
their application, of capacity of principles, reliance on the application of these fundamental principles is misplaced.

10
C. Earnings were Commissions

That his earnings were agents commissions arising from his work as an insurance agent is a matter that the petitioner cannot deny,
as these are the declarations and representations he stated in his income tax returns through the years. It would be doubly unjust,
particularly to the government, if he would be allowed at this late point to turn around and successfully claim that he was merely an
employee after he declared himself, through the years, as an independent self-employed insurance agent with the privilege of
deducting business expenses. This aspect of the case alone considered together with the probative value of income tax declarations
and returns filed prior to the present controversy should be enough to clinch the present case against the petitioners favor.

D. The Dissents Solution:

Unwieldy and Legally Infirm

The Dissent proposes that Tongko should be considered as part employee (as manager) and part insurance agent; hence, the original
decision should be modified to pertain only to the termination of his employment as a manager and not as an insurance
agent.Accordingly, the backwages component of the original award to him should not include the insurance sales commissions. This
solution, according to the line taken by the Dissent then, was justified on the view that this was made on a case-to-case basis.

Decisions of the Supreme Court, as the Civil Code provides, form part of the law of the land. When the Court states that the
determination of the existence of an employment relationship should be on a case-to-case basis, this does not mean that there will
be as many laws on the issue as there are cases. In the context of this case, the four-fold test is the established standard for
determining employer-employee relationship and the existence of these elements, most notably control, is the basis upon which a
conclusion on the absence of employment relationship was anchored. This simply means that a conclusion on whether employment
relationship exists in a particular case largely depends on the facts and, in no small measure, on the parties evidence vis--vis the
clearly defined jurisprudential standards. Given that the parties control what and how the facts will be established in a particular
case and/or how a particular suit is to be litigated, deciding the issues on a case-to-case basis becomes an imperative.

Another legal reality, a more important one, is that the duty of a court is to say what the law is. [17] This is the same duty of the
Supreme Court that underlies the stare decisis principle. This is how the public, in general and the insurance industry in particular,
views the role of this Court and courts in general in deciding cases. The lower courts and the bar, most specially, look up to the
rulings of this Court for guidance. Unless extremely unavoidable, the Court must, as a matter of sound judicial policy, resist the
temptation of branding its ruling pro hac vice.

The compromise solution of declaring Tongko both an employee and an agent is legally unrealistic, unwieldy and is, in fact, legally
infirm, as it goes against the above basic principles of judicial operation. Likewise, it does not and cannot realistically solve the
problem/issue in this case; it actually leaves more questions than answers.

As already pointed out, there is no legal basis (be it statutory or jurisprudential) for the part-employee/part-insurance agent status
under an essentially principal-agent contractual relation which the Dissent proposes to accord to Tongko. If the Dissent intends to
establish one, this is highly objectionable for this would amount to judicial legislation. A legal relationship, be it one of employment
or one based on a contract other than employment, exists as a matter of law pursuant to the facts, incidents and legal consequences
of the relationship; it cannot exist devoid of these legally defined underlying facts and legal consequences unless the law itself
creates the relationship an act that is beyond the authority of this Court to do.

Additionally, the Dissents conclusion completely ignores an unavoidable legal reality that the parties are bound by a contract of
agency that clearly subsists notwithstanding the successive designation of Tongko as a unit manager, a branch manager and a
regional sales manager. (As already explained in our Resolution granting Manulifes motion for reconsideration, no evidence on
record exists to provide the Court with clues as to the precise impact of all these designations on the contractual agency
relationship.) The Dissent, it must be pointed out, concludes that Tongkos employment as manager was illegally terminated; thus, he
should be accordingly afforded relief therefor. But, can Tongko be given the remedies incidental to his dismissal as manager
separately from his status as an insurance agent? In other words, since the respondents terminated all relationships with Tongko
through the termination letter, can we simply rule that his role as a manager was illegally terminated without touching on the
consequences of this ruling on his status as an insurance agent? Expressed in these terms, the inseparability of his contract as agent
with any other relationship that springs therefrom can thus be seen as an insurmountable legal obstacle.

The Dissents compromise approach would also sanction split jurisdiction. The labor tribunals shall have jurisdiction over Tongkos
employment as manager while another entity shall decide the issues/cases arising from the agency relationship. If the managerial
employment is anchored on the agency, how will the labor tribunals decide an issue that is inextricably linked with a relationship
that is outside the loop of their jurisdiction? As already mentioned in the Resolution granting Manulifes reconsideration,
the DOMINANTrelationship in this case is agency and no other.

E. The Dissents Cited Cases

The Dissent cites the cases of Great Pacific Life Assurance Corporation v. National Labor Relations Commission [18] and Insular Life
Assurance Co., Ltd. v. National Labor Relations Commission [19] to support the allegation that Manulife exercised control over the
petitioner as an employer.

11
In considering these rulings, a reality that cannot but be recognized is that cases turn and are decided on the basis of their own
unique facts; the ruling in one case cannot simply be bodily lifted and applied to another, particularly when notable differences exist
between the cited cases and the case under consideration; their respective facts must be strictly examined to ensure that the ruling
in one applies to another. This is particularly true in a comparison of the cited cases with the present case. Specifically, care should
be taken in reading the cited cases and applying their rulings to the present case as the cited cases all dealt with the proper legal
characterization of subsequent management contracts that superseded the original agency contract between the insurance
company and the agent.

In Great Pacific Life, the Ruiz brothers were appointed to positions different from their original positions as insurance agents, whose
duties were clearly defined in a subsequent contract. Similarly, in Insular, de los Reyes, a former insurance agent, was appointed as
acting unit manager based on a subsequent contract. In both cases, the Court anchored its findings of labor control on the
stipulations of these subsequent contracts.

In contrast, the present case is remarkable for the absence of evidence of any change in the nature of the petitioners employment
with Manulife. As previously stated above and in our assailed Resolution, the petitioner had always been governed by the
Agreement from the start until the end of his relationship with Manulife. His agency status never changed except to the extent of
being a lead agent.Thus, the cited cases where changes in company-agent relationship expressly changed and where the subsequent
contracts were the ones passed upon by the Court cannot be totally relied upon as authoritative.

We cannot give credit as well to the petitioners claim of employment based on the affidavits executed by other Manulife agents
describing their duties, because these same affidavits only affirm their status as independent agents, not as employees. To quote
these various claims:[20]

1.a. I have no fixed wages or salary since my services are compensated by way of commissions based on the computed premiums
paid in full on the policies obtained thereat;

1.b. I have no fixed working hours and employ my own method in soliciting insurance at a time and place I see fit;

1.c. I have my own assistant and messenger who handle my daily work load;

1.d. I use my own facilities, tools, materials and supplies in carrying out my business of selling insurance;

xxxx

6. I have my own staff that handles day to day operations of my office;

7. My staff are my own employees and received salaries from me;

xxxx

9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as income by a self-employed individual or
professional with a ten (10) percent creditable withholding tax. I also remit monthly for professionals.

The petitioner cannot also rely on the letter written by respondent Renato Vergel de Dios to prove that Manulife exercised control
over him. As we already explained in the assailed Resolution:

Even de Dios letter is not determinative of control as it indicates the least amount of intrusion into Tongkos exercise of his role as
manager in guiding the sales agents. Strictly viewed, de Dios directives are merely operational guidelines on how Tongko could align
his operations with Manulifes re-directed goal of being a big league player. The method is to expand coverage through the use of
more agents. This requirement for the recruitment of more agents is not a means-and-method control as it relates, more than
anything else, and is directly relevant, to Manulifes objective of expanded business operations through the use of a bigger sales
force whose members are all on a principal-agent relationship. An important point to note here is that Tongko was not supervising
regular full-time employees of Manulife engaged in the running of the insurance business; Tongko was effectively guiding his corps
of sales agents, who are bound to Manulife through the same agreement that he had with manulife, all the while sharing in these
agents commissions through his overrides.[21]

Lastly, in assailing the Agreement between him and Manulife, the petitioner cites Paguio v. National Labor Relations
Commission[22] on the claim that the agreement that the parties signed did not conclusively indicate the legal relationship between
them.

The evidentiary situation in the present case, however, shows that despite the petitioners insistence that the Agreement was no
longer binding between him and Manulife, no evidence was ever adduced to show that their relationship changed so that Manulife
at some point controlled the means and method of the petitioners work. In fact, his evidence only further supports the conclusion
that he remained an independent insurance agent a status he admits, subject only to the qualification that he is at the same time an
employee.Thus, we can only conclude that the Agreement governed his relations with Manulife.

12
Additionally, it is not lost on us that Paguio is a ruling based on a different factual setting; it involves a publishing firm and an
account executive, whose repeated engagement was considered as an indication of employment. Our ruling in the present case is
specific to the insurance industry, where the law permits an insurance company to exercise control over its agents within the limits
prescribed by law, and to engage independent agents for several transactions and within an unlimited period of time without the
relationship amounting to employment. In light of these realities, the petitioners arguments on his last argument must also fail.

The dissent also erroneously cites eight other cases Social Security System v. Court of Appeals,[23] Cosmopolitan Funeral Homes, Inc.
v. Maalat,[24] Algon Engineering Construction Corporation v. National Labor Relations Commission,[25] Equitable Banking Corporation
v. National Labor Relations Commission,[26] Lazaro v. Social Security Commission,[27] Dealco Farms, Inc. v. National Labor Relations
Commission,[28] South Davao Development Company, Inc. v. Gamo,[29] and Abante, Jr. v. Lamadrid Bearing & Parts Corporation.[30]The
dissent cited these cases to support its allegation that labor laws and jurisprudence should be applied in cases, to the exclusion of
other laws such as the Civil Code or the Insurance Code, even when the latter are also applicable.

In Social Security System, Cosmopolitan Funeral Homes, Dealco Farms, and South Davao Development, the issue that repeats itself is
whether complainants were employees or independent contractors; the legal relationships involved are both labor law concepts and
make no reference to the Civil Code (or even the Insurance Code). The provisions cited in the Dissent Articles 1458-1637 of the Civil
Code[31] and Articles 1713-1720 of the Civil Code [32] do not even appear in the decisions cited.

In Algon, the issue was whether the lease contract should dictate the legal relationship between the parties, when there was proof
of an employer-employee relationship. In the cited case, the lease provisions on termination were thus considered irrelevant
because of a substantial evidence of an employment relationship. The cited case lacks the complexity of the present case; Civil Code
provisions on lease do not prescribe that lessees exercise control over their lessors in the way that the Insurance Code and the Civil
provide that insurance companies and principals exercised control over their agents.

The issue in Equitable, on the other hand, is whether a lawyer-client relationship or an employment relationship governs the legal
relation between parties. Again, this case is inapplicable as it does not illustrate the predominance of labor laws and jurisprudence
over other laws, in general, and the Insurance Code and Civil Code, in particular. It merely weighed the evidence in favor of an
employment relationship over that of a lawyer-client relationship. Similarly in Lazaro, the Court found ample proof of control
determinative of an employer-employee relationship. Both cases are not applicable to the present case, which is attended by totally
different factual considerations as the petitioner had not offered any evidence of the companys control in the means and manner of
the performance of his work.

On the other hand, we find it strange that the dissent cites Abante as a precedent, since the Court, in this case, held that an
employee-employer relationship is notably absent in this case as the complainant was a sales agent. This case better supports the
majoritys position that a sales agent, who fails to show control in the concept of labor law, cannot be considered an employee, even
if the company exercised control in the concept of a sales agent. [33]

It bears stressing that our ruling in this case is not about which law has primacy over the other, but that we should be able to
reconcile these laws. We are merely saying that where the law makes it mandatory for a company to exercise control over its agents,
the complainant in an illegal dismissal case cannot rely on these legally prescribed control devices as indicators of an employer-
employee relationship. As shown in our discussion, our consideration of the Insurance Code and Civil Code provisions does not
negate the application of labor laws and jurisprudence; ultimately, we dismissed the petition because of its failure to comply with
the control test.

WHEREFORE, premises considered, we hereby DENY the Motion for Reconsideration WITH FINALITY for lack of merit.No further
pleadings shall be entertained. Let entry of judgment proceed in due course.

SO ORDERED.

PEOPLE OF THE PHILIPPINES, G.R. No. 180926

Plaintiff-Appellee,

Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO MORALES,

TINGA,

VELASCO, JR., and

BRION, JJ.
13
LOURDES VALENCIANO y Promulgated:

DACUBA,

Accused-Appellant. December 10, 2008

x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

This is an appeal from the Decision[1] dated July 24, 2007 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 01390 which upheld the
Decision[2] of the Regional Trial Court (RTC), Branch 116 in Pasay City in Criminal Case No. 97-9851. The RTC convicted Lourdes
Valenciano of the crime of Illegal Recruitment in Large Scale.

The Facts

In May 1996, Lourdes Valenciano, claiming to be an employee of Middle East International Manpower Resources, Inc., went with
one Susie Caraeg to the house of Agapito De Luna, and told him he could apply for a job in Taiwan. A week later, De Luna went to
Valencianos house, there to be told to undergo a medical examination, with the assurance that if there were a job order abroad, he
would be able to leave. He was also told that the placement fee for his employment as a factory worker in Taiwan was PhP 70,000.

After passing the medical examination, De Luna paid Valenciano at the latters residence the following amounts: PhP 20,000 on June
21, 1996; PhP 20,000 on July 12, 1996; and PhP 30,000 on August 21, 1996. The first and last payments were turned over by
Valenciano to Teresita Imperial, who issued the corresponding receipts, and the second payment was turned over by Valenciano to
Rodante Imperial, who also issued a receipt.

Also in May 1996, Valenciano visited the house of Allan De Villa, accompanied by Euziel N. Dela Cuesta, Eusebio T. Candelaria, and
De Luna, to recruit De Villa as a factory worker in Taiwan. De Villa was also asked for PhP 70,000 as placement fee. He paid
Valenciano the following amounts: PhP 20,000 on May 16, 1996 at Valencianos residence; PhP 20,000 on May 30, 1996 at the Rural
Bank of Calaca, Batangas; PhP 20,000 on July 8, 1996 at Valencianos residence; and PhP 10,000 on August 14, 1996, also at her
residence.Valenciano turned over the amounts to either Teresita or Rodante. Teresita issued receipts for the May 16, July 8,
and August 14, 1996payments, while Rodante issued a receipt for the payment made on May 30, 1996.

On May 20, 1996, Valenciano, accompanied by Rodante and Puring Caraeg, went to the house of Dela Cuesta to recruit her for
employment as a factory worker in Taiwan. Dela Cuesta paid Valenciano PhP 20,000 as initial payment on May 20, 1996. On May 30,
1996, she paid Valenciano another PhP 20,000. On August 12, 1996, she paid PhP 15,000, and on August 21, 1996, she paid PhP
7,000. Valenciano turned the May 20 and 30, 1996 payments over to Rodante, who issued receipts for these payments. The
payments made on August 12 and 21, 1996 were turned over to Teresita, who also issued receipts for them. These payments were
to cover the placement fee and other expenses for the processing of the requirements for the employment of Dela Cuesta in Taiwan.

On May 1, 1996, Valenciano, with Rodante, Teresita, and Rommel Imperial, went to Lian, Batangas to recruit workers for
employment abroad. Candelaria applied for a job as a factory worker in Taiwan when Valenciano went to his residence in
Lian. Valenciano asked him for an initial payment of PhP 20,000. On May 30, 1996, Candelaria paid Valenciano PhP 20,000 when she
returned to Lian. He then paid PhP 20,000 on June 24, 1996 and PhP 29,000 on July 17, 1996 at Valencianos residence
in Manila. These payments were to cover the placement fee and the expenses for the processing of his passport and other papers
connected with his application for employment as a factory worker in Taiwan. The payments made on May 30 and July 17,
1996 were turned over to Rodante, who issued a receipt for the said payments. The payment made on June 24, 1996 was turned
over by Valenciano to Teresita.

After the payments were made, Valenciano brought the prospective workers to the office of Middle East International Manpower
Resources, Inc. in Pasay City, where they were made to fill out application forms for their employment as factory workers
in Taiwan.The complainants were introduced to Romeo Marquez, alias Rodante Imperial, Teresita Marquez, alias Teresita Imperial,
and Rommel Marquez, alias Rommel Imperial, whom Valenciano made to appear as the owners of the employment agency. She
assured the prospective workers that they could leave for Taiwan within one month from the filing of their applications. During the
period material, they have not yet found employment as factory workers in Taiwan.

Valenciano, Rodante, Teresita, and Rommel were charged with the offense of illegal recruitment in large scale, as defined under
Article 13(b) of Presidential Decree No. (PD) 442, otherwise known as the Labor Code of the Philippines, as amended, in relation to
Art. 38(a), and penalized under Art. 39(c) of the Code, as amended by PD 1920 and PD 2018. The Information reads as follows:

14
That sometime in May, 1996 to August, 1996, or thereabout, in the City of Pasay, Metro Manila, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, representing to have the capacity, authority or license to contract,
enlist and deploy or transport workers for overseas employment, conspiring, confederating, and mutually helping each other, did
then and there, wilfully, unlawfully and criminally recruit and promise to deploy the herein complainants, namely, Agapito R. De
Luna, Allan Ilagan De Villa, Euziel N. Dela Cuesta and Eusebio T. Candelaria, as factory workers in Taiwan, in exchange for placement,
processing and other fees ranging from P62,000.00 to P70,000.00 or a total of P271,000.00, without first obtaining the required
license and/or authority from the Philippine Overseas Employment Administration (POEA).

CONTRARY TO LAW.[3]

Accused-appellant Valenciano pleaded not guilty and waived the pre-trial. The other three accused remained at large.

The RTC found accused-appellant guilty, the dispositive portion of the decision reading as follows:

WHEREFORE, accused Lourdes Valenciano y Dacuba is found guilty beyond reasonable doubt of the offense of illegal recruitment in
large scale as charged in the aforequoted Information; and she is sentenced to suffer the penalty of life imprisonment and to pay a
fine of P100,000.00.

She is also ordered to indemnify complainants Agapito R. de Luna, Allan Ilagan de Villa, Euziel N. dela Cuesta and Eusebio T.
Candelaria the amounts of P70,000.00, P70,000.00, P62,000.00 and P69,000.00, respectively, as reparation of the damage caused.

No other civil liability may be adjudged against the accused for lack of any factual or legal basis therefor.

SO ORDERED.[4]

Accused-appellant appealed to this Court, but the case was transferred to the CA through a Resolution dated September 6, 2004,
following People v. Mateo.[5]

The CA, in CA-G.R. CR-H.C. No. 01390, affirmed the decision of the trial court finding accused-appellant guilty of the offense charged.

Hence, we have this appeal.

The Issues

Accused-appellant raises the following assignment of errors: (1) the lower court gravely erred in not acquitting accused-appellant on
reasonable doubt; and (2) the lower court gravely erred in holding that a conspiracy exists between accused-appellant and her co-
accused.

The Courts Ruling

The appeal is without merit.

In her defense, accused-appellant claims that she was an ordinary employee of Middle East International Manpower Resources, Inc.,
where her other co-accused were the owners and managers. She also denies receiving payment from the complainants; that had she
promised employment in Taiwan, this promise was made in the performance of her duties as a clerk in the company. She denies too
having knowledge of the criminal intent of her co-accused, adding that she might even be regarded as a victim in the present case,
as she was in good faith when she made the promise.

Art. 13(b) of the Labor Code reads:

Recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers,
and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement.

Art. 38(a) and (b) of the Labor Code reads as follows:

(a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken
by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. x x x

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage and shall be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first
15
paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually
or as a group.

Art. 39(a) provides that the penalty of life imprisonment and a fine of PhP 100,000 shall be imposed if illegal recruitment constitutes
economic sabotage as defined above.

The claim of accused-appellant that she was a mere employee of her other co-accused does not relieve her of liability. An employee
of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown
that the employee actively and consciously participated in illegal recruitment. [6] As testified to by the complainants, accused-
appellant was among those who met and transacted with them regarding the job placement offers. In some instances, she made the
effort to go to their houses to recruit them. She even gave assurances that they would be able to find employment abroad and leave
for Taiwanafter the filing of their applications. Accused-appellant was clearly engaged in recruitment activities, notwithstanding her
gratuitous protestation that her actions were merely done in the course of her employment as a clerk.

Accused-appellant cannot claim to be merely following the dictates of her employers and use good faith as a shield against criminal
liability. As held in People v. Gutierrez:

Appellant cannot escape liability by claiming that she was not aware that before working for her employer in the recruitment
agency, she should first be registered with the POEA. Illegal recruitment in large scale is malum prohibitum, not malum in se. Good
faith is not a defense.[7]

The claim of accused-appellant that she received no payment and that the payments were handed directly over to her co-accused
fails in the face of the testimony of the complainants that accused-appellant was the one who received the money. In spite of the
receipts having been issued by her co-accused, the trial court found that payments were directly made to accused-appellant, and
this finding was upheld by the CA. Nothing is more entrenched than the rule that where, as here, the findings of fact of the trial
court are affirmed by the CA, these are final and conclusive upon this Court. [8] And even if it were true that no money changed
hands, money is not material to a prosecution for illegal recruitment, as the definition of recruitment and placement in the Labor
Code includes the phrase, whether for profit or not. We held in People v. Jamilosa that it was sufficient that the accused promises or
offers for a fee employment to warrant conviction for illegal recruitment. [9] Accused-appellant made representations that
complainants would receive employment abroad, and this suffices for her conviction, even if her name does not appear on the
receipts issued to complainants as evidence that payment was made.

Neither accused-appellant nor her co-accused had authority to recruit workers for overseas employment. The Philippine Overseas
Employment Administration (POEA), through its employee, Corazon Aquino, issued on July 8, 1997 the following certification to that
effect:

This is to certify that per available records of this Office, MIDDLE EAST INTERNATIONAL MANPOWER RESOURCES INC., with office
address at 2119 P. Burgos St., cor. Gil Puyat Ave., Pasay City represented by SAPHIA CALAMATA ASAAD is a licensed landbased
agency whose license expired on October 13, 1996. Per record, said agency has not filed any application for renewal of license.

Per available records, the names of RODANTE IMPERIAL a.k.a. ROMEO MARQUEZ, TERESITA IMPERIAL a.k.a. TERESITA MARQUEZ,
ROMMEL MARQUEZ a.k.a. ROMMEL IMPERIAL and LOURDES VALENCIANO do not appear on the list of employees submitted by
agency.

This certification is being issued for whatever legal purpose it may serve. [10]

Another certification dated July 9, 1997 stated that accused-appellant in her personal capacity was not licensed or authorized to
recruit workers for overseas employment and that any recruitment activities undertaken by her are illegal. [11] Accused-appellant
could thus point to no authority allowing her to recruit complainants, as she was not an employee of Middle East International
Manpower Resources, Inc. nor was she allowed to do so in her personal capacity. Furthermore, she undertook recruitment activities
outside the premises of the office of a licensed recruitment agency, which can only be done with the prior approval of the POEA, and
neither she nor her co-accused had permission to do so, as testified by Aquino of the POEA. [12]

Accused-appellant was convicted of Illegal Recruitment in Large Scale, and there could be no other result. As held in Jamilosa:

To prove illegal recruitment in large scale, the prosecution is burdened to prove three (3) essential elements, to wit: (1) the person
charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2)
accused did not have the license or the authority to lawfully engage in the recruitment and placement of workers; and (3) accused
committed the same against three or more persons individually or as a group. [13] x x x

The RTC found accused-appellant to have undertaken recruitment activities, and this was affirmed by the CA. A POEA certification
was submitted stating that accused-appellant was not authorized to recruit applicants for overseas employment, and she did not
contest this certification. In the present case, there are four complainants: De Luna, De Villa, Dela Cuesta, and Candelaria. The three
essential elements for illegal recruitment in large scale are present. Thus, there can be no other conclusion in this case but to uphold
the conviction of accused-appellant and apply the penalty as imposed by law.

16
WHEREFORE, premises considered, we AFFIRM the appealed CA Decision dated July 24, 2007 in CA-G.R. CR-H.C. No. 01390, with no
costs.

SO ORDERED.

G.R. No. 192571 April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C.
BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.

RESOLUTION

PERLAS-BERNABE, J.:

For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated August 23, 2013 of the Court's
Decision dated July 23, 2013 (Decision).1

At the outset, there appears to be no substantial argument in the said motion sufficient for the Court to depart from the
pronouncements made in the initial ruling. But if only to address Akaraz's novel assertions, and to so placate any doubt or
misconception in the resolution of this case, the Court proceeds to shed light on the matters indicated below.

A. Manner of review.

Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a petition for review on certiorari under
Rule 45 of the Rules of Court (Rules) is limited to the review of questions of law. She submits that since what was under review was a
ruling of the Court of Appeals (CA) rendered via a petition for certiorari under Rule 65 of the Rules, the Court should only determine
whether or not the CA properly determined that the National Labor Relations Commission (NLRC) committed a grave abuse of
discretion.

The assertion does not justify the reconsideration of the assailed Decision.

A careful perusal of the questioned Decision will reveal that the Court actually resolved the controversy under the above-stated
framework of analysis. Essentially, the Court found the CA to have committed an error in holding that no grave abuse of discretion
can be ascribed to the NLRC since the latter arbitrarily disregarded the legal implication of the attendant circumstances in this case
which should have simply resulted in the finding that Alcaraz was apprised of the performance standards for her regularization and
hence, was properly a probationary employee. As the Court observed, an employee’s failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-
regularization. As detailed in the Decision, Alcaraz was well-apprised of her duties and responsibilities as well as the probationary
status of her employment:

(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the publication in a major broadsheet newspaper of its
need for a Regulatory Affairs Manager, indicating therein the job description for as well as the duties and responsibilities attendant
to the aforesaid position; this prompted Alcaraz to submit her application to Abbott on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s organizational structure and her
job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where [Allan G. Almazar] informed her that she had to implement
Abbott’s Code of Conduct and office policies on human resources and finance and that she would be reporting directly to [Kelly
Walsh];

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from [Maria Olivia T. Yabut-Misa] who explained
to her the procedure for evaluating the performance of probationary employees; she was further notified that Abbott had only one
evaluation system for all of its employees; and

17
(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have an "extensive training
and background" to acquire the necessary skills for her job. 2

Considering the foregoing incidents which were readily observable from the records, the Court reached the conclusion that the NLRC
committed grave abuse of discretion, viz.:

[I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not a probationary employee, the Court finds that
the NLRC committed a grave abuse of discretion.

To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her job description and Abbott’s
Code of Conduct and Performance Modules was not equivalent to being actually informed of the performance standards upon
which she should have been evaluated on. It, however, overlooked the legal implication of the other attendant circumstances as
detailed herein which should have warranted a contrary finding that Alcaraz was indeed a probationary and not a regular employee
– more particularly the fact that she was well-aware of her duties and responsibilities and that her failure to adequately perform the
same would lead to her non-regularization and eventually, her termination.3

Consequently, since the CA found that the NLRC did not commit grave abuse of discretion and denied the certiorari petition before
it, the reversal of its ruling was thus in order.

At this juncture, it bears exposition that while NLRC decisions are, by their nature, final and executory 4 and, hence, not subject to
appellate review,5 the Court is not precluded from considering other questions of law aside from the CA’s finding on the NLRC’s
grave abuse of discretion. While the focal point of analysis revolves on this issue, the Court may deal with ancillary issues – such as,
in this case, the question of how a probationary employee is deemed to have been informed of the standards of his regularization –
if only to determine if the concepts and principles of labor law were correctly applied or misapplied by the NLRC in its decision. In
other words, the Court’s analysis of the NLRC’s interpretation of the environmental principles and concepts of labor law is not
completely prohibited in – as it is complementary to – a Rule 45 review of labor cases.

Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was reviewed, it bears pointing out that no
"factual appellate review" was conducted by the Court in the Decision. Rather, the Court proceeded to interpret the relevant rules
on probationary employment as applied to settled factual findings. Besides, even on the assumption that a scrutiny of facts was
undertaken, the Court is not altogether barred from conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:

Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of witnesses, or substitute the findings of fact of
the NLRC, an administrative body that has expertise in its specialized field. Nor do we substitute our "own judgment for that of the
tribunal in determining where the weight of evidence lies or what evidence is credible." The factual findings of the NLRC, when
affirmed by the CA, are generally conclusive on this Court.

Nevertheless, there are exceptional cases where we, in the exercise of our discretionary appellate jurisdiction may be urged to look
into factual issues raised in a Rule 45 petition. For instance, when the petitioner persuasively alleges that there is insufficient or
insubstantial evidence on record to support the factual findings of the tribunal or court a quo, as Section 5, Rule 133 of the Rules of
Court states in express terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established
only if supported by substantial evidence.7 (Emphasis supplied)

B. Standards for regularization;

conceptual underpinnings.

Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of itself be treated as a standard for
regularization as a standard denotes a measure of quantity or quality. By way of example, Alcaraz cites the case of a probationary
salesperson and asks how does such employee achieve regular status if he does not know how much he needs to sell to reach the
same.

The argument is untenable.

First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary employee’s job description but the adequate
performance of his duties and responsibilities which constitutes the inherent and implied standard for regularization. To echo the
fundamental point of the Decision, if the probationary employee had been fully apprised by his employer of these duties and
responsibilities, then basic knowledge and common sense dictate that he must adequately perform the same, else he fails to pass
the probationary trial and may therefore be subject to termination. 8

The determination of "adequate performance" is not, in all cases, measurable by quantitative specification, such as that of a sales
quota in Alcaraz’s example. It is also hinged on the qualitative assessment of the employee’s work; by its nature, this largely rests on
the reasonable exercise of the employer’s management prerogative. While in some instances the standards used in measuring the
quality of work may be conveyed – such as workers who construct tangible products which follow particular metrics, not all
standards of quality measurement may be reducible to hard figures or are readily articulable in specific pre-engagement
descriptions. A good example would be the case of probationary employees whose tasks involve the application of discretion and

18
intellect, such as – to name a few – lawyers, artists, and journalists. In these kinds of occupation, the best that the employer can do
at the time of engagement is to inform the probationary employee of his duties and responsibilities and to orient him on how to
properly proceed with the same. The employer cannot bear out in exacting detail at the beginning of the engagement what he
deems as "quality work" especially since the probationary employee has yet to submit the required output. In the ultimate analysis,
the communication of performance standards should be perceived within the context of the nature of the probationary employee’s
duties and responsibilities.

The same logic applies to a probationary managerial employee who is tasked to supervise a particular department, as Alcaraz in this
case.1âwphi1 It is hardly possible for the employer, at the time of the employee’s engagement, to map into technical indicators, or
convey in precise detail the quality standards by which the latter should effectively manage the department. Factors which gauge
the ability of the managerial employee to either deal with his subordinates (e.g., how to spur their performance, or command
respect and obedience from them), or to organize office policies, are hardly conveyable at the outset of the engagement since the
employee has yet to be immersed into the work itself. Given that a managerial role essentially connotes an exercise of discretion,
the quality of effective management can only be determined through subsequent assessment. While at the time of engagement,
reason dictates that the employer can only inform the probationary managerial employee of his duties and responsibilities as such
and provide the allowable parameters for the same. Verily, as stated in the Decision, the adequate performance of such duties and
responsibilities is, by and of itself, an implied standard of regularization.

In this relation, it bears mentioning that the performance standard contemplated by law should not, in all cases, be contained in a
specialized system of feedbacks or evaluation. The Court takes judicial notice of the fact that not all employers, such as simple
businesses or small-scale enterprises, have a sophisticated form of human resource management, so much so that the adoption of
technical indicators as utilized through "comment cards" or "appraisal" tools should not be treated as a prerequisite for every case
of probationary engagement. In fact, even if a system of such kind is employed and the procedures for its implementation are not
followed, once an employer determines that the probationary employee fails to meet the standards required for his regularization,
the former is not precluded from dismissing the latter. The rule is that when a valid cause for termination exists, the procedural
infirmity attending the termination only warrants the payment of nominal damages. This was the principle laid down in the
landmark cases of Agabon v. NLRC9 (Agabon) and Jaka Food Processing Corporation v. Pacot 10 (Jaka). In the assailed Decision, the
Court actually extended the application of the Agabon and Jaka rulings to breaches of company procedure, notwithstanding the
employer’s compliance with the statutory requirements under the Labor Code. 11 Hence, although Abbott did not comply with its
own termination procedure, its non-compliance thereof would not detract from the finding that there subsists a valid cause to
terminate Alcaraz’s employment. Abbott, however, was penalized for its contractual breach and thereby ordered to pay nominal
damages.

As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano 12 (Aliling) since the same is not squarely applicable to the case at
bar. The employee in Aliling, a sales executive, was belatedly informed of his quota requirement. Thus, considering the nature of his
position, the fact that he was not informed of his sales quota at the time of his engagement changed the complexion of his
employment. Contrarily, the nature of Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates the application of
the foregoing. Records show that Alcaraz was terminated because she (a) did not manage her time effectively; (b) failed to gain the
trust of her staff and to build an effective rapport with them; (c) failed to train her staff effectively; and (d) was not able to obtain
the knowledge and ability to make sound judgments on case processing and article review which were necessary for the proper
performance of her duties.13 Due to the nature and variety of these managerial functions, the best that Abbott could have done, at
the time of Alcaraz's engagement, was to inform her of her duties and responsibilities, the adequate performance of which, to
repeat, is an inherent and implied standard for regularization; this is unlike the circumstance in Aliling where a quantitative
regularization standard, in the term of a sales quota, was readily articulable to the employee at the outset. Hence, since the
reasonableness of Alcaraz's assessment clearly appears from the records, her termination was justified. Bear in mind that the
quantum of proof which the employer must discharge is only substantial evidence which, as defined in case law, means that amount
of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise. 14 To the Court's mind, this threshold of evidence Abbott amply overcame in this
case.

All told, the Court hereby denies the instant motion for reconsideration and thereby upholds the Decision in the main case.

WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's Decision dated July 23, 2013 in this case is hereby
DENIED.

SO ORDERED.

JUANITO TABIGUE, ALEX BIBAT, JECHRIS DASALLA, G.R. No. 183335

ANTONIO TANGON, ROLANDO PEDRIGAL, DANTE MAUL,
ALFREDO IDUL, EDGAR RAMOS, RODERICK JAVIER, NOEL
PONAYO, ROMEL ORAPA, REY JONE, ALMA PATAY, JERIC
BANDIGAN, DANILO JAYME, ELENITA S. BELLEZA, Present:
JOSEPHINE COTANDA, RENE DEL MUNDO, PONCIANO
ROBUCA, and MARLON MADICLUM,

19
Petitioners,

PUNO, C.J., Chairperson,

- versus - CARPIO MORALES,

LEONARDO-DE CASTRO,

INTERNATIONAL COPRA EXPORT CORPORATION BERSAMIN, and

(INTERCO),
VILLARAMA, JR., JJ.
Respondent.

Promulgated:

December 23, 2009

x--------------------------------------------------x

DECISION

CARPIO MORALES, J.:

Petitioner Juanito Tabigue and his 19 co-petitioners, all employees of respondent International Copra Export Corp-oration
(INTERCO), filed a Notice of Preventive Mediation with the Department of Labor and Employment National Conciliation and
Mediation Board (NCMB), Regional Branch No. XI, Davao City against respondent, for violation of Collective Bargaining Agreement
(CBA) and failure to sit on the grievance conference/meeting.[1]

As the parties failed to reach a settlement before the NCMB, petitioners requested to elevate the case to voluntary arbitration. The
NCMB thus set a date for the parties to agree on a Voluntary Arbitrator.

Before the parties could finally meet, respondent presented before the NCMB a letter [2] of Genaro Tan (Tan), president of the
INTERCO Employees/Laborers Union (the union) of which petitioners are members, addressed to respondents plant manager Engr.
Paterno C. Tangente (Tangente), stating that petitioners are not duly authorized by [the] board or the officers to represent the
union, [hence] . . . all actions, representations or agreements made by these people with the management will not be honored or
recognized by the union. Respondent thus moved to dismiss petitioners complaint for lack of jurisdiction. [3]

Petitioners soon sent union president Tan and respondents plant manager Tangente a Notice to Arbitrate, citing the Revised
Guidelines in the Conduct of Voluntary Arbitration Procedure vis a vis Section 3, Article XII of the CBA, furnishing the NCMB with a
copy[4] thereof, which notice respondent opposed.[5]

The parties having failed to arrive at a settlement, [6] NCMB Director Teodorico O. Yosores wrote petitioner Alex Bibat and
respondents plant manager Tangente of the lack of willingness of both parties to submit to voluntary arbitration, which willingness is
a pre-requisite to submit the case thereto; and that under the CBA forged by the parties, the union is an indispensable party to a
voluntary arbitration but that since Tan informed respondent that the union had not authorized petitioners to represent it, it would
be absurd to bring the case to voluntary arbitration.

The NCMB Director thus concluded that the demand of [petitioners] to submit the issues . . . to voluntary arbitration CAN NOT BE
GRANTED. He thus advised petitioners to avail of the compulsory arbitration process to enforce their rights. [7]

On petitioners Motion for Reconsideration,[8] the NCMB Director, by letter of April 11, 2007 to petitioners counsel, stated that the
NCMB has no rule-making power to decide on issues [as it] only facilitates settlement among the parties to . . . labor disputes.

Petitioners thus assailed the NCMB Directors decision via Petition for Review before the Court of Appeals [9] which dismissed it by
Resolution[10] of October 24, 2007 in this wise:

xxxx

20
Considering that NCMB is not a quasi-judicial agency exercising quasi-judicial functions but merely a conciliatory body for the
purpose of facilitating settlement of disputes between parties, its decisions or that of its authorized officer cannot be
appealed either through a petition for review under Rule 43 or under Rule 65 of the Revised Rules of Court.

Further perusal of the petition reveals the following infirmities:

1. Payment of the docket fees and other legal fees is short by One Thousand Pesos (Php 1,000.00);

2. Copy of the assailed Decision of the Regional Director of the National Conciliation and Mediation Board has not been
properly certified as the name and designation of the certifying officer thereto are not indicated; and

3. Not all of the petitioners named in the petition signed the verification and non-forum shopping.[11] (emphasis and
underscoring supplied)

Their Motion for Reconsideration[12] having been denied,[13] petitioners filed the present Petition for Review on Certiorari, [14]raising
the following arguments:

THIS PARTICULAR CASE XXX FALLS SQUARELY WITHIN THE PURVIEW OF SECTION 6, RULE IV, IN RELATION TO PARAGRAPH 3, SUB-
PARAGRAPH 3.2, SECTION 4, RULE IV, ALL OF THE REVISED PROCEDURAL GUIDELINES IN THE CONDUCT OF VOLUNTARY
ARBITRATION PROCEEDINGS.[15]

THE NCMB, WHEN EXERCISING ADJUDICATIVE POWERS, ACTS AS A QUASI-JUDICIAL AGENCY.[16]

FINAL JUDGMENTS, DECISIONS, RESOLUTIONS, ORDERS, OR AWARDS OF REGIONAL TRIAL COURTS AND QUASI-JUDICIAL BOARDS,
LIKE THE NCMB, COMMISSIONS, AGENCIES, INSTRUMENTALITIES, ARE APPEALABLE BY PETITION FOR REVIEW TO THE COURT OF
APPEALS.[17] (emphasis in the original)

LABOR CASES, AS A GENERAL RULE, ARE NEVER RESOLVED ON THE BASIS OF TECHNICALITY ESPECIALLY SO WHEN SUBSTANTIAL
RIGHTS OF EMPLOYEES ARE AFFECTED.[18] (emphasis and underscoring supplied)

The petition fails.

Section 7 of Rule 43 of the Rules of Court provides that

[t]he failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the docket and other
lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany
the petition shall be sufficient ground for the dismissal thereof. (underscoring and emphasis supplied)

Petitioners claim that they had completed the payment of the appellate docket fee and other legal fees when they filed their motion
for reconsideration before the Court of Appeals.[19] While the Court has, in the interest of justice, given due course to appeals
despite the belated payment of those fees,[20] petitioners have not proffered any reason to call for a relaxation of the above-quoted
rule. On this score alone, the dismissal by the appellate court of petitioners petition is in order.

But even if the above-quoted rule were relaxed, the appellate courts dismissal would just the same be sustained. Under Section 9 (3)
of the Judiciary Reorganization Act of 1980,[21] the Court of Appeals exercises exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions.

Rule 43 of the Rules of Court under which petitioners filed their petition before the Court of Appeals [22] applies to awards,
judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.[23]

A[n agency] is said to be exercising judicial function where [it] has the power to determine what the law is and what the legal rights
of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties. Quasi-judicial
function is a term which applies to the action, discretion, etc. of public administrative officers or bodies, who are required to
investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action
and to exercise discretion of a judicial nature.[24] (underscoring supplied)

Given NCMBs following functions, as enumerated in Section 22 of Executive Order No. 126 (the Reorganization Act of the Ministry of
Labor and Employment), viz:

(a) Formulate policies, programs, standards, procedures, manuals of operation and guidelines pertaining to effective mediation and
conciliation of labor disputes;

(b) Perform preventive mediation and conciliation functions;

21
(c) Coordinate and maintain linkages with other sectors or institutions, and other government authorities concerned with matters
relative to the prevention and settlement of labor disputes;

(d) Formulate policies, plans, programs, standards, procedures, manuals of operation and guidelines pertaining to the promotion of
cooperative and non-adversarial schemes, grievance handling, voluntary arbitration and other voluntary modes of dispute
settlement;

(e) Administer the voluntary arbitration program; maintain/update a list of voluntary arbitrations; compile arbitration awards and
decisions;

(f) Provide counseling and preventive mediation assistance particularly in the administration of collective agreements;

(g) Monitor and exercise technical supervision over the Board programs being implemented in the regional offices; and

(h) Perform such other functions as may be provided by law or assigned by the Minister,

it can not be considered a quasi-judicial agency.

Respecting petitioners thesis that unsettled grievances should be referred to voluntary arbitration as called for in the CBA, the same
does not lie. The pertinent portion of the CBA reads:

In case of any dispute arising from the interpretation or implementation of this Agreement or any matter affecting the relations of
Labor and Management, the UNION and the COMPANY agree to exhaust all possibilities of conciliation through the grievance
machinery. The committee shall resolve all problems submitted to it within fifteen (15) days after the problems ha[ve] been
discussed by the members. If the dispute or grievance cannot be settled by the Committee, or if the committee failed to act on the
matter within the period of fifteen (15) days herein stipulated, the UNION and the COMPANY agree to submit the issue to Voluntary
Arbitration. Selection of the arbitrator shall be made within seven (7) days from the date of notification by the aggrieved party. The
Arbitrator shall be selected by lottery from four (4) qualified individuals nominated by in equal numbers by both parties taken from
the list of Arbitrators prepared by the National Conciliation and Mediation Board (NCMB). If the Company and the Union
representatives within ten (10) days fail to agree on the Arbitrator, the NCMB shall name the Arbitrator. The decision of the
Arbitrator shall be final and binding upon the parties. However, the Arbitrator shall not have the authority to change any provisions
of the Agreement. The cost of arbitration shall be borne equally by the parties. [25] (capitalization in the original, underscoring
supplied)

Petitioners have not, however, been duly authorized to represent the union. Apropos is this Courts pronouncement in Atlas Farms,
Inc. v. National Labor Relations Commission, [26] viz:

x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their respective representatives to the
grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by parties to a CBA. Consequently only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.[27] (emphasis and underscoring supplied)

Clutching at straws, petitioners invoke the first paragraph of Article 255 of the Labor Code which states:

Art. 255. The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit
shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual
employee or group of employees shall have the right at any time to present grievances to their employer.

x x x x (emphasis and underscoring supplied)

To petitioners, the immediately quoted provision is meant to be an exception to the exclusiveness of the representative role of the
labor organization/union.[28]

This Court is not persuaded. The right of any employee or group of employees to, at any time, present grievances to the
employerdoes not imply the right to submit the same to voluntary arbitration.

WHEREFORE, the petition is DENIED.

SO ORDERED.

22
 INSULAR HOTEL EMPLOYEES UNION-NFL, G.R. Nos. 174040-41

Petitioner,

Present:

CARPIO, J., Chairperson,

- versus - VELASCO, JR., *

PERALTA,

BERSAMIN, ** and

ABAD, JJ.

WATERFRONT INSULAR HOTEL DAVAO,

Respondent. Promulgated:

September 22, 2010

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari,[1] under Rule 45 of the Rules of Court, seeking to set aside the
Decision[2] dated October 11, 2005, and the Resolution[3] dated July 13, 2006 of the Court of Appeals (CA) in consolidated labor cases
docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657. Said Decision reversed the Decision[4] dated the April 5, 2004 of the
Accredited Voluntary Arbitrator Rosalina L. Montejo (AVA Montejo).

The facts of the case, as culled from the records, are as follows:

On November 6, 2000, respondent Waterfront Insular Hotel Davao (respondent) sent the Department of Labor and Employment
(DOLE), Region XI, Davao City, a Notice of Suspension of Operations[5] notifying the same that it will suspend its operations for a
period of six months due to severe and serious business losses. In said notice, respondent assured the DOLE that if the company
could not resume its operations within the six-month period, the company would pay the affected employees all the benefits legally
due to them.

During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free Employees Union (DIHFEU-
NFL), the recognized labor organization in Waterfront Davao, sent respondent a number of letters asking management to reconsider
its decision.

In a letter[6] dated November 8, 2000, Rojas intimated that the members of the Union were determined to keep their jobs and that
they believed they too had to help respondent, thus:

xxxx

Sir, we are determined to keep our jobs and push the Hotel up from sinking. We believe that we have to help in this (sic) critical
times. Initially, we intend to suspend the re-negotiations of our CBA. We could talk further on possible adjustments on economic
benefits, the details of which we are hoping to discuss with you or any of your emissaries. x x x [7]

In another letter[8] dated November 10, 2000, Rojas reiterated the Union's desire to help respondent, to wit:

We would like to thank you for giving us the opportunity to meet [with] your representatives in order for us to air our sentiments
and extend our helping hands for a possible reconsideration of the company's decision.

23
The talks have enabled us to initially come up with a suggestion of solving the high cost on payroll.

We propose that 25 years and above be paid their due retirement benefits and put their length of service to zero without loss of
status of employment with a minimum hiring rate.

Thru this scheme, the company would be able to save a substantial amount and reduce greatly the payroll costs without affecting
the finance of the families of the employees because they will still have a job from where they could get their income.

Moreover, we are also open to a possible reduction of some economic benefits as our gesture of sincere desire to help.

We are looking forward to a more fruitful round of talks in order to save the hotel. [9]

In another letter[10] dated November 20, 2000, Rojas sent respondent more proposals as a form of the Union's gesture of their
intention to help the company, thus:

1) Suspension of [the] CBA for ten years, No strike no lock-out shall be enforced.

2) Pay all the employees their benefits due, and put the length of service to zero with a minimum hiring rate. Payment of
benefits may be on a staggered basis or as available.

3) Night premium and holiday pays shall be according to law. Overtime hours rendered shall be offsetted as practiced.

4) Reduce the sick leaves and vacation leaves to 15 days/15days.

5) Emergency leave and birthday off are hereby waived.

6) Duty meal allowance is fixed at P30.00 only. No more midnight snacks and double meal allowance. The cook drinks be
stopped as practiced.

7) We will shoulder 50% of the group health insurance and family medical allowance be reduced to 1,500.00 instead of
3,000.00.

8) The practice of bringing home our uniforms for laundry be continued.

9) Fixed manning shall be implemented, the rest of manpower requirements maybe sourced thru WAP and casual hiring.
Manpower for fixed manning shall be 145 rank-and-file union members.

10) Union will cooperate fully on strict implementation of house rules in order to attain desired productivity and discipline. The
union will not tolerate problem members.

11) The union in its desire to be of utmost service would adopt multi-tasking for the hotel to be more competitive.

It is understood that with the suspension of the CBA renegotiations, the same existing CBA shall be adopted and that all provisions
therein shall remain enforced except for those mentioned in this proposal.

These proposals shall automatically supersede the affected provisions of the CBA. [11]

In a handwritten letter[12] dated November 25, 2000, Rojas once again appealed to respondent for it to consider their proposals and
to re-open the hotel. In said letter, Rojas stated that manpower for fixed manning shall be one hundred (100) rank-and-file Union
members instead of the one hundred forty-five (145) originally proposed.

Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to respondent a Manifesto [13] concretizing their earlier
proposals.

After series of negotiations, respondent and DIHFEU-NFL, represented by its President, Rojas, and Vice-Presidents, Exequiel J. Varela
Jr. and Avelino C. Bation, Jr., signed a Memorandum of Agreement[14] (MOA) wherein respondent agreed to re-open the hotel
subject to certain concessions offered by DIHFEU-NFL in its Manifesto.

Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth in the terms of the MOA.
Moreover, as agreed upon in the MOA, a new pay scale was also prepared by respondent.

The retained employees individually signed a Reconfirmation of Employment[15] which embodied the new terms and conditions of
their continued employment. Each employee was assisted by Rojas who also signed the document.

On June 15, 2001, respondent resumed its business operations.

24
On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of the National Federation of Labor (NFL),
filed a Notice of Mediation[16] before the National Conciliation and Mediation Board (NCMB), Region XI, Davao City. In said Notice, it
was stated that the Union involved was DARIUS JOVES/DEBBIE PLANAS ET. AL, National Federation of Labor. The issue raised in said
Notice was the Diminution of wages and other benefits through unlawful Memorandum of Agreement.

On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of settling the conflict. In the
said conference, respondent and petitioner Insular Hotel Employees Union-NFL (IHEU-NFL), represented by Joves, signed a
Submission Agreement[17] wherein they chose AVA Alfredo C. Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the
resolution of AVA Olvida was the determination of whether or not there was a diminution of wages and other benefits through an
unlawful MOA. In support of his authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo), presented several Special
Powers of Attorney (SPA) which were, however, undated and unnotarized.

On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion for a Second Preliminary Conference, [18] raising
the following grounds:

1) The persons who filed the instant complaint in the name of the Insular Hotel Employees Union-NFL have no authority to
represent the Union;

2) The individuals who executed the special powers of attorney in favor of the person who filed the instant complaint have no
standing to cause the filing of the instant complaint; and

3) The existence of an intra-union dispute renders the filing of the instant case premature. [19]

On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo denied any existence of an intra-
union dispute among the members of the union. Cullo, however, confirmed that the case was filed not by the IHEU-NFL but by the
NFL. When asked to present his authority from NFL, Cullo admitted that the case was, in fact, filed by individual employees named in
the SPAs. The hearing officer directed both parties to elevate the aforementioned issues to AVA Olvida. [20]

The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent again raised its objections,
specifically arguing that the persons who signed the complaint were not the authorized representatives of the Union indicated in the
Submission Agreement nor were they parties to the MOA. AVA Olvida directed respondent to file a formal motion to withdraw its
submission to voluntary arbitration.

On October 16, 2002, respondent filed its Motion to Withdraw. [21] Cullo then filed an Opposition[22] where the same was captioned:

NATIONAL FEDERATION OF LABOR

And 79 Individual Employees, Union Members,

Complainants,

-versus-

Waterfront Insular Hotel Davao,

Respondent.

In said Opposition, Cullo reiterated that the complainants were not representing IHEU-NFL, to wit:

xxxx

Respondent must have been lost when it said that the individuals who executed the SPA have no standing to represent the union
nor to assail the validity of Memorandum of Agreement (MOA). What is correct is that the individual complainants are not
representing the union but filing the complaint through their appointed attorneys-in-fact to assert their individual rights as workers
who are entitled to the benefits granted by law and stipulated in the collective bargaining agreement. [23]

On November 11, 2002, AVA Olvida issued a Resolution [24] denying respondent's Motion to Withdraw. On December 16, 2002,
respondent filed a Motion for Reconsideration [25] where it stressed that the Submission Agreement was void because the Union did
not consent thereto. Respondent pointed out that the Union had not issued any resolution duly authorizing the individual
employees or NFL to file the notice of mediation with the NCMB.

25
Cullo filed a Comment/Opposition[26] to respondent's Motion for Reconsideration. Again, Cullo admitted that the case was not
initiated by the IHEU-NFL, to wit:

The case was initiated by complainants by filling up Revised Form No. 1 of the NCMB duly furnishing respondent, copy of which is
hereto attached as Annex A for reference and consideration of the Honorable Voluntary Arbitrator. There is no mention there of
Insular Hotel Employees Union, but only National Federation of Labor (NFL). The one appearing at the Submission Agreement was
only a matter of filling up the blanks particularly on the question there of Union; which was filled up with Insular Hotel Employees
Union-NFL. There is nothing there that indicates that it is a complainant as the case is initiated by the individual workers and
National Federation of Labor, not by the local union. The local union was not included as party-complainant considering that it was a
party to the assailed MOA.[27]

On March 18, 2003, AVA Olvida issued a Resolution [28] denying respondent's Motion for Reconsideration. He, however, ruled that
respondent was correct when it raised its objection to NFL as proper party-complainant, thus:

Anent to the real complainant in this instant voluntary arbitration case, the respondent is correct when it raised objection to the
National Federation of Labor (NFL) and as proper party-complainants.

The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL, the recognized and incumbent bargaining agent of the
rank-and-file employees of the respondent hotel. In the submission agreement of the parties dated August 29, 2002, the party
complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other
members.

However, since the NFL is the mother federation of the local union, and signatory to the existing CBA, it can represent the union, the
officers, the members or union and officers or members, as the case may be, in all stages of proceedings in courts or administrative
bodies provided that the issue of the case will involve labor-management relationship like in the case at bar.

The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution dated November
11, 2002 is modified in so far as the party-complainant is concerned; thus, instead of National Federation of Labor and 79 individual
employees, union members, shall be Insular Hotel Employees Union-NFL et. al., as stated in the joint submission agreement dated
August 29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11, 2002,

No further motion of the same nature shall be entertained.[29]

On May 9, 2003, respondent filed its Position Paper Ad Cautelam,[30] where it declared, among others, that the same was without
prejudice to its earlier objections against the jurisdiction of the NCMB and AVA Olvida and the standing of the persons who filed the
notice of mediation.

Cullo, now using the caption Insular Hotel Employees Union-NFL, Complainant, filed a Comment[31] dated June 5, 2003. On June 23,
2003, respondent filed its Reply.[32]

Later, respondent filed a Motion for Inhibition[33] alleging AVA Olvida's bias and prejudice towards the cause of the employees. In an
Order[34] dated July 25, 2003, AVA Olvida voluntarily inhibited himself out of delicadeza and ordered the remand of the case to the
NCMB.

On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before the conciliator for the selection of a new
voluntary arbitrator.

In a letter[35] dated August 19, 2003 addressed to the NCMB, respondent reiterated its position that the individual union members
have no standing to file the notice of mediation before the NCMB. Respondent stressed that the complaint should have been filed by
the Union.

On September 12, 2003, the NCMB sent both parties a Notice[36] asking them to appear before it for the selection of the new
voluntary arbitrator. Respondent, however, maintained its stand that the NCMB had no jurisdiction over the case. Consequently, at
the instance of Cullo, the NCMB approved ex parte the selection of AVA Montejo as the new voluntary arbitrator.

On April 5, 2004, AVA Montejo rendered a Decision[37] ruling in favor of Cullo, the dispositive portion of which reads:

WHEREOF, in view of the all the foregoing, judgment is hereby rendered:

1. Declaring the Memorandum of Agreement in question as invalid as it is contrary to law and public policy;

2. Declaring that there is a diminution of the wages and other benefits of the Union members and officers under the said
invalid MOA.

26
3. Ordering respondent management to immediately reinstate the workers wage rates and other benefits that they were
receiving and enjoying before the signing of the invalid MOA;

4. Ordering the management respondent to pay attorneys fees in an amount equivalent to ten percent (10%) of whatever
total amount that the workers union may receive representing individual wage differentials.

As to the other claims of the Union regarding diminution of other benefits, this accredited voluntary arbitrator is of the opinion that
she has no authority to entertain, particularly as to the computation thereof.

SO ORDERED.[38]

Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the Decision in so far as it did not categorically
order respondent to pay the covered workers their differentials in wages reckoned from the effectivity of the MOA up to the actual
reinstatement of the reduced wages and benefits. Cullos' petition was docketed as CA-G.R. SP No. 83831. Respondent, for its part,
questioned among others the jurisdiction of the NCMB. Respondent maintained that the MOA it had entered into with the officers
of the Union was valid. Respondent's petition was docketed as CA-G.R. SP No. 83657. Both cases were consolidated by the CA.

On October 11, 2005, the CA rendered a Decision[39] ruling in favor of respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, the petition for review in CA-G.R. SP No. 83657 is hereby GRANTED, while the petition in CA-G.R.
SP No. 83831 is DENIED. Consequently, the assailed Decision dated April 5, 2004 rendered by AVA Rosalina L. Montejo is hereby
REVERSED and a new one entered declaring the Memorandum of Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties
are DIRECTED to comply with the terms and conditions thereof.

SO ORDERED.[40]

Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution [41] dated July 13, 2006.

Hence, herein petition, with Cullo raising the following issues for this Court's resolution, to wit:

I.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN FINDING THAT THE ACCREDITED
VOLUNTARY ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY BECAUSE THE NOTICE OF MEDIATION DOES NOT MENTION
THE NAME OF THE LOCAL UNION BUT ONLY THE AFFILIATE FEDERATION THEREBY DISREGARDING THE SUBMISSION AGREEMENT
DULY SIGNED BY THE PARTIES AND THEIR LEGAL COUNSELS THAT MENTIONS THE NAME OF THE LOCAL UNION.

II.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR BY DISREGARDING THE PROVISIONS OF THE
CBA SIMPLY BECAUSE IT BELIEVED THE UNPROVEN ALLEGATIONS OF RESPONDENT HOTEL THAT IT WAS SUFFERING FROM
FINANCIAL CRISIS.

III.

THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED IN CONCLUDING THAT ARTICLE 100 OF THE LABOR CODE
APPLIES ONLY TO BENEFITS ENJOYED PRIOR TO THE ADOPTION OF THE LABOR CODE WHICH, IN EFFECT, ALLOWS THE DIMINUTION
OF THE BENEFITS ENJOYED BY EMPLOYEES FROM ITS ADOPTION HENCEFORTH.[42]

The petition is not meritorious.

Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact that before the case was submitted to
voluntary arbitration, the parties signed a Submission Agreement which mentioned the name of the local union and not only
NFL. Cullo, thus, contends that the CA committed error when it ruled that the voluntary arbitrator had no jurisdiction over the case
simply because the Notice of Mediation did not state the name of the local union thereby disregarding the Submission Agreement
which states the names of local union as Insular Hotel Employees Union-NFL.[43]

In its Memorandum,[44] respondent maintains its position that the NCMB and Voluntary Arbitrators had no jurisdiction over the
complaint. Respondent, however, now also contends that IHEU-NFL is a non-entity since it is DIHFEU-NFL which is considered by the
DOLE as the only registered union in Waterfront Davao. [45] Respondent argues that the Submission Agreement does not name the
local union DIHFEU-NFL and that it had timely withdrawn its consent to arbitrate by filing a motion to withdraw.

A review of the development of the case shows that there has been much confusion as to the identity of the party which filed the
case against respondent. In the Notice of Mediation [46] filed before the NCMB, it stated that the union involved was DARIUS

27
JOVES/DEBBIE PLANAS ET. AL., National Federation of Labor. In the Submission Agreement, [47] however, it stated that the union
involved was INSULAR HOTEL EMPLOYEES UNION-NFL.

Furthermore, a perusal of the records would reveal that after signing the Submission Agreement, respondent persistently
questioned the authority and standing of the individual employees to file the complaint. Cullo then clarified in subsequent
documents captioned as National Federation of Labor and 79 Individual Employees, Union Members, Complainants that the
individual complainants are not representing the union, but filing the complaint through their appointed attorneys-in-fact.[48] AVA
Olvida, however, in a Resolution dated March 18, 2003, agreed with respondent that the proper party-complainant should
be INSULAR HOTEL EMPLOYEES UNION-NFL, to wit:

x x x In the submission agreement of the parties dated August 29, 2002, the party complainant written is INSULAR HOTEL
EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other members. [49]

The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution dated November
11, 2002, is modified in so far as the party complainant is concerned, thus, instead of National Federation of Labor and 79 individual
employees, union members, shall be Insular Hotel Employees Union-NFL et. al., as stated in the joint submission agreement dated
August 29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11, 2002. [50]

After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted Insular Hotel Employees Union-NFL et. al., Complainant as the
caption in all his subsequent pleadings. Respondent, however, was still adamant that neither Cullo nor the individual employees had
authority to file the case in behalf of the Union.

While it is undisputed that a submission agreement was signed by respondent and IHEU-NFL, then represented by Joves and Cullo,
this Court finds that there are two circumstances which affect its validity: first, the Notice of Mediation was filed by a party who had
no authority to do so; second, that respondent had persistently voiced out its objection questioning the authority of Joves, Cullo and
the individual members of the Union to file the complaint before the NCMB.

Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB. It is only after
this step that a submission agreement may be entered into by the parties concerned.

Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediation, to wit:

Who may file a notice or declare a strike or lockout or request preventive mediation. -

Any certified or duly recognized bargaining representative may file a notice or declare a strike or request for preventive mediation in
cases of bargaining deadlocks and unfair labor practices. The employer may file a notice or declare a lockout or request for
preventive mediation in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate
labor organization in the establishment may file a notice, request preventive mediation or declare a strike, but only on grounds of
unfair labor practice.

From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a notice or request for preventive
mediation. It is curious that even Cullo himself admitted, in a number of pleadings, that the case was filed not by the Union but by
individual members thereof. Clearly, therefore, the NCMB had no jurisdiction to entertain the notice filed before it.

Even though respondent signed a Submission Agreement, it had, however, immediately manifested its desire to withdraw from the
proceedings after it became apparent that the Union had no part in the complaint. As a matter of fact, only four days had lapsed
after the signing of the Submission Agreement when respondent called the attention of AVA Olvida in a Manifestation with Motion
for a Second Preliminary Conference[51] that the persons who filed the instant complaint in the name of Insular Hotel Employees
Union-NFL had no authority to represent the Union. Respondent cannot be estopped in raising the jurisdictional issue, because it is
basic that the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by
estoppel.

In Figueroa v. People,[52] this Court explained that estoppel is the exception rather than the rule, to wit:

Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the jurisdiction of the RTC,
considering that he raised the lack thereof in his appeal before the appellate court. At that time, no considerable period had yet
elapsed for laches to attach. True, delay alone, though unreasonable, will not sustain the defense of estoppel by laches unless it
further appears that the party, knowing his rights, has not sought to enforce them until the condition of the party pleading laches has
in good faith become so changed that he cannot be restored to his former state, if the rights be then enforced, due to loss of
evidence, change of title, intervention of equities, and other causes. In applying the principle of estoppel by laches in the exceptional
case of Sibonghanoy, the Court therein considered the patent and revolting inequity and unfairness of having the judgment creditors
go up their Calvary once more after more or less 15 years.The same, however, does not obtain in the instant case.

28
We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be applied rarelyonly from
necessity, and only in extraordinary circumstances. The doctrine must be applied with great care and the equity must be strong
in its favor.When misapplied, the doctrine of estoppel may be a most effective weapon for the accomplishment of injustice. x x x
(Italics supplied.)[53]

The question to be resolved then is, do the individual members of the Union have the requisite standing to question the MOA before
the NCMB? On this note, Tabigue v. International Copra Export Corporation (INTERCO) [54] is instructive:

Respecting petitioners thesis that unsettled grievances should be referred to voluntary arbitration as called for in the CBA, the same
does not lie.The pertinent portion of the CBA reads:

In case of any dispute arising from the interpretation or implementation of this Agreement or any matter affecting the relations of
Labor and Management, the UNION and the COMPANY agree to exhaust all possibilities of conciliation through the grievance
machinery. The committee shall resolve all problems submitted to it within fifteen (15) days after the problems ha[ve] been
discussed by the members. If the dispute or grievance cannot be settled by the Committee, or if the committee failed to act on the
matter within the period of fifteen (15) days herein stipulated, the UNION and the COMPANY agree to submit the issue to Voluntary
Arbitration. Selection of the arbitrator shall be made within seven (7) days from the date of notification by the aggrieved party. The
Arbitrator shall be selected by lottery from four (4) qualified individuals nominated by in equal numbers by both parties taken from
the list of Arbitrators prepared by the National Conciliation and Mediation Board (NCMB). If the Company and the Union
representatives within ten (10) days fail to agree on the Arbitrator, the NCMB shall name the Arbitrator. The decision of the
Arbitrator shall be final and binding upon the parties. However, the Arbitrator shall not have the authority to change any provisions
of the Agreement.The cost of arbitration shall be borne equally by the parties.

Petitioners have not, however, been duly authorized to represent the union. Apropos is this Courts pronouncement in Atlas Farms,
Inc. v. National Labor Relations Commission, viz:

x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their respective representatives to the
grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by parties to a CBA. Consequently, only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators. (Emphasis and underscoring supplied.)[55]

If the individual members of the Union have no authority to file the case, does the federation to which the local union is affiliated
have the standing to do so? On this note, Coastal Subic Bay Terminal, Inc. v. Department of Labor and Employment [56] is enlightening,
thus:

x x x A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its members. Mere affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of
agency, where the former acts in representation of the latter. Hence, local unions are considered principals while the federation is
deemed to be merely their agent. x x x[57]

Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled that NFL had no authority to file
the complaint in behalf of the individual employees, to wit:

Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the case. Waterfront contents that the Notice of
Mediation does not mention the name of the Union but merely referred to the National Federation of Labor (NFL) with which the
Union is affiliated. In the subsequent pleadings, NFL's legal counsel even confirmed that the case was not filed by the union but by
NFL and the individual employees named in the SPAs which were not even dated nor notarized.

Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the local union and the labor
federation or national union with which the former was affiliated is generally understood to be that of agency, where the local is the
principal and the federation the agency. Being merely an agent of the local union, NFL should have presented its authority to file the
Notice of Mediation. While We commend NFL's zealousness in protecting the rights of lowly workers, We cannot, however, allow it
to go beyond what it is empowered to do.

As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining representative and an employer
may file a notice of mediation, declare a strike or lockout or request preventive mediation. The Collective Bargaining Agreement
(CBA), on the other, recognizes that DIHFEU-NFL is the exclusive bargaining representative of all permanent employees. The
inclusion of the word NFL after the name of the local union merely stresses that the local union is NFL's affiliate. It does not,
however, mean that the local union cannot stand on its own. The local union owes its creation and continued existence to the will of
its members and not to the federation to which it belongs. The spring cannot rise higher than its source, so to speak. [58]

29
In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that DIHFEU-NFL is the only recognized bargaining unit
in their establishment. While the resolution of the said argument is already moot and academic given the discussion above, this
Court shall address the same nevertheless.

While the November 16, 2006 Certification[59] of the DOLE clearly states that IHEU-NFL is not a registered labor organization, this
Court finds that respondent is estopped from questioning the same as it did not raise the said issue in the proceedings before the
NCMB and the Voluntary Arbitrators. A perusal of the records reveals that the main theory posed by respondent was whether or not
the individual employees had the authority to file the complaint notwithstanding the apparent non-participation of the union.
Respondent never put in issue the fact that DIHFEU-NFL was not the same as IHEU-NFL. Consequently, it is already too late in the
day to assert the same.

Anent the second issue raised by Cullo, the same is again without merit.

Cullo contends that respondent was not really suffering from serious losses as found by the CA. Cullo anchors his position on the
denial by the Wage Board of respondent's petition for exemption from Wage Order No. RTWPB-X1-08 on the ground that it is a
distressed establishment.[60] In said denial, the Board ruled:

A careful analysis of applicant's audited financial statements showed that during the period ending December 31, 1999, it registered
retained earnings amounting to P8,661,260.00. Applicant's interim financial statements for the quarter ending June 30, 2000 cannot
be considered, as the same was not audited. Accordingly, this Board finds that applicant is not qualified for exemption as a
distressed establishment pursuant to the aforecited criteria.[61]

In its Decision, the CA held that upholding the validity of the MOA would mean the continuance of the hotel's operation and
financial viability, to wit:

x x x We cannot close Our eyes to the impending financial distress that an employer may suffer should the terms of employment
under the said CBA continue.

If indeed We are to tilt the balance of justice to labor, then We would be inclined to favor for the nonce petitioner Waterfront. To
uphold the validity of the MOA would mean the continuance of the hotel's operation and financial viability. Otherwise, the eventual
permanent closure of the hotel would only result to prejudice of the employees, as a consequence thereof, will necessarily lose their
jobs.[62]

In its petition before the CA, respondent submitted its audited financial statements[63] which show that for the years 1998, 1999,
until September 30, 2000, its total operating losses amounted to P48,409,385.00. Based on the foregoing, the CA was not without
basis when it declared that respondent was suffering from impending financial distress. While the Wage Board denied respondent's
petition for exemption, this Court notes that the denial was partly due to the fact that the June 2000 financial statements then
submitted by respondent were not audited. Cullo did not question nor discredit the accuracy and authenticity of respondent's
audited financial statements. This Court, therefore, has no reason to question the veracity of the contents thereof. Moreover, it
bears to point out that respondent's audited financial statements covering the years 2001 to 2005 show that it still continues to
suffer losses.[64]

Finally, anent the last issue raised by Cullo, the same is without merit.

Cullo argues that the CA must have erred in concluding that Article 100 of the Labor Code applies only to benefits already enjoyed at
the time of the promulgation of the Labor Code.

Article 100 of the Labor Code provides:

PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS- Nothing in this Book shall be construed to eliminate or in any
way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of this Code.

On this note, Apex Mining Company, Inc. v. NLRC[65] is instructive, to wit:

Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned
with benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 does not, in other words, purport to
apply to situations arising after the promulgation date of the Labor Code x x x. [66]

Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with respondent that the same does not
prohibit a union from offering and agreeing to reduce wages and benefits of the employees. In Rivera v. Espiritu,[67] this Court ruled
that the right to free collective bargaining, after all, includes the right to suspend it, thus:

A CBA is a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the
agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions arising under such agreement. The primary purpose of a CBA is the
stabilization of labor-management relations in order to create a climate of a sound and stable industrial peace. In construing a CBA,
30
the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it
is intended to serve.

The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the
severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at
PAL, but preventing the latters closure. We find no conflict between said agreement and Article 253-A of the Labor Code. Article
253-A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to
promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to
assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the
parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same.

In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees, that voluntarily entered into the CBA
with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case was the unions exercise of its
right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it.[68]

Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws specifically provides that the results of the
collective bargaining negotiations shall be subject to ratification and approval by majority vote of the Union members at a meeting
convened, or by plebiscite held for such special purpose. [69] Accordingly, it is undisputed that the MOA was not subject to ratification
by the general membership of the Union. The question to be resolved then is, does the non-ratification of the MOA in accordance
with the Union's constitution prove fatal to the validity thereof?

It must be remembered that after the MOA was signed, the members of the Union individually signed contracts denominated as
Reconfirmation of Employment.[70] Cullo did not dispute the fact that of the 87 members of the Union, who signed and accepted the
Reconfirmation of Employment, 71 are the respondent employees in the case at bar. Moreover, it bears to stress that all the
employees were assisted by Rojas, DIHFEU-NFL's president, who even co-signed each contract.

Stipulated in each Reconfirmation of Employment were the new salary and benefits scheme. In addition, it bears to stress that
specific provisions of the new contract also made reference to the MOA. Thus, the individual members of the union cannot feign
knowledge of the execution of the MOA. Each contract was freely entered into and there is no indication that the same was
attended by fraud, misrepresentation or duress. To this Court's mind, the signing of the individual Reconfirmation of Employment
should, therefore, be deemed an implied ratification by the Union members of the MOA.

In Planters Products, Inc. v. NLRC,[71] this Court refrained from declaring a CBA invalid notwithstanding that the same was not ratified
in view of the fact that the employees had enjoyed benefits under it, thus:

Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties to a collective [bargaining]
agreement are required to furnish copies of the appropriate Regional Office with accompanying proof of ratification by the majority
of all the workers in a bargaining unit. This was not done in the case at bar. But we do not declare the 1984-1987 CBA invalid or void
considering that the employees have enjoyed benefits from it. They cannot receive benefits under provisions favorable to them and
later insist that the CBA is void simply because other provisions turn out not to the liking of certain employees. x x x. Moreover, the
two CBAs prior to the 1984-1987 CBA were not also formally ratified, yet the employees are basing their present claims on these
CBAs. It is iniquitous to receive benefits from a CBA and later on disclaim its validity. [72]

Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain benefits previously enjoyed by
the members of the Union, it cannot escape this Court's attention that it was the execution of the MOA which paved the way for the
re-opening of the hotel, notwithstanding its financial distress. More importantly, the execution of the MOA allowed respondents to
keep their jobs. It would certainly be iniquitous for the members of the Union to sign new contracts prompting the re-opening of the
hotel only to later on renege on their agreement on the fact of the non-ratification of the MOA.

In addition, it bears to point out that Rojas did not act unilaterally when he negotiated with respondent's management. The
Constitution and By-Laws of DIHFEU-NFL clearly provide that the president is authorized to represent the union on all occasions and
in all matters in which representation of the union may be agreed or required. [73] Furthermore, Rojas was properly authorized under
a Board of Directors Resolution[74] to negotiate with respondent, the pertinent portions of which read:

SECRETARY's CERTIFICATE

I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby certify that, at a meeting of the Board of Directors of the DIHFEU-NFL, on 28
Feb. 2001 with a quorum duly constituted, the following resolutions were unanimously approved:

RESOLVED, as it is hereby resolved that the Manifesto dated 25 Feb. 2001 be approved ratified and adopted

RESOLVED, FURTHER, that Mr. Domy R. Rojas, the president of the DIHFEU-NFL, be hereby authorized to negotiate with Waterfront
Insular Hotel Davao and to work for the latter's acceptance of the proposals contained in DIHFEU-NFL Manifesto; and

RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby authorized to sign any and all documents to implement, and carry into effect,
his foregoing authority.[75]
31
Withal, while the scales of justice usually tilt in favor of labor, the peculiar circumstances herein prevent this Court from applying the
same in the instant petition. Even if our laws endeavor to give life to the constitutional policy on social justice and on the protection
of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management
has rights which are also entitled to respect and enforcement in the interest of fair play. [76]

WHEREFORE, premises considered, the petition is DENIED. The Decision dated October 11, 2005, and the Resolution dated July 13,
2006 of the Court of Appeals in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657,
are AFFIRMED.

SO ORDERED.

G.R. No. 82819 February 8, 1989

LUZ LUMANTA, ET AL., petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and FOOD TERMINAL, INC., respondents.

J. S. Torregoza and Associates for petitioners.

The Solicitor General for public respondent.

The Government Corporate Counsel for Food Terminal, Inc.

RESOLUTION

FELICIANO, J.:

The present Petition for certiorari seeks to annul and set aside the Decision of the National Labor Relations Commission rendered on
18 March 1988 in NLRC-NCR Case No. 00- 0301035-87, entitled "Luz Lumanta, et al., versus Food Terminal Incorporated." The
Decision affirmed an order of the Labor Arbiter dated 31 August 1987 dismissing petitioners' complaint for lack of Jurisdiction.

On 20 March 1987, petitioner Luz Lumanta, joined by fifty-four (54) other retrenched employees, filed a complaint for unpaid 'd
retrenchment or separation pay against private respondent Food Terminal, Inc. ("FTI") with the Department of Labor and
Employment. The complaint was later amended to include charges of underpayment of wages and non-payment of emergency cost
of living allowances (ECOLA).

Private respondent FTI moved to dismiss the complaint on the ground of lack of jurisdiction. It argued that being a government-
owned and controlled corporation, its employees are governed by the Civil Service Law not by the Labor Code, and that claims
arising from employment fall within the jurisdiction of the Civil Service Commission and not the Department of Labor and
Employment.

The petitioners opposed the Motion to Dismiss contending that although FTI is a corporation owned and controlled by the
government, it has still the marks of a private corporation: it directly hires its employees without seeking approval from the Civil
Service Commission and its personnel are covered by the Social Security System and not the Government Service Insurance System.
Petitioners also argued that being a government-owned and controlled corporation without original charter, private respondent FTl
clearly falls outside the scope of the civil service as marked out in Section 2 (1), Article IX of the 1987 Constitution.

On 31 August 1987, Labor Arbiter Isabel P. Oritiguerra issued an Order, 1 the dispositive part of which read:

On account of the above findings the instant case is governed by the Civil Service Law. The case at bar lies outside the jurisdictional
competence of this Office.

WHEREFORE, premises considered this case is hereby directed to be DISMISSED for lack of jurisdiction of this Office to hear and
decide the case.

SO ORDERED.

On 18 March 1988, the public respondent National Labor Relations Commission affirmed on appeal the order of the Labor Arbiter
and dismissed the petitioners' appeal for lack of merit.

Hence this Petition for Certiorari.

32
The only question raised in the present Petition is whether or not a labor law claim against a government-owned and controlled
corporation, such as private respondent FTI, falls within the jurisdiction of the Department of Labor and Employment.

In refusing to take cognizance of petitioners' complaint against private respondent, the Labor Arbiter and the National Labor
Relations Commission relied chiefly on this Court's ruling in National Housing Authority v. Juco, 2which held that "there should no
longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil
service law and civil service rules and regulations.

Juco was decided under the 1973 Constitution, Article II-B, Section 1 (1) of which provided:

The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-
owned or controlled corporation.

The 1987 Constitution which took effect on 2 February 1987, has on this point a notably different provision which reads:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charter. (Article IX-B, Section 2 [1]).

The Court, in National Service Corporation (NASECO) v. National Labor Relations Commission, G.R. No. 69870, promulgated on 29
November 1988, 3 quoting extensively from the deliberations 4 of the 1986 Constitutional Commission in respect of the intent and
meaning of the new phrase "with original charter," in effect held that government-owned and controlled corporations with original
charter refer to corporations chartered by special law as distinguished from corporations organized under our general incorporation
statute-the Corporation Code. In NASECO, the company involved had been organized under the general incorporation statute and
was a subsidiary of the National Investment Development Corporation (NIDC) which in turn was a subsidiary of the Philippine
National Bank, a bank chartered by a special statute. Thus, government-owned or controlled corporations like NASECO are
effectively excluded from the scope of the Civil Service.

It is the 1987 Constitution, and not the case law embodied in Juco, 5 which applies in the case at bar, under the principle that
jurisdiction is determined as of the time of the filing of the complaint. 6 At the time the complaint against private respondent FTI was
filed (i.e., 20 March 1987), and at the time the decisions of the respondent Labor Arbiter and National Labor Relations Commission
were rendered (i.e., 31 August 1987 and 18 March 1988, respectively), the 1987 Constitution had already come into effect. latter of
Instruction No. 1013, dated 19 April 1980, included Food Terminal, Inc. in the category of "government-owned or controlled
corporations." 7 Since then, FTI served as the marketing arm of the National Grains Authority (now known as the National Food
Authority). The pleadings show that FTI was previously a privately owned enterprise, created and organized under the general
incorporation law, with the corporate name "Greater Manila Food Terminal Market, Inc." 8 The record does not indicate the precise
amount of the capital stock of FM that is owned by the government; the petitioners' claim, and this has not been disputed, that FTl is
not hundred percent (100%) government-owned and that it has some private shareholders.

We conclude that because respondent FTI is government-owned and controlled corporation without original charter, it is the
Department of Labor and Employment, and not the Civil Service Commission, which has jurisdiction over the dispute arising from
employment of the petitioners with private respondent FTI, and that consequently, the terms and conditions of such employment
are governed by the Labor Code and not by the Civil Service Rules and Regulations.

Public respondent National Labor Relations Commission acted without or in excess of its jurisdiction in dismissing petitioners
complaint.

ACCORDINGLY, the Petition for certiorari is hereby GRANTED and the Decision of public respondent Labor Arbiter dated 31 August
1987 and the Decision of public respondent Commission dated 18 March 1988, both in NLRC-NCR Case No. 00-03-01035-87 are
hereby SET ASIDE. The case is hereby REMANDED to the Labor Arbiter for further appropriate proceedings.

Fernan, C.J., Gutierrez, Jr., Bidin, and Cortes, JJ., concur.

G.R. No. 100947 May 31, 1993

PNOC ENERGY DEVELOPMENT CORPORATION and MARCELINO TONGCO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MANUEL S. PINEDA, respondents.

Alikpala, Gomez & Associates Law Office for petitioners.

Filomeno A. Zieta for private respondent.

NARVASA, C.J.:

33
The applicability to private respondent Manuel S. Pineda of Section 66 of the Election Code is what is chiefly involved in the case at
bar. Said section reads as follows:

Sec. 66. Candidates holding appointive office or position.— Any person holding a public appointive office or position, including active
members of the Armed Forces of the Philippines, and officers and employees in government-owned or controlled corporations, shall
be considered ipso facto resigned from his office upon the filing of his certificate of candidacy.

Manuel S. Pineda was employed with the Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC), as subsidiary of the
Philippine National Oil Co., from September 17, 1981, when he was hired as clerk, to January 26, 1989, when his employment was
terminated. The events leading to his dismissal from his job are not disputed.

In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and Construction Department, at
Tongonan Geothermal Project, Ormoc City, Pineda decided to run for councilor of the Municipality of Kananga, Leyte, in the local
elections scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position. Objection to Pineda's
being a candidate while retaining his job in the PNOC-EDC was shortly thereafter registered by Mayor Arturo Cornejos of Kananga,
Leyte. The mayor communicated with the PNOC-EDC — thru Engr. Ernesto Patanao, Resident Manager, Tongonan Geothermal
Project — to express the view that Pineda could not actively participate in politics unless he officially resigned from PNOC-
EDC.1 Nothing seems to have resulted from this protest.

The local elections in Leyte, scheduled for January, 1988, were reset to and held on February 1, 1988. Pineda was among the official
candidates voted for, and eventually proclaimed elected to, the office of councilor. Some vacillation appears to have been evinced
by Pineda at about this time. On February 8, 1988, he wrote to the COMELEC Chairman, expressing his desire to withdraw from the
political contest on account of what he considered to be election irregularities; 2 and on March 19, 1988, he wrote to the Secretary of
Justice seeking legal opinion on the question, among others, of whether or not he was "considered automatically resigned upon . . .
filing of . . . (his) certificate of candidacy," and whether or not, in case he was elected, he could "remain appointed to any corporate
offspring of a government-owned or controlled corporation."3 Nevertheless, Pineda took his oath of office in June, 1988 as
councilor-elect of the Municipality of Kananga, Leyte.4 And despite so qualifying as councilor, and assuming his duties as such, he
continued working for PNOC-EDC as the latter's Geothermal Construction Secretary, Engineering and Construction Department, at
Tongonan Geothermal Project, Ormoc City.

On June 7, 1988, Marcelino M. Tongco, Department Manager of the Engineering and Construction Department, PNOC-EDC,
addressed an inquiry to the latter's Legal Department regarding the status of Manuel S. Pineda as employee in view of his candidacy
for the office of municipal councilor.5 In response, the Legal Department rendered an opinion to the effect that Manuel S. Pineda
should be considered ipso facto resigned upon the filing of his Certificate of Candidacy in November, 1987, in accordance with
Section 66 of the Omnibus Election Code.6

Pineda appealed the PNOC-EDC Legal Department's ruling to N.C. Vasquez, the Vice-President of PNOC-EDC, on July 14, 1988. In his
letter of appeal,7 he invoked a "court ruling in the case of Caagusan and Donato vs. PNOC-Exploration Corp. . . . (to the effect that)
while the government-owned or controlled corporations are covered by the Civil Service Law (as is taken to mean in Sec. 66 of the
Omnibus Election Code of 1985) (sic), the subsidiaries or corporate offsprings are not." In the same letter he declared his wish to
continue resign from his position as councilor/member of the Sangguniang Bayan.

He also wrote a letter dated October 1, 1988 to the Department of Local Government inquiring about the status of his employment
with PNOC-EDC in relation to his election as member of the Sangguniang Bayan. He was advised by DLG Undersecretary Jacinto T.
Rubillo, Jr., by letter dated March 31, 1989, that there was no legal impediment to his continuing in his employment with PNOC-EDC
while holding at the same time the elective position of municipal councilor. Cited as basis by Undersecretary Rubillo was Section 2(1)
Article IX-B of the 1987 Constitution and this Court's ruling in NASECO vs. NLRC, 168 SCRA 122. Undersecretary Rubillo went on to
say that Pineda could receive his per diems as municipal councilor as well as the corresponding representation and transportation
allowance [RATA] "provided the PNOC-EDC charter does not provide otherwise and public shall not be prejudiced." 8

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

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

After due proceedings, Labor Arbiter Araceli H. Maraya, to whom the case was assigned, rendered a decision on December 28,
1990,11 declaring Manuel S. Pineda's dismissal from the service illegal, and ordering his reinstatement to his former position without
loss of seniority rights and payment of full back wages corresponding to the period from his illegal dismissal up to the time of actual
reinstatement. The Arbiter pointed out that the ruling relied upon by PNOC-EDC to justify Pineda's dismissal from the service,
i.e., NHA v. Juco,12 had already been abandoned; and that "as early as November 29, 1988," the governing principle laid down by
case law — in light of Section 2 (1), Article IX-B of the 1987 Constitution13 — has been that government-owned or controlled
corporations incorporated under the Corporation Code, the general law — as distinguished from those created by special charter —
34
are not deemed to be within the coverage of the Civil Service Law, and consequently their employees, like those of the PNOC-EDC,
are subject to the provisions of the Labor Code rather than the Civil Service Law. 14

The PNOC-EDC filed an appeal with the National Labor Relations Commission. The latter dismissed the appeal for lack of merit in a
decision dated April 24, 1991. 15 PNOC-EDC sought reconsideration;16 its motion was denied by the Commission in a Resolution
dated June 21, 1991.17

It is this decision of April 24, 1991 and the Resolution of June 21, 1991 that the PNOC-EDC seeks to be annulled and set aside in the
special civil action for certiorari at bar. It contends that the respondent Commission gravely abused its discretion:

1) when it ruled that Manuel S. Pineda was not covered by the Civil Service Rules when he filed his candidacy for the 1988 local
government elections in November 1987;

2) when it ruled that Pineda was not covered by the Omnibus Election Code at the time he filed his certificate of candidacy for the
1988 local elections;

3) when it ruled that Pineda was illegally dismissed despite the fact that he was considered automatically resigned pursuant to
Section 66 of the Omnibus Election Code; and

4) when it ruled that Pineda could occupy a local government position and be simultaneously employed in a government-owned or
controlled corporation, a situation patently violative of the constitutional prohibition on additional compensation.

Acting on the petition, this Court issued a temporary restraining order enjoining the respondent NLRC from implementing or
enforcing its decision and resolution dated April 24, 1991 and June 21, 1991, respectively.

In the comment required of him by the Court, the Solicitor General expressed agreement with the respondent Commission's holding
that Manuel Pineda had indeed been illegally separated from his employment in the PNOC-EDC; in other words, that his running for
public office and his election thereto had no effect on his employment with the PNOC-EDC, a corporation not embraced within the
Civil Service.

Petitioner PNOC-EDC argues that at the time that Pineda filed his certificate of candidacy for municipal councilor in November, 1987,
the case law "applicable as far as coverage of government-owned or controlled corporations are concerned . . . ( was to the
following effect):18

As correctly pointed out by the Solicitor General, the issue of jurisdiction had been resolved in a string of cases starting with
the National Housing Authority vs. Juco (134 SCRA 172) followed by Metropolitan Waterworks and Sewerage System
vs. Hernandez (143 SCRA 602) and the comparatively recent case of Quimpo vs. Sandiganbayan (G.R. No. 72553, Dec. 2, 1986) in
which this Court squarely ruled that PNOC subsidiaries, whether or not originally created as government-owned or controlled
corporations are governed by the Civil Service Law.

This doctrine, petitioner further argues, was not "automatically reversed" by the 1987 Constitution because not "amended or
repealed by the Supreme Court or the Congress;"19 and this Court's decision in November, 1988, in National Service Corporation
vs. NLRC, supra20 — abandoning the Juco ruling — "cannot be given retroactive effect . . . (in view of ) the time-honored principle . . .
that laws (judicial decisions included) shall have no retroactive effect, unless the contrary is provided (Articles 4 and 8 of the New
Civil Code of the Philippines)."

Section 2 (1), Article IX of the 1987 Constitution provides as follows:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charters.

Implicit in the provision is that government-owned or controlled corporations without original charters — i.e., organized under the
general law, the Corporation Code — are not comprehended within the Civil Service Law. So has this Court construed the
provision.21

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

Lumanta, et al. v. NLRC, et al.,25 decided on February 8, 1989, made the same pronouncement: that Juco had been superseded by
the 1987 Constitution for implicit in the language of Section 2 (1), Article IX thereof, is the proposition that government-owned or
controlled corporations without original charter do not fall under the Civil Service Law but under the Labor Code.
35
And in PNOC-EDC v. Leogardo, etc., et al.,26 promulgated on July 5, 1989, this Court ruled that conformably with the apparent
intendment of the NASECO case, supra, since the PNOC-EDC, a government-owned or controlled company had been incorporated
under the general Corporation Law, its employees are subject to the provisions of the Labor Code.

It is thus clear that the Juco doctrine prevailing at the time of the effectivity of the fundamental charter in 1987 — i.e., that
government-owned or controlled corporations were part of the Civil Service and its employees subject to Civil Service laws and
regulations,27 regardless of the manner of the mode of their organization or incorporation — is no longer good law, being at "stark
variance," to paraphrase NASECO, with the 1987 Constitution. In other words, and contrary to the petitioner's view, as of the
effectivity of the 1987 Constitution, government-owned or controlled corporations without original charters, or, as Mr. Justice Cruz
insists in his concurring opinion in NASECO v. NLRC,28 a legislative charter (i.e., those organized under the Corporation Code), ceased
to pertain to the Civil Service and its employees could no longer be considered as subject to Civil Service Laws, rules or regulations.

The basic question is whether an employee in a government-owned or controlled corporations without an original charter (and
therefore not covered by Civil Service Law) nevertheless falls within the scope of Section 66 of the Omnibus Election Code, viz.:

Sec. 66. Candidates holding appointive office or position.— Any person holding a public appointive office or position, including active
members of the Armed Forces of the Philippines, and officers and employees in government-owned or controlled corporations, shall
be considered ipso facto resigned from his office upon the filing of his certificate of candidacy.

When the Congress of the Philippines reviewed the Omnibus Election Code of 1985, in connection with its deliberations on and
subsequent enactment of related and repealing legislation — i.e., Republic Acts Numbered 7166: "An Act Providing for Synchronized
National and Local Elections and for Electoral Reforms, Authorizing Appropriations Therefor, and for Other Purposes" (effective
November 26, 1991), 6646: "An Act Introducing Additional Reforms in the Electoral System and for Other Purposes" (effective
January 5, 1988) and 6636: "An Act Resetting the Local Elections, etc., (effective November 6, 1987), it was no doubt aware that in
light of Section 2 (1), Article IX of the 1987 Constitution: (a) government-owned or controlled corporations were of two (2)
categories — those with original charters, and those organized under the general law — and (b) employees of these corporations
were of two (2) kinds — those covered by the Civil Service Law, rules and regulations because employed in corporations having
original charters, and those not subject to Civil Service Law but to the Labor Code because employed in said corporations organized
under the general law, or the Corporation Code. Yet Congress made no effort to distinguish between these two classes of
government-owned or controlled corporations or their employees in the Omnibus Election Code or subsequent related statutes,
particularly as regards the rule that any employee "in government-owned or controlled corporations, shall be considered ipso
facto resigned from his office upon the filing of his certificate of candidacy." 29

Be this as it may, it seems obvious to the Court that a government-owned or controlled corporation does not lose its character as
such because not possessed of an original charter but organized under the general law. If a corporation's capital stock is owned by
the Government, or it is operated and managed by officers charged with the mission of fulfilling the public objectives for which it has
been organized, it is a government-owned or controlled corporation even if organized under the Corporation Code and not under a
special statute; and employees thereof, even if not covered by the Civil Service but by the Labor Code, are nonetheless "employees
in government-owned or controlled corporations," and come within the letter of Section 66 of the Omnibus Election Code, declaring
them "ipso facto resigned from . . . office upon the filing of . . . (their) certificate of candidacy."

What all this imports is that Section 66 of the Omnibus Election Code applies to officers and employees in government-owned or
controlled corporations, even those organized under the general laws on incorporation and therefore not having an original or
legislative charter, and even if they do not fall under the Civil Service Law but under the Labor Code. In other words, Section 66
constitutes just cause for termination of employment in addition to those set forth in the Labor Code, as amended.

The conclusions here reached make unnecessary discussion and resolution of the other issues raised in this case.

WHEREFORE, the petition is GRANTED; the decision of public respondent National Labor Relations Commission dated April 24, 1991
and its Resolution dated June 21, 1991 are NULLIFIED AND SET ASIDE; and the complaint of Manuel S. Pineda is DISMISSED. No costs.

SO ORDERED.

G.R. No. 67035 January 29, 1993

PHILIPPINE-SINGAPORE PORTS CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER DANIEL M. LUCAS, JR., and PERFECTO JARDIN, respondents.

Zamora, Soller, Baluyut & Mendoza Law Offices for petitioner.

Public Attorney's Office for private respondent.

BIDIN, J.:
36
This petition for certiorari with preliminary injunction and/or restraining order seeks to reverse and set aside: (a) the May 29, 1981
Resolution of the National Labor Relations Commission (NLRC) dismissing the appeal of the Philippine-Singapore Ports Corporation
(PSPC) from the Decision the Labor Arbiter dated January 3, 1980 ordering PSPC to pay Perfecto Jardin the sum of $3,800.00 or its
peso equivalent at the current rate of exchange representing the latter's wages for the unexpired portion of his employment
contract, and (b) the February 9, 1984 Resolution of the NLRC en banc denying PSPC's motion for the reconsideration of its earlier
Resolution.

The facts of the case are as follows:

PSPC is a corporation organized and existing under Philippine laws. On September 5, 1977, PSPC and Jardin entered into a contract
of employment wherein the latter was employed by the former as a winchman/signalman at the Commercial Islamic Port of Jeddah
in Saudi Arabia for a two-year period commencing in January, 1978. On or about October 18, 1978, the PSPC Medical Director
recommended that Jardin be given priority in the schedule for rest and recreation (R and R) leave as he was diagnosed to be in need
of a fistulectomy due to "fistula in anu."

Jardin was sent back to the Philippines at PSPC's expense for medical treatment. At the GSIS Hospital, Quezon City where he was
treated and confined, his ailment was diagnosed as "pruritis ani due to ancylostomiasis." On November 4, 1978, Jardin was certified
as fit to work by his attending physician at the said hospital. When he reported to the PSPC on the same day, however, he was
advised to file his resignation papers.

Thus, on January 31, 1979, Jardin filed with the then Ministry of Labor, Region IV, Manila, a complaint for illegal dismissal and
recovery of backwages (R4-STF-1-787-79). In its position paper, the PSPC prayed for the dismissal of the complaint principally on the
ground that under Art. 15 of the Labor Code (P.D. No. 442), the Bureau of Employment Services and not the Labor Arbiter had
jurisdiction over the case because it involved the overseas employment of a Filipino worker.

In his decision of January 3, 1980, Labor Arbiter Daniel M. Lucas, Jr. did not pass upon the issue of jurisdiction. He resolved the case
on its merits and disposed of it as follows:

WHEREFORE, respondent corporation is hereby ordered to pay complainant the sum of $3,800.00 or, its equivalent in Peso,
Philippine Currency, at the current rate of exchange, representing the latter's wages for the unexpired portion of his employment
contract.

SO ORDERED. (Rollo, p. 29).

In its appeal filed with the NLRC on February 19, 1980, PSPC reiterated its contention that it is the Bureau of Employment Services
that has jurisdiction over the case and that, assuming that the Labor Arbiter had such jurisdiction, he gravely abused his discretion in
finding that Jardin had been illegally dismissed even in the absence of evidentiary support thereon.

In the Resolution of May 21, 1981, the NLRC1 dismissed the appeal on the sole ground that since Jardin had not been furnished with
a copy of the appeal within the reglementary period of ten days, no appeal had been duly perfected by the PSPC.

PSPC filed a motion for reconsideration of said Resolution alleging that it had furnished Jardin with a copy of its memorandum of
appeal which was attached to its opposition to Jardin's motion for issuance of a writ of execution. The PSPC also stressed that the
Bureau of Employment Services and not the arbitration section of the Ministry of Labor, had jurisdiction over the case. In the
Resolution of February 9, 1984, the NLRC en banc 2 denied the motion for reconsideration and lifted the injunction it had issued in
the case. Mentioning the fact that PSPC had repeatedly raised the issue of jurisdiction in all its previous cases without success, the
NLRC held that the case fell "within the ambit of compulsory arbitration." The NLRC also ruled that PSPC's "belated service" of the
appeal memorandum "did not cure the infirmity of the appeal" and therefore the PSPC failed to comply within the reglementary
period with the mandatory requirements of an appeal (Rollo, pp. 59-60).

Hence, the instant petition for certiorari filed by PSPC asserting that the Labor Arbiter had no jurisdiction over the case and
therefore the decision he had rendered is null and void, that the NLRC abused its discretion in dismissing the appeal on the technical
ground of failure to furnish the adverse party with a copy of the appeal memorandum, and that, granting that the Labor Arbiter had
jurisdiction over the case, he erred in finding that Jardin had been illegally dismissed.

The petition is impressed with merit.

When Jardin filed the complaint for illegal dismissal on January 31, 1979, Art. 217 (5) of the Labor Code provided that Labor Arbiters
and he NLRC shall have "exclusive jurisdiction to hear and decide" all cases arising from employer-employee relations "unless
expressly excluded by this Code." At that time, Art. 15 of the same Code had been amended by P.D. No. 1412 which took effect on
June 9, 1978. The pertinent provision of the said presidential decree states:

Art. 15. Bureau of Employment Services. —

(a) . . . . . .

37
(b) The Bureau shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations
including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment,
except seamen. The decisions of the Bureau shall be final and executory subject to appeal to the Secretary of Labor whose decisions
shall be final and inappealable.

Considering that private respondent Jardin's claims undeniably arose out of an employer-employee relationship with petitioner PSPC
and that private respondent worked overseas or in Saudi Arabia, the Bureau of Employment Services and not the Labor Arbiter had
jurisdiction over the case. "Overseas employment" is defined by Art. 13(h) of the Labor Code as "employment of a worker outside
the Philippines." Since the definition does not make a distinction regarding the nationality of the employer, Filipino employers who
deploy their employees abroad should be deemed covered by the definition (See: Philippine National Construction Corporation v.
NLRC, 193 SCRA 401 [1991]).

Art. 15 was further amended by P.D. No. 1691 which took effect on May 1, 1990. Such amendment qualified the jurisdiction of the
Bureau of Employment Services as follows:

(b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matters or cases involving
employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for
overseas employment except seamen; Provided, That the Bureau of Employment Services may, in the case of the National Capital
Region, exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices or the
Bureau of Employment Services if so authorized by the Minister of Labor as provided in this Article, shall be appealable to the
National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor
Relations Commission shall be final and inappealable.

Hence, as further amended, Art. 15 provided for concurrent jurisdiction between the regional offices of the then Ministry of Labor
and the Bureau of Employment Services "in the case of the National Capital Region." It is noteworthy that P.D. No. 1691, while
likewise amending Art. 217 of the Labor Code, did not alter the provision that Labor Arbiters shall have jurisdiction over all claims
arising from employer-employee relations "unless expressly excluded by this Code."

The functions of the Bureau of Employment Services were subsequently assumed by the Philippine Overseas Employment
Administration (POEA) on May 1, 1982 by virtue of Executive Order No. 797 by granting the POEA "original and exclusive jurisdiction
over all cases, including money claims, involving employer-employee relations arising out of or by virtue of any law or contract
involving Filipino workers for overseas employment, including seamen" (Sec. 4(a); Eastern Shipping Lines v. Philippine Overseas
Employment Administration [POEA], 200 SCRA 663 [1991]). This development showed the legislative authority's continuing intent
to exclude from the Labor Arbiter's jurisdiction claims arising from overseas employment.

These amendments notwithstanding, when the complaint for illegal dismissal was filed on January 31, 1979, under Art. 15, as
amended by P.D. No. 1412, it was the Bureau of Employment Services which had jurisdiction over the case and not the Labor
Arbiters. It is a settled rule that jurisdiction is determined by the statute in force at the time of the commencement of the action
(Municipality of Sogod v. Rosal, 201 SCRA 632, 637 [1991]). P.D. No. 1691 which gave the regional offices of the Ministry of Labor
concurrent jurisdiction with the Bureau of Employment Services, was promulgated more than a year after the complaint was filed.

It is indubitable that at the time the Labor Arbiter took cognizance of the complaint for illegal dismissal, he was devoid of
jurisdiction. Consequently, the decision promulgated by him is null and void having been rendered without jurisdiction and may be
struck down any time — even on appeal to the Supreme Court (Suarez v. Court of Appeals, 186 SCRA 339 [1990]).

On the issue of whether or not the NLRC abused its discretion in dismissing the appeal on the technical ground of failure to furnish
the adverse party with a copy of the appeal memorandum, the ruling of the Court in Remerco Garments Manufacturing v. Minister
of Labor and Employment (135 SCRA 167, 178 [1985]) is squarely in point. The Court said therein:

. . . The mere failure to furnish copy of the appeal memorandum to adverse party is not a fatal defect. We have consistently adhered
to the principle clearly held in Alonso vs. Villamor that "technicality when it deserts its proper office as an aid to justice and become
its great hindrance and chief enemy, deserves scant consideration from court." In a more forceful language, Mr. Chief Justice
Enrique M. Fernando, speaking for the Court, in Meracap vs. International Ceramics Manufacturing Co., Inc. stated that "from the
strictly juridical standpoint, it cannot be too strongly stressed, to follow Davis in his masterly work, Discretionary Justice, that where
a decision may be made to rest on informed judgment rather than rigid rules, all the equities of the case must be accorded their due
weight. Finally, labor law determinations, to quote from Bultmann, should be not only secundum retionem but also secundum
caritatem." More recently, we held that in appeals in labor cases, non-service of the copy of appeal or appeal memorandum to the
adverse party is not a jurisdictional defect, and does not justify dismissal of the appeal. Likewise, it was held that dismissal of an
employee's appeal on a purely technical ground is inconsistent with the constitutional mandate on protection to labor.

The NLRC therefore arbitrarily and despotically exercised its power by evading its positive duty to entertain the appeal on a purely
technical ground. As the Court said in Rapid Manpower Consultants, Inc. v. NLRC 190 SCRA 747, 752 [1990]), "(t)echnicality should
not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties." In view of the
clear lack of jurisdiction on the part of the Labor Arbiter over the complaint for illegal dismissal filed by private respondent, and the
apparent abuse of discretion on the part of the NLRC in refusing to resolve petitioner's appeal, there is no reason to discuss the
merits of the case.

38
WHEREFORE, the instant petition for certiorari is GRANTED and the proceedings below NULLIFIED but without prejudice to the right
of private respondent Perfecto Jardin to refile with the Philippine Overseas Employment Administration his claim against the
petitioner Philippine-Singapore Ports Authority.

SO ORDERED.

G.R. No. 212070

CEBU PEOPLE'S MULTI-PURPOSE COOPERATIVE and MACARIO G. QUEVEDO, Petitioners,

vs.
NICERATO E. CARBONILLA, JR., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 25, 2013 and the Resolution 3 dated March 17, 2014 of
the Court of Appeals (CA) in CA-G.R. CEB SP No. 05403, which reversed and set aside the Decision 4 dated April 29, 2010 and the
Resolution5 dated June 30, 2010 of the National Labor Relations Commission (NLRC) in NLRC Case No. VAC-10-000977-2009, and
accordingly, declared respondent Nicerato E. Carbonilla, Jr. (Carbonilla, Jr.) to have been illegally dismissed by petitioner Cebu
People's Multi-Purpose Cooperative (CPMPC).

The Facts

On November 14, 2005, CPMPC hired Carbonilla, Jr. as a Credit and Collection Manager and, as such, was tasked with the handling of
the credit and collection activities of the cooperative, which included recommending loan approvals, formulating and implementing
credit and collection policies, and conducting trainings. 6 Sometime in 2007, CPMPC underwent a reorganization whereby Carbonilla,
Jr. was also assigned to perform the duties of Human Resources Department (HRD) Manager, i.e., assisting in the personnel hiring,
firing, and handling of labor disputes.7 In 2008, he was appointed as Legal Officer and subsequently, held the position of Legal and
Collection Manager.8

However, beginning February 2008, CPMPC, through its HRD Manager, Ma. Theresa R. Marquez (HRD Manager Marquez), sent
various memoranda to Carbonilla, Jr. seeking explanation on the various infractions he allegedly committed. The aforesaid
memoranda, as well as his replies thereto, are detailed as follows:

CPMPC'S MEMORANDA: CARBONILLA, JR.'S REPLIES:

HRD 202 File 2008.02.19.017 dated February 19, He claimed that he was belatedly informed and was
20089 not given any written notification of the said
meeting, and that he did not find any relation of the
10
- Memorandum relative to his non-attendance to the said meeting to his job as a Legal Officer.
CLIMBS HOME PROTEK Dinner Meeting.

HRD 202 File 2008.02.26.034 dated February 26, No reply.

200811- Memorandum relative to his non-submission
of Weekly Executive Summary Reports and Itinerary
for the months of January and February.

HRD 202 File 2008.02.26.035 dated February 26,
200812 - Memorandum on why he allowed Joelito
Aguipo (Aguipo), a contractual collector for the
Bantayan Branch, to drive a motorcycle without a
driver's license and not being the owner thereof.
He stated that there was no policy requiring field
collectors to own – in a strict legal sense - a
motorcycle, but merely to possess the same so he
can effect collections more efficiently. Besides,
Aguipo was allowed to drive due to the urgency of
collecting from the Bantayan Branch. In any case,
there is an Affidavit of Undertaking13 exonerating
CPMPC from any liability.14

HRD 202 File 2008.02.26.036 dated He sought clarification of the charges against him,
and at the same time, threatened HRD Manager
February 26, 2008 - Memorandum on why he failed Marquez that if this Memorandum is "proven
15

to: (a) account for a motorcycle being used by a malicious, [she] might be answerable to a certain
former employee under his branch; and degree of civil liability which the 1987 Constitution
( b) reclassify the vehicle of another employee. has given to individuals."16

39
HRD 202 File 2008.06.26.086 dated June 26, 200817
- Memorandum on why he insulted his superior,
CPMPC Chief Operation Officer Agustina L. Bentillo
(COO Bentillo), in front of her subordinates, with the
statement: "Ikaw ra may di mosalig ba, ka
kwalipikado adto niya, maski mag contest pa mo,
lupigon gani ka" 18 or "You're the only one who
doesn't trust her, she is very qualified, you even lose
in comparison to her."19
He dismissed the charge as made with malicious
intent and aimed to discredit his person, claiming
that he only had a discussion with his superior,
particularly, about Alfonso Vasquez (Vasquez), who
was unsystematically pulled out from his
department without his consent. He added that if
COO Bentillo was indeed offended by his remarks,
then it should not have taken almost a month before
his attention was called regarding the matter.20

HRD 202 File 2008.06.26.087 dated June 26, 200821

Citing the Philippine Law Dictionary, he explained
that "[i]nsubordination means a quality or state of
- Memorandum on his alleged acts of being insubordinate to a person in authority." He
insubordination and gross disrespect when he maintained that he did not commit insubordination
questioned the authority of HRD Manager Marquez as he merely sought clarification about the
to refuse the hiring of a new staff. deferment of the hiring of a working student by HRD
Manager Marquez despite having prior approval of
CPMPC Chief Executive Officer (CEO), petitioner
Macario G. Quevedo (CEO Quevedo ).22

HRD 202 File 2008.06.26.088 dated June 26, 200823
- Memorandum on his alleged acts of
insubordination and gross disrespect when he
insisted before CEO Quevedo that he had the
authority as Legal and Collection Manager to hire a
new staff.
Reiterating the definition of "insubordination" in
Philippine Law Dictionary, he maintained that his act
of clarifying with the CEO the policy on hiring
working students did not constitute insubordination,
but rather, was made in the exercise of his right to
express.24

HRD 202 File 2008.06.27.091 dated He only reviewed the subject documents and they
were never entrusted to him for safekeeping.27
June 27, 200825

- Memorandum asking Carbonilla, Jr. to tum-over to

the officer-in-charge custody of the following
documents: Banco de Oro contract on staff loans,
CPMPC firearm contracts and licenses, branch offices
rentals, and others.26

HRD 202 File 2008.07.03.094 dated
July 3, 200828
- Memorandum on his alleged acts of gross
negligence in: (a) failing to submit the employment
assessment of one Marcelina M. Remonde
(Remonde ); ( b) promoting one Mary Grace R.
Batain (Batain) despite lack of any performance
appraisal; ( c) failing to report the shortage of Batain
amounting to Pl08,254.55; (d) disseminating a wrong
schedule of mediation activity which caused
confusion and pressure among branch managers;
( e) failing to annotate the encumbrance on the
certificate of title offered as collateral to
CPMPC; (j) failing to review and verify its contract
with the BISDA Security Agency (agency) which
exposed CPMPC to third-party liability for failure of
the agency to remit the Social Security System,
Philhealth and Pag-IBIG premiums of its security
guards to the government; (g) failing to inform the
branch managers of any
settlements or compromise agreements entered into
by the head office resulting in confusion as to
payments; and (h) failing to submit to HRD Manager
Marquez the status of the firearms and licenses
He interposed the following defenses:29 (a) he was
not responsible for employment assessments having
been transferred to the Legal Department; ( b) as
then HRD Manager, it was within his discretion to
promote Batain whose appointment has been
previously concurred in by the CEO; ( c) he was not
informed of the shortage committed by Batain nor
was it within his primary obligation to disclose the
same; (d) the printing of invitation was managed
only by his legal assistant, Joel Semblante
(Semblante) and Vasquez. However, the latter was
unexpectedly transferred to another job assignment,
leaving only Semblante to do the job, which may
have caused the unintentional mistake;30 (e) a
certain Brenda Dela Cruz was the one responsible for
the annotation of the encumbrances of real and
personal properties; (j) he was not responsible for
the review of the contract between the agency and
its security guards as CPMPC had no employer-
employee relationship with them; (g) he was
unaware of the complaints of the branch managers
regarding the payment confusion as a result of
settlements or compromise agreements; and (h) it
was not his duty to determine the status, custody,
and licenses of the firearms.31

40
 assigned to the branch managers.

HRD 202 File 2008.07.04.095 dated July 4, 200832 His acts did not constitute gross misconduct, gross
disrespect, or loss of trust and confidence as he only
- Memorandum on the allegations he made against questioned the suspicious transactions of CEO
the CEO during the Board of Directors' inquiry Quevedo regarding the sale of a titled parcel of land
hearing, which constituted gross misconduct, gross owned by the cooperative for an inadequate
disrespect, and loss of trust and confidence. consideration. He then added that as a member of
CPMPC, he has the right to demand transparency of
all the transactions made by CEO Quevedo, of which
its consequences will affect the cooperative.33

HRD 202 File 2008.07 .08.098 dated July 8, 200834

The said meeting was scheduled outside the regular
meeting day and he was only informed about it on
- Memorandum on his failure to attend the the day of the meeting at which time, he was
35
management and operations committee meeting personally handling collection cases.
held on July 7, 2008 despite prior notices.

HRD 202 File 2008.07.09.103 dated July 9, 200836 –
Memorandum relative to the mediation settlements
which were forwarded for notarization to one Atty.
Miñoza who is not the authorized legal retainer of
CPMPC.
He admitted that as head of the Legal Department,
he endorsed the documents for notarization to his
friend who only charged P50.00 per document as
compared to the legal retainers who charged Pl00.00
per document. He added that "[t]he same is more
advantageous and secured rather than having it
notarized- by a 'murio-murio' notary public at the
back of the Cebu City Hall."37

HRD 202 File 2008.07.09.104 dated July 9, 200838
- Memorandum on his failure to update the CEO and
management committee of the dismissal of the
cases filed by CPMPC against Spouses Alex and Alma
Monisit in Civil Case No. R-52633 and against
Spouses Helen and Rogelio Lopez in Civil Case No. R-
53274.
The two cases were re-filed before the Regional Trial
Court on May 29, 2008 as the amounts involved
were beyond the jurisdiction of the Municipal Trial
Court (MTC). He also explained that he was not
aware of the filing of these cases before the MTC as
he was occupying the position of the HRD Manager
at that time.39

HRD 202 File 2008.07.15.106 dated July 15, 200840
- Memorandum relative to Carbonilla, Jr. 's
instruction to Semblante to pull out important
records and vital documents, i.e., Compromise/
Settlement Agreement, Mediation Tracking Form,
Agreement to Mediate, Mediator's Report,
Evaluation of Mediation, among others, from the
head office without the knowledge and approval of
the management, which documents were later on
returned tampered and altered.
He explained that as head of the Legal Department,
he was responsible for the proper disposal of all
legal documents and contracts, and the cancellation
of said documents were done to protect the interest
of the cooperative. Moreover, he claimed that the
erasures were caused by the
cancellation of the notarial subscription since
Carbonilla, Jr. found the requirements of the notary
public - which required all 125 respondents to
appear personally and present their community tax
certificates - impractical. Moreover, he claimed that
the cancellation of the documents "was not for the
purpose of falsifying or tampering the same[,] but
merely to protect the interest of the cooperative
against possible sanctions [or] circulating bogus
documents. "41

HRD 202 File 2008.07.16.107 dated July 16, 200842 –
Memorandum relative to the unliquidated cash
advances of the notarial transactions of the
mediation agreements.43
The delay in liquidation was due to the "agreement"
he had with the notary public about the disposition
of the notarized documents. He claimed that in the
afternoon of the same day, he turned over the
amount of P6,250.00 to the Accounting
Department.44

HRD 202 File 2008.07.19.111 dated July 19, 2008 45 - No reply.

Memorandum on the alleged tampering and loss of
CPMPC's vital records and documents, i.e., two (2)
copies of the compromise settlement agreement.

Unconvinced by Carbonilla, Jr.'s explanations, CPMPC scheduled several clarificatory hearings, 46 but the former failed to attend
despite due notice.47 Later, CPMPC conducted a formal investigation where it ultimately found Carbonilla, Jr. to have committed acts

41
prejudicial to CPMPC's interests.48 As such, CPMPC, CEO Quevedo, sent Carbonilla, Jr. a Notice of Dismissal49 dated August 5, 2008
informing the latter of his termination on the grounds of: (a) loss of trust and confidence; (b) gross disrespect; (c) serious
misconduct; (d) gross negligence; (e) commission of a crime of falsification/inducing Aguipo to violate the law or the Land
Transportation and Traffic Code; and (e) committing acts highly prejudicial to the interest of the cooperative.50

Consequently, Carbonilla, Jr. filed the instant case for illegal dismissal, non-payment of salaries, 13th month pay, as well as damages
and backawages, against CPMPC, before the NLRC, docketed as NLRC RAB VII-08-1856-2008.51 In support of his claims, Carbonilla, Jr.
denied the administrative charges against him, asserting that the Management and Board of Directors of CPMPC merely
orchestrated means to unjustly dismiss him from employment. 52

In defense, CPMPC maintained that the totality of Carbonilla, Jr.'s infractions was sufficient to warrant his dismissal, and that it had
complied with the procedural due process in terminating him. 53 Further, CPMPC pointed out that Carbonilla, Jr. had been fully paid
of all his benefits, notwithstanding his unsettled obligations to it in the form of loans, insurance policy premiums, and cash advances,
among others, amounting to a total of P129,455.00.54

The LA Ruling

In a Decision55 dated July 1, 2009, the Labor Arbiter (LA) dismissed Carbonilla, Jr.' s complaint for lack of merit. 56The LA found that
Carbonilla, Jr. committed a litany of infractions, the totality of which constituted just cause for the termination of his
employment.57 Likewise, it was determined that CPMPC afforded Carbonilla, Jr. procedural due process prior to his termination, as
evinced by the former's issuance of a series of memoranda, as well as its conduct of investigation with notices to the
latter.58 Furthermore, the LA denied his claims for unpaid salaries and 13th month pay, as records show that the aggregate amount
of his monetary claims is not even enough to pay his accountabilities to CPMPC in the total amount of P129,455.00.59

Aggrieved, Carbonilla, Jr. appealed to the NLRC, which was docketed as NLRC Case No. VAC-10-000977-2009.60

The NLRC Ruling

In a Decision61 dated April 29, 2010, the NLRC affirmed the LA ruling. It found CPMPC to have substantially proven the existence of
just causes in dismissing Carbonilla, Jr., i.e., abuse of authority; disrespect to his colleagues and superiors; being remiss in his duties;
and commission of acts of misrepresentation.62 It further held that Carbonilla, Jr. was given the opportunity to present his side and
to disprove the charges against him, but failed to do so.63 Finally, the NLRC explained that while Carbonilla, Jr. may indeed be
entitled to his claims for unpaid salaries and 13th month pay, the same cannot be granted as his accountabilities with CPMPC were
larger than said claims.64

Carbonilla, Jr. moved for reconsideration,65 which was, however, denied in a Resolution66 dated June 30, 2010. Undaunted, he
elevated the matter to the CA via a petition for certiorari.67

The CA Ruling

In a Decision68 dated June 25, 2013, the CA reversed and set aside the NLRC ruling and accordingly, ordered Carbonilla, Jr.'s
reinstatement and the remand of the case to the LA for the computation of his full backwages, inclusive of allowances and other
benefits, as well as attorney's fees.69 It held that the NLRC gravely abused its discretion in declaring Carbonilla, Jr.'s dismissal as valid,
considering that, other than CPMPC's series of memoranda and self-serving allegations, it did not present substantial documents to
support a conclusion that would warrant Carbonilla, Jr.'s valid dismissal. 70 In fine, CPMPC failed to discharge the burden of proving
that Carbonilla, Jr. 's dismissal was for just causes.71

Dissatisfied, petitioners moved for reconsideration, 72 but the same was denied in a Resolution73 dated March 17, 2014; hence, this
petition.

The Issue Before the Court

The core issue for the Court's resolution is whether or not the CA correctly ascribed grave abuse of discretion on the part of the
NLRC in ruling that Carbonilla, Jr. 's dismissal was valid.

The Court's Ruling

The petition is impressed with merit.

To justify the grant of the extraordinary remedy of certiorari, petitioner must satisfactorily show that the court or quasi-judicial
authority gravely abused the discretion conferred upon it. Grave abuse of discretion connotes a capricious and whimsical exercise of
judgment, done in a despotic manner by reason of passion or personal hostility, the character of which being so patent and gross as
to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of
law.74

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In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and conclusions are not
supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify
a conclusion.75

Guided by the foregoing considerations, the Court finds that the CA committed reversible error in granting Carbonilla, Jr.
's certiorari petition since the NLRC did not gravely abuse its discretion in ruling that he was validly dismissed from employment as
CPMPC was able to prove, through substantial evidence, the existence of just causes warranting the same.

Basic is the rule that an employer may validly terminate the services of an employee for any of the just causesenumerated under
Article 296 (formerly Article 282) of the Labor Code,76 namely:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection
with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or
his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

As may be gathered from the tenor of CPMPC's Notice of Dismissal, it is apparent that Carbonilla, Jr.'s employment was terminated
on the grounds of, among others, serious misconduct and loss of trust and confidence. 77

On the first ground, case law characterizes misconduct as a transgression of some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character and implies wrongful intent and not mere error injudgment. 78 For misconduct to be
considered as a just cause for termination, the following requisites must concur: (a) the misconduct must be serious; (b) it must
relate to the performance of the employee's duties showing that the employee has become unfit to continue working for the
employer; and (c) it must have been performed with wrongful intent. 79

All of the foregoing requisites have been duly established in this case. Records reveal that Carbonilla, Jr. 's serious misconduct
consisted of him frequently exhibiting disrespectful and belligerent behavior, not only to his colleagues, but also to his superiors. He
even used his stature as a law graduate to insist that he is "above" them, often using misguided legalese to weasel his way out of the
charges against him, as well as to strong-arm his colleagues and superiors into succumbing to his arrogance. Carbonilla Jr.'s
obnoxious attitude is highlighted by the following documents on record: (a) his reply to HRD 202 File 2008.02.26.036 dated February
26, 2008 wherein he threatened HRD Manager Marquez with a lawsuit, stating that if the memorandum is "proven malicious, [she]
might be answerable to a certain degree of civil liability which the 1987 Constitution has given to individuals"; 80 (b) HRD 202 File
2008.06.26.086 dated June 26, 200881 wherein he berated COO Bentillo in front of her subordinates with the statement: "[i]kaw ra
may di mosalig ba, ka kwalipikado adto niya, maski mag contest pa mo, lupigon gani ka"82 or "[y ]ou're the only one who doesn't
trust her, she is very qualified, you even lose in comparison to her[,]" 83 and his reply thereto wherein he dismissed the charge as
made with malicious intent and aimed to discredit his person; 84 (c) HRD 202 File 2008.06.26.088 dated June 26, 200885 wherein he
argued with the CEO Quevedo, insisting that he had the authority to hire a new staff, and his reply thereto where he cited the
Philippine Law Dictionary to maintain that his act did not amount to insubordination;86 (d) HRD 202 File 2008.06.26.087 dated June
26, 200887 wherein he openly questioned the authority of HRD Manager Marquez in refusing to hire a new staff and his reply thereto
where he again cited the Philippine Law Dictionary to insist that he did not commit acts of insubordination; 88 and (e) HRD 202 File
2008.07.04.095 dated July 4, 200889 wherein he openly and improperly confronted the CPMPC CEO during a Board of Directors'
inquiry hearing, to which he again maintained that his acts did not constitute misconduct, gross disrespect, and loss of trust and
confidence as he was only looking after the welfare of the cooperative.90

Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and superiors is serious in nature as it is not only reflective of
defiance but also breeds of antagonism in the work environment. Surely, within the bounds of law, management has the rightful
prerogative to take away dissidents and undesirables from the workplace. It should not be forced to deal with difficult personnel,
especially one who occupies a position of trust and confidence, as will be later discussed, else it be compelled to act against the best
interest of its business. Carbonilla, Jr.'s conduct is also clearly work-related as all were incidents which sprung from the performance
of his duties. Lastly, the misconduct was performed with wrongful intent as no justifiable reason was presented to excuse the same.
On the contrary, Carbonilla, Jr. comes off as a smart aleck who would even go to the extent of dangling whatever knowledge he had
of the law against his employer in a combative manner. As succinctly put by CPMPC, "[e]very time [Carbonilla, Jr.'s] attention was
called for some inappropriate actions, he would always show his Book, Philippine Law Dictionary and would ask the CEO or HRD
Manager under what provision of the law he would be liable for the complained action or omission." 91 Irrefragably, CPMPC is
justified in no longer tolerating the grossly discourteous attitude of Carbonilla, Jr. as it constitutes conduct unbecoming of his
managerial position and a serious breach of order and discipline in the workplace. 92

With all these factored in, CPMPC's dismissal of Carbonilla, Jr. on the ground of serious misconduct was amply warranted.1âwphi1

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For another, Carbonilla, Jr. 's dismissal was also justified on the ground of loss of trust and confidence. According to
jurisprudence, loss of trust and confidence will validate an employee's dismissal when it is shown that: (a) the employee concerned
holds a position of trust and confidence; and ( b) he performs an act that would justify such loss of trust and confidence.93 There are
two (2) classes of positions of trust: first, managerial employees whose primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof, and to other officers or members of the
managerial staff; and second, fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the
normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-
file, are routinely charged with the care and custody of the employer's money or property, and are thus classified as occupying
positions of trust and confidence.94

Records reveal that Carbonilla, Jr. occupied a position of trust and confidence as he was employed as Credit and Collection Manager,
and later on, as Legal and Collection Manager, tasked with the duties of, among others, handling the credit and collection activities
of the cooperative, which included recommending loan approvals, formulating and implementing credit and collection policies, and
conducting trainings.95 With such responsibilities, it is fairly evident that Carbonilla, Jr. is a managerial employee within the ambit of
the first classification of employees afore-discussed. The loss of CPMPC's trust and confidence in Carbonilla, Jr., as imbued in that
position, was later justified in light of the latter's commission of the following acts: (a) the forwarding of the mediation settlements
for notarization to a lawyer who was not the authorized legal retainer of CPMPC (HRD 202 File 2008.07.09.103 dated July 9, 200896);
(b) the pull-out of important records and vital documents from the office premises, which were either lost or returned already
tampered and altered (HRD 202 File 2008.07.15.106 dated July 15, 2008 97 and HRD 202 File 2008.07.19.111 dated July 19, 200898);
and (c) the incurring of unliquidated cash advances related to the notarial transactions of the mediation agreements (HRD 202 File
2008.07.16.107 dated July 16, 200899). While Carbonilla, Jr. posited that these actuations were resorted with good intentions as he
was only finding ways for CPMPC to save up on legal fees, this defense can hardly hold, considering that all of these transactions
were not only highly irregular, but also done without the prior knowledge and consent of CPMPC's management. Cast against this
light, Carbonilla, Jr.'s performance of the said acts therefore gives CPMPC more than enough reason to lose trust and confidence in
him. To this, it must be emphasized that "employers are allowed a wider latitude of discretion in terminating the services of
employees who perform functions by which their nature require the employer's full trust and confidence. Mere existence of basis
for believing that the employee has breached the trust and confidence of the employer is sufficient and does not require proof
beyond reasonable doubt. Thus, when an employee has been guilty of breach of trust or his employer has ample reason to distrust
him, a labor tribunal cannot deny the employer the authority to dismiss him," 100 as in this case.

Perforce, having established the actual breaches of duty committed by Carbonilla, Jr. and CPMPC's observance of due process, the
Court no longer needs to further examine the other charges against Carbonilla, Jr., as it is already clear that the CA erred in ascribing
grave abuse of discretion on the part of the NLRC when the latter declared that CPMPC validly dismissed Carbonilla, Jr. from his job.
The totality and gravity of Carbonilla, Jr. 's infractions throughout the course of his employment completely justified CPMPC's
decision to finally terminate his employment. The Court's pronouncement in Realda v. New Age Graphics, Inc.101 is instructive on this
matter, to wit:

The totality of infractions or the number of violations committed during the period of employment shall be considered in
determining the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly
and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character,
conduct and ability separate and independent of each other. While it may be true that petitioner was penalized for his previous
infractions, this does not and should not mean that his employment record would be wiped clean of his infractions. After all, the
record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee's past
misconduct and present behavior must be taken together in determining the proper imposable penalty[.] Despite the sanctions
imposed upon petitioner, he continued to commit misconduct and exhibit undesirable behavior on board. Indeed, the employer
cannot be compelled to retain a misbehaving employee, or one who is guilty of acts inimical to its interests. 102 (Emphases and
underscoring supplied)

On a final point, the Court notes that Carbonilla, Jr.'s award of unpaid salaries and 13th month pay were validly offset by his
accountabilities to CPMPC in the amount of P129,455.00.103 Pursuant to Article 1278104 in relation to Article 1706105 of the Civil Code
and Article 113 (c)106 of the Labor Code, compensation can take place between two persons who are creditors and debtors of each
other.107 Considering that Carbonilla, Jr. had existing debts to CPMPC which were incurred during the existence of the employer-
employee relationship, the amount which may be due him in wages was correctly deducted therefrom.

WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2013 and the Resolution dated March 17, 2014 of the Court of
Appeals in CA-G.R. CEB SP No. 05403 are hereby REVERSED and SET ASIDE. Accordingly, the Decision dated April 29, 2010 and the
Resolution dated June 30, 2010 of the National Labor Relations Commission in NLRC Case No. VAC-10-000977-2009 declaring
respondent Nicerato E. Carbonilla, Jr. to have been validly dismissed by petitioner Cebu People's Multi-Purpose Cooperative
are REINSTATED.

SO ORDERED.

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