G.R. No.

87653 February 11, 1992

CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A.
GASPAN and NICARDO P. BLANQUISCO,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND OTIS
ELEVATOR COMPANY, respondents.
Alejandro P. Ruiz, Jr. for petitioners.
Abad, Leano & Associates for private respondent.

CRUZ, J.:
The petitioners' services were terminated on the ground of
retrenchment, and they received separation pay double that
required by the Labor Code. Thereafter, they demanded retirement
benefits, invoking the Retirement Plan of the respondent company
which they said was contractual rather than statutory. The
question eventually submitted to the labor authorities was, having
received the separation pay, were the petitioners still entitled to
the retirement benefits? The Labor Arbiter said they were, but the
NLRC reversed him. The issue is now before us for final
resolution.
The petitioners were employees of private respondent Otis
Elevator Company when they were informed of the termination of
their employment in line with the need of the company "to
streamline its operations, consolidate certain functions, reduce its
manpower and cut non-essential spending." The separate letters
addressed to the petitioners advised them that
In lieu of notice, you shall be paid one month's
equivalent salary, plus your regular allowances,
counted from such date, and you shall be
covered with the normal benefits for that
period. You shall also be paid your earned
and/or unused sick leave and vacation leave,
including your pro-rata 13th month pay. And
for every year of service with the Company, you
shall be paid one month's basic salary or your
retirement benefits, if applicable to you,
whichever is higher. 1
Accordingly, petitioners were paid their separation pay, computed
as follows:
Basic monthly Years in Separation
salary service Pay
Conrado M. Aquino P 4,300 22 P 94,600
Napoleon B. Aromin 10,350 22 227,700
Roberto A. Gaspan 3,800 19 72,200
Nicardo P. Blanquisco 8,800 13 110,500
The separation pay was based on Section 4, Article VII of the
Collective Bargaining Agreement between the company and its
employees providing thus:
All employees in the bargaining unit separated
without cause shall be granted separation pay
of not less than one (1) month's latest basic
rate for every year of service subject to the
existing provisions of the Retirement Plan.
In justifying their subsequent demand for retirement benefits
before the Labor Arbiter, the petitioners invoked Section 1, Article
XIV, of the CBA in relation to Section 5.2, Article V, of the
company's Retirement Plan, which provides:
The COMPANY shall maintain the present
group retirement plan which is attached hereto
as Annex "A" and made an integral part of this
contract. (Sec. 1, Art. XIV).
xxx xxx xxx
5.2. A Participant who is terminated from
employment and who has rendered at least ten
(10) years of service shall be entitled to receive
in lump sum all or a portion of his accrued
benefit credits as of his date of termination, in
accordance with the following schedule:
Years of Service Vested Percentage
Upon Termination of Benefit Credits
Less than 10 years NIL
10 to less than 15 50%
15 to less than 20 75%
20 years and over 100%
They also cited the case of their co-employees Cleodeveo Soriano,
Jr. and Patriciano Destajo, Jr., whose services were terminated on
the ground of redundancy in 1983 and 1982, respectively, and
were both given separation pay and retirement benefits.
For its part, the respondent company argued that separation pay
and retirement benefits were mutually exclusive; hence, the
petitioners could no longer claim the latter after having received
the former.
The Labor Arbiter ruled in favor of the petitioners mainly on the
ground that the company was estopped from withholding
retirement benefits from them after having granted similar
benefits to the employees earlier mentioned. He held that a
different treatment of the petitioners would constitute
discrimination because "benefits accorded to other employees
must likewise be extended to the rest who are similarly
situated." 2
In reversing the appealed decision, the NLRC declared that the
case cited by the petitioners was exceptional and could not be
considered a precedent. Moreover
The CBA provision is very clear that while the
employees separated without cause are entitled
to a separation pay of not less than one (1)
month's latest basic rate for every year of
service, this is made merely subject to and not
in addition to the existing provisions of Section
5.2 of the Article V of the Retirement Plan. In
other words, no logical inference can be made
that the benefits under Section 5.2 of Article V
of the Retirement in addition to the one (1)
month's latest basic rate for every year of
service. (sic) Therefore, the offer of appellant
perfectly fits well within the contemplation of
the parties as envisaged in the aforementioned
provisions of the CBA and the Retirement
Plan. 3
It is important at the outset to note the distinction between
separation pay and retirement benefits.
Separation pay is required in the cases enumerated in Articles
283 and 284 of the Labor Code, which include retrenchment, and
is computed at at least one month salary or at the rate of one-half
month salary for every year of service, whichever is higher. We
have held that it is a statutory right designed to provide the
employee with the wherewithal during the period that he is
looking for another employment. 4
Retirement benefits, where not mandated by law, may be granted
by agreement of the employees and their employer or as a
voluntary act on the part of the employer. Retirement benefits are
intended to help the employee enjoy the remaining years of his
life, lessening the burden of worrying for his financial support,
and are a form of reward for his loyalty and service to the
employer. 5
It is on the basis of these distinctions that the petitioners claim to
be entitled not only to the separation pay they have already
received but also to the retirement benefits provided for in the
Retirement Plan of the respondent company.
In rejecting this contention, the private respondent insists that the
retirement benefits are subject to the provisions of the
Retirement Plan under Section 4 of the CBA. Moreover, under the
Omnibus Implementing Rules of the Labor Code, retired employees
whose services are terminated shall receive the corresponding
retirement benefits or separation pay, whichever is higher. 6 This
clearly indicates that one benefit should exclude the other.
The petitioners are covered by the Retirement Plan because they
have contributed to the retirement fund, have been separated by
reason of the retrenchment, and have served the company for
more than the prescribed minimum period of ten years.
In Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 7 Justice
Martin started his ponencia thus: "The issue in this petition is
whether an employee who has already received his separation pay
can still recover retirement benefits from his employer." Resolving
the question affirmatively, the Court declared in part:
But petitioner contends that private respondent
can only avail himself of either separation pay
or retirement benefits but not both, citing in
support thereof, the ruling of this Court in the
case ofCipriano vs. San Miguel Corporation, 24
SCRA 703. The foregoing ruling cannot be
made to apply to the present suit because in
said case it is so expressly provided in the
Labor Agreement that:
Regular employees who are
separated from the service
of the company for any
reason other than
misconduct or voluntary
resignation shall be entitled
to either 100% of the
benefits provided in Section
2, Article VIII hereof
regardless of their length of
service in the company or to
the severance pay provided
by law, whichever is the
greater amount.
Thus, in said case the employee was entitled to
either the amount prescribed in the plan or the
severance pay provided by law whichever is the
greater amount. In the present case, there is
nothing in the labor agreement entered into by
the petitioner with Batangas Transportation
Employees Association of which private
respondent is a member barring the latter from
recovering whatever benefits he is entitled to
under the law in addition to the gratuity benefits
under the labor agreementbetween him and his
employer. Neither is there any provision in the
Termination Pay Law (Republic Act No. 1052, as
amended by Republic Act No. 1787) that an
employee who receives big termination pay upon
separation from the service without cause is
precluded from recovering any other benefits
agreed upon by him and his employer. In the
absence of any such prohibition, both in the
aforesaid Labor Agreement and the
Termination Pay Law the private
respondent has the right to recover from the
petitioner whatever benefits he is entitled to
under the Termination Pay Law in addition to
the other benefits conferred upon him by the
aforesaid labor agreement. *
The same issue was squarely raised in University of the East
v. Minister of Labor, 8 where the award of both separation pay and
retirement benefits to the employees was assailed by the employer
on the ground that "there could only be one mode of termination
of employment with respect to one and the same employee."
Through Justice Gutierrez, the Court reaffirmed the above-quoted
ruling in the BLTB case and held as follows:
Therefore, if there is no provision contained in
the collective bargaining agreement to the
effect that benefits received under the
Termination Pay Law shall preclude the
employee from receiving other benefits from
the agreement, then said employee is entitled to
the benefits embodied in the agreement in
addition to whatever benefits are mandated by
statute. In the case at bar, there is no such
provision. We cannot presume that it forms an
implicit part of either the CBA or the
law.Separation pay arising from a forced
termination of employment and benefits given as
a contractual right due to many years of faithful
service are not necessarily antagonistic to each
other, especially where there are strong
equitable considerations as in this case. **
We have carefully examined the record, and particularly the
Collective Bargaining Agreement and the Retirement Plan, and
have found no specific prohibition against the payment
of both benefits to the employee.
Maintaining that the above cases have no application to the case
at bar, the company calls attention to Book VI, Section 14, Rule 1,
of the Omnibus Rules Implementing the Labor Code, which
provides as follows:
(a) An employee who is retired pursuant to a
bonafide retirement plan or in accordance with
the applicable individual or collective
agreement or established employer policy shall
be entitled to all the retirement benefits
provided therein or to termination pay
equivalent to at least one-half month salary for
every year of service, whichever is higher, a
fraction of at least six (6) months being
considered as one whole year.
However, it overlooks sub-section (c) of the same Section 14,
which clearly provides that:
(c) This Section shall apply where the
employee retires at the age of sixty (60) years
or more.
The private respondent has not shown that the petitioners were
sixty years or older at the time of their separation and therefore
covered by the said section. Having itself invoked that provision,
the company had the obligation to prove that the petitioners came
under its terms.
The private respondent's argument that the petitioners did not
retire but were terminated in employment is, in our view, plain
nitpicking. It cannot be seriously contended that if an employee
dies before he can retire (at a time when he is already eligible for
retirement), his beneficiaries are entitled to the retirement pay he
would have himself earned. The effective cause of separation is
death, for which his heirs are entitled to death benefits, but they
are also paid retirement benefits as a consequence of such death.
This is not to say that one whose services are terminated not only
because he has retired but for another cause resulting in
retirement is always entitled to both separation pay and
retirement benefits. It should be obvious that if, say, an employee
is dismissed for dishonesty, he is not entitled to separation pay or,
for that matter, even retirement benefits. But in the case before us,
the petitioners have not been separated for cause, in the sense
that they have committed an offense warranting their removal.
They were separated for reasons not imputable to them, as the
letter above quoted categorically declared:
Finally, we want to assure you that your
retrenchment is through no fault of your own
but mainly due to prevention of further losses.
In behalf of the Company, we express our
sincere appreciation for your services and
loyalty and wish you every success in your
future undertakings. 9
In arriving at our conclusion, we are guided by the principle that
any doubt concerning the rights of labor should be resolved in its
favor, pursuant to the social justice policy. The Court feels that if
the private respondent really intended to make the separation pay
and the retirement benefits mutually exclusive, it should have
sought inclusion of the corresponding provision in the Retirement
Plan and the Collective Bargaining Agreement so as to remove all
possible ambiguity regarding this matter.
We may presume that the counsel of the respondent company
was aware of the prevailing doctrine embodied in the cases earlier
cited. Knowing this, he should have made it a point to categorically
provide in the Retirement Plan and the CBA that an employee who
had received separation pay would no longer be entitled to
retirement benefits. Or to put it more plainly, collection of
retirement benefits was prohibited if the employee had already
received separation pay.
The private respondent argues that it had paid the petitioners
more than what the law requires by giving them separation pay at
the rate of one month instead of one-half month for every year of
service. The suggestion is that the company had been more than
liberal and that to require it to pay the retirement benefits as well
would be a strain on its benevolence.
The petitioners are not pleading for generosity
but demanding their rights. These rights are embodied in the
Collective Bargaining Agreement, which was the result of
negotiations between the company and the employees.
Bargaining is a process where the parties discuss their demands
and counter-demands and, after haggling, agree on what is
essentially a compromise reflecting the concessions mutually
given by the parties to arrive at a common understanding. The
resultant contract provides for demandable rights, not
withdrawable doles. When the employer signs a collective
bargaining agreement, it recognizes the rights of the workers and
does not merely concedecertain privileges to them out of the
goodness of its heart.
The private respondent asserts in its statement of facts that it gave
the petitioners a choice between accepting the separation pay and
the retirement benefits and they opted for the former. This is not
borne by the record. In its letter advising the petitioners of the
termination of their services, the company merely informed them
that they would be given separation pay or retirement benefits,
whichever was higher. The petitioners received the separation
pay because they felt they were entitled thereto but they did not
thereby waive their rights to the retirement benefits.
We realize that the retirement benefits of the petitioners come up
to a substantial figure, considering their respective lengths of
service with the company. These benefits, added to the separation
pay they have already received, make up a tidy sum indeed. The
point, however, is that the petitioners are entitled to this amount
under the provisions of the CBA and the Retirement Plan freely
entered into by the parties. These instruments are binding
agreements, not being contrary to law, morals, good customs,
public order or public policy, and must therefore be upheld.
WHEREFORE, the petition is GRANTED. The decision of the
respondent National Labor Relations Board is REVERSED and a
new judgment is hereby rendered directing the payment of
retirement benefits to the petitioners in accordance with the
Retirement Plan of the respondent company and its Collective
Bargaining Agreement with its employees.
SO ORDERED.

G.R. No. 102157 July 23, 1993
GVM SECURITY AND PROTECTIVE AGENCY AND PHILIPPINE
SCOUT VETERANS SECURITY & INVESTIGATION
AGENCY, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO
DULCE, respondents.
D.P. Mercado & Associates for petitioners.
Ciriaco S. Cruz & Associates for private respondent.

QUIASON, J.:
The issue in this petition for certiorari is whether a 64-year old
employee, who voluntarily resigned, is entitled retirement benefits
under the Labor Code, in the absence of the company retirement
plan or collective bargaining agreement or an established
company policy on such benefits.
Private respondent was employed as a security guard by
petitioners in July 1958. On February 6, 1987, after 28 years in
the service of petitioners, he tendered his resignation, stating
therein that "he is going back to the province to put up a little
business and to get his cash deposit" (Rollo, p. 52). He was then 64
years old, and earning a monthly salary of P2,350.00. After
petitioners paid him the amount of P6,650.00 as his "cash
deposit," he executed a quitclaim in their favor.
On May 5, 1988, private respondent filed a complaint against
petitioners for monetary claim, including retirement pay.
Petitioners denied any liability for the claims, taking the position
that they did not have a company policy or collective bargaining
agreement on employees' retirement benefits.
The Labor Arbiter dismissed private respondent's complaint on
"lack of sufficient supporting evidence to establish [his] claims."
He, however, stated that "considering private respondent's twenty-
eight years service . . . he may be granted any ex-gratia benefits, or
any benefits pursuant to the company policy" (Rollo, p. 42).
On appeal, the NLRC, in its Resolution dated December 28, 1990,
held petitioners liable for the amount of P3,915.00 as differential
to private respondent's separation pay and P391.50 as attorneys
fees. The NLRC arrived at the amount by applying the formula
found in paragraph (a), Section 14, Rule I, Book VI of the Omnibus
Rules, specifically the provision granting a separation pay
equivalent to one-half month salary for every year of service and
considering a fraction of at least six months as one whole year.
Both parties moved for reconsideration of the resolution. Private
respondent questioned the mathematical computation of the
differential, claiming that he was entitled to P27,325.00 as
differential and P2,732.00 as attorney's fees. Petitioners assailed
the legal basis for the grant of retirement pay.
Acting on the motions for reconsideration, the NLRC, in its
Resolution dated August 23, 1991, ordered petitioners to pay
private respondent the amount of P27,325.00 as "differential of
his retirement benefits and P2,742.50 as attorney's fees" (Rollo, p.
22).
Hence, the instant petition for certiorari.
On November 4, 1991, this Court issued a temporary restraining
order enjoining, the NLRC from implementing the assailed
resolutions.
The issue involved in the instant case was settled in Llora Motor,
Inc. v. Drilon, 179 SCRA 175, [1989] wherein we held that under
Article 287 of the Labor Code, entitlement of employees to
retirement benefits must be specifically granted under existing
laws, a collective bargaining agreement or employment contract or
an established employer policy. Llora Motor, Inc. was reiterated
in Abaquin Security and Detective Agency, Inc. v. Atienza, 190 SCRA
460 [1990].
Article 287 of the Labor Code reads as follows:
Art. 287. Retirement. Any employee may be
retired upon reaching the retirement age
established in the collective bargaining
agreement or other applicable employment
contract.
In case of retirement, the employee shall be
entitled to receive such retirement benefits as
he may have earned under existing laws and
any collective bargaining agreement and other
agreements.
The first paragraph of Article 287 deals with the retirement age of
an employee, which is the age established in (a) a collective
bargaining agreement or (b) other applicable retirement contract.
The second paragraph of said Article deals with the retirement
benefits to be received by a retiring employee and which are the
retirement benefits as the employee may have earned under (a) an
existing law, (b) a collective bargaining or (c) other agreements.
As stressed in Llora Motors, Inc., Article 287 does not in itself
purport to impose any obligation upon employers to set up a
retirement scheme for their employees over and above that
already established under existing laws, like the Social Security
Act.
There are three kinds of retirement schemes. The first type is
compulsory and contributory in character. The second type is one
set up by agreement between the employer and the employees in
collective bargaining agreements or other agreements between
them (Llora Motors, Inc. v. Drilon, supra). The third type is one
that is voluntarily given by the employer, expressly as in an
announced company policy or impliedly as in a failure to contest
the employee's claim for retirement benefits (Allied Investigation
Bureau, Inc. v. Ople, 91 SCRA 265 [1979]).
Respondent is not asking for retirement benefits due him under
the Social Security Law. He does not claim that there is a collective
bargaining agreement or other applicable contract or an
established company policy, granting him retirement benefits.
The asymmetry in the law in granting separation pay to employees
who have served the company for at least one year but denying
retirement benefits to those who have reached retirement age in
the absence of agreements granting the same, is for the legislature
to remedy.
WHEREFORE, the instant petition is GRANTED. The assailed
Resolutions of the NLRC dated August 23, 1991 and December 28,
1990 are SET ASIDE, and the Temporary Restraining Order issued
by the Court on November 4, 1991 is made PERMANENT.

G.R. No.173587 July 15, 2013
ZUELLIG PHARMA CORPORATION, Petitioner,
vs.
ALICE M. SIBAL, MA. TERESA J. BARISO, PRESCILLANO L.
GONZALES, LAURA B. BERNARDO, MAMERTA R. ZITA,
JOSEPHINE JUDY C. GARCIA, MA. ASUNCION B. HERCE,
EDITHA D. CARPITANOS, MA. LUZ B. BUENO, DANTE C.
VERASTIGUE,** AGNES R. ALCOBER, ARWIN Y. CRUZ, ADONIS
F. OCAMPO, SOPHIA P. ANGELES, JOEL B. BUST AMANTE,
EDITHA B. COLE, LUDIVINA C. PACIA, ROSELLE M. DIZON,
RODOLFO A. ABCEDE, WILFREDO RICAFRENTE, RODOLFO R.
ROBERTO, ROSALIE R. LUNAR, BENJAMINR. CALAYCAY,
GUILLERO YAP CADORNA, THROV ADORE TOBOSO,
CAROLINAS. UY, MARIA LORETTO M. REGIS, ALMAR C.
CALUAG,** VILMA R. SAPIWOSO ANATALIA L. CALPITO, FELIPE
S. CALINAWAN, VIVIELIZA DELMAR MANULAT, MA. LIZA L.
RAFINAN,** AMMIE V. GATILAO, ALEX B. SADAYA and REGINO
EDDIE PANGA,Respondents.
D E C I S I O N
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the December 4,
2003 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
50448 which nullified the January 21, 1998 Decision3 of the
National Labor Relations Commission (NLRC) in NLRC NCR CA
NO. 011914-96. The NLRC affirmed the August 6, 1996
Decision4 of the Labor Arbiter which, in turn, denied respondents'
claim for retirement gratuity and monetary equivalent of their
unused sick leave on top of the redundancy pay they already
received.
Also assailed in this Petition is the CA's July 13,2006
Resolution5 denying petitioner's motion to reconsider aforesaid
CA Decision.
Factual Antecedents
Petitioner Zuellig Pharma Corporation (Zuellig) is a domestic
corporation engaged in the manufacture and distribution of
pharmaceutical products. It also distributes pharmaceutical
products manufactured by other companies like Syntex
Pharmaceuticals (Syntex). Respondents (36 in all), on the other
hand, were the employees of Zuellig at its Syntex Division.
In 1995, Roche Philippines, Inc. (Roche) purchased Syntex and
took over from Zuellig the distribution of Syntex products.
Consequently, Zuellig closed its Syntex Division and terminated
the services of respondents due to redundancy. They were
properly notified of their termination6 and were paid their
respective separation pay in accordance with Section 3(b), Article
XIV of the March 21, 1995 Collective Bargaining Agreement
(CBA)7 for which, respondents individually signed Release and
Quitclaim8 in full settlement of all claims arising from their
employment with Zuellig.
Proceedings before the Labor Arbiter and the NLRC
Controversy arose when respondents filed before the Arbitration
Branch of the NLRC separate Complaints9 (which were later
consolidated) for payment of retirement gratuity and monetary
equivalent of their unused sick leave on top of the separation pay
already given them. Respondents claimed that they are still
entitled to retirement benefits and that their receipt of separation
pay and execution of Release and Quitclaim do not preclude
pursuing such claim.
On August 6, 1996, Labor Arbiter Eduardo J. Carpio (Labor Arbiter
Carpio) rendered a Decision denying respondents claims. He
opined that only employees whose separation from employment
was brought about by sickness, death, compulsory or optional
retirement, or resignation are entitled to gratuity pay. However,
employees whose separation from employment was by reason of
redundancy are not entitled to the monetary equivalent of their
unused sick leave if cessation from employment was caused by
redundancy.
Upon respondents appeal, the NLRC rendered a Decision dated
January 21, 1998 affirming the Decision of the Labor Arbiter.
Proceedings before the Court of Appeals
Twice rebuffed but still undeterred, the respondents filed a
Petition for Certiorari10 with the CA.
In a Decision dated December 4, 2003, the CA granted
respondents Petition and nullified the Decisions of both the Labor
Arbiter and the NLRC. Relying on the case of Aquino v. National
Labor Relations Commission,11 the CA ruled that since there is
nothing in the CBA which expressly prohibits the grant of both
benefits, those who received separation pay are, therefore, still
entitled to retirement gratuity. The CA also took note of Section 5,
Article V of Zuelligs January 1, 1968 Retirement Gratuity
Plan,12 which provides that an employee who may be separated
from the service for any cause not attributable to his or her own
fault or misconduct shall be entitled to full retirement benefits.
Since the cause of respondents separation from work was
redundancy, the CA ordered Zuellig to pay respondents retirement
gratuity and the monetary equivalent of their unused sick leave on
top of the redundancy pay previously granted to them. The
dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED,
and the assailed Decision of the Labor Arbiter dated August 6,
1996 and the affirming Decision of the NLRC dated January 21,
1998 are SET ASIDE and VACATED. In its stead, judgment is
rendered ORDERING respondent Zuellig Pharma Corporation to
pay the retirement gratuity and unused sick leave pay prayed for,
and to this end the respondent NLRC is directed to compute and
specify the respective amounts due them.
SO ORDERED.13
Grounds
Zuellig moved for a reconsideration,14 but to no avail.15 Hence,
this Petition anchored on the following grounds:
I
THE COURT OF APPEALS COMMITTED GRAVE
ERROR WHEN IT HELD THAT UNDER THE TERMS
AND CONDITIONS OF THE CBA AND THE
RETIREMENT AND GRATUITY PLAN X X X
RESPONDENTS COULD AVAIL OF BOTH
REDUNDANCY PAY AND RETIRMENT BENEFITS.
II
THE COURT OF APPEALS COMMITTED GRAVE
ERROR IN FINDING THAT RESPONDENTS ARE
ENTITLED TO THE MONETARY EQUIVALENT OF
UNUSED SICK LEAVE.
III
THE COURT OF APPEALS COMMITTED GRAVE
ERROR IN FAILING TO HOLD THAT QUITCLAIMS
BAR RESPONDENTS FROM CLAIMING FROM
PETITIONER ANY MORE THAN THEY HAVE
LAWFULLY RECEIVED.16
The Parties Arguments
Zuellig concedes that, in the absence of contractual prohibition,
payment of both separation pay and retirement pay may be
allowed as ruled by this Court in Aquino. Nonetheless, it asserts
that Aquino is not applicable in this case. It explains that in
Aquino, the parties CBA incorporates by reference a retirement
plan agreed upon by the parties prior to the execution of the CBA.
On the other hand, Zuellig insists that in this case, Section 2,
Article XIV of the parties CBA prohibits the recovery of both
retirement gratuity and severance pay. In addition, Section 2,
Article VII of the Retirement and Gratuity Plan likewise expressly
limits the benefits the employees may receive to their choice
between (i) the benefits enumerated therein and (ii) separation
pay or other benefits that Zuellig may be required by law or
competent authority to pay them. In any event, Zuellig further
argues that respondents are not qualified to receive early
retirement benefits as none of them resigned from the service,
have reached the retirement age of 60 or have been in the employ
of Zuellig for at least 25 years as required by Section 1(b), Article
XIV of the CBA.
Zuellig furthermore contends that the CAs award of monetary
equivalent of respondents unused sick leave lacks basis. It asserts
that under Section 2(c) and (d), Article VIII of the CBA, only
employees who are due for compulsory retirement and those
availing of early retirement are entitled to the cash equivalent of
their unused sick leave. Those separated from employment by
reason of redundancy like the respondents are not.
Finally, Zuellig insists that the CA committed grave error in
invalidating the Release and Quitclaim voluntarily executed by the
respondents. Said quitclaims represent a fair reasonable
settlement of all the claims respondents had against Zuellig. In fact,
the amount of redundancy pay given to respondents is
substantially higher than the retirement package received by
those who resigned.
Respondents counter that there is nothing in the CBA which
categorically prohibits the recovery of retirement benefits in
addition to separation pay. They assert that Section 2, Article XIV
of the CBA alluded to by Zuellig does not constitute as an express
prohibition that would foreclose recovery of retirement gratuity
after the employees had received redundancy pay. Hence,
following the ruling of this Court in Aquino, they are entitled to
said retirement gratuity.
With regard to Zuelligs contention that retirement benefits can
be extended only to those who resigned, respondents echo the
observation of the CA that since their separation from
employment was due to a cause beyond their control, they cannot
be considered to have exclusively chosen separation pay and
abandoned their right to retirement gratuity. To bolster their
point, respondents cite Section 5, Article V of the Retirement
Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may be
separated from the service of the Company for any cause not
attributable to his own fault or misconduct shall be entitled to full
benefits as provided for under Article V, Sections 1 and 2 above,
provided, however, that any employee, executive or supervisory
personnel separated for cause shall not be entitled to any benefit
as provided for under said Article V, Sections 1, 2 and 3.17
Respondents likewise insist that since there is no specific
provision in the CBA prohibiting them from claiming the
monetary value of their unused sick leave, the same should be
given to them.
Zuellig ripostes that nothing prevented respondents from
resigning to make them eligible to receive retirement gratuity.
They had ample time to decide whether to resign or to accept
redundancy pay. But they chose redundancy pay over early
retirement benefits because they knew they would be getting
more. As to respondents reliance on Section 5, Article V, in relation
to Sections 1 and 2, of the Retirement Gratuity Plan, Zuellig posits
that the same cannot prevail over Section 2, Article XIV of the
CBA.
On August 23, 2006, this Court issued a Temporary Restraining
Order enjoining the CA from implementing its now assailed
Decision until further orders from this Court.18
Our Ruling
The Petition is impressed with merit.
The CBA does not allow recovery of both separation pay and
retirement gratuity.
In Aquino,19 the petitioner employees were retrenched after their
employer Otis Elevator Company (Otis) adopted cost-cutting
measures and streamlined its operations. They were thus given
separation pay double the amount required by the Labor Code.
Subsequently, however, the employees filed a claim for retirement
benefits, alleging entitlement thereto by virtue of the Retirement
Plan. Otis denied the claim by asserting that separation pay and
retirement benefits are mutually exclusive of each other; hence,
acceptance of one bars recovery of the other. When the case
reached its final review, this Court held that in the absence of
specific prohibition in the retirement plan or the CBA, retirement
benefits and separation pay are not mutually exclusive of each
other and the employees whose services were terminated
without cause are entitled to both separation pay and retirement
gratuity.
In the present case, the CBA contains specific provisions which
effectively bar the availment of retirement benefits once the
employees have chosen separation pay or vice versa. The
provisions of the CBA on Retirement Gratuity read:
ARTICLE XIV
RETIREMENT GRATUITY
Section 1[a] Any employee who is separated from
employment due to sickness or death shall receive
from the COMPANY a retirement gratuity in an
amount equivalent to one [1] months basic salary
per year of service. For the purpose of this
agreement, years of service shall be deemed
equivalent to the total service credits in the
COMPANY; a fraction of at least six [6] months shall
be considered as one [1] year, including
probationary employment; basic salary is
understood to mean the monthly compensation
being received by the employee under the payroll
for services rendered during the normal regular
working hours of the company, excluding but not
limited to any other emoluments for extra work,
premiums, incentives, benefits and allowances of
whatever kind and nature.
[b] No person may retire under this paragraph for
old age before reaching the age of sixty [60] years
provided that the COMPANY may compel the
retirement of an employee who reaches or is past
60 years of age. An employee who resigns prior to
attaining such retirement age shall be entitled to
any of the following percentage of the gratuity
provided above:
Early Retirement or Separation
a] 5 to 7 years of service 60%
b] 8 to 10 years of service 70%
c] 11 to 15 years of service 90%
d] 16 years of service and above 100%
An employee who opts to retire before reaching the
age of 60 is entitled to one (1) months basic pay
per year of service or Four Hundred Thirty
Thousand Pesos (P430,000.00), whichever is
higher, provided however that his service record in
the COMPANY is not less than twenty-nine (29)
years. Those whose service record is from twenty-
five (25) to twenty-eight (28) years will be paid an
amount equivalent to one (1) months basic pay
per year of service or Three Hundred Sixty
Thousand Pesos (P360,000.00), whichever is
higher.
An employee may be entitled to retirement gratuity
on account of illness under this article only upon a
certification by the COMPANYs physician, that the
illness of the retiring individual will disable said
individual from employment for a protracted length
of time.
A transfer of an employee from the employment of
the COMPANY to that of any other sister company
shall be deemed a retirement for the purpose of
this section.
In case an employee retires at the age of 60, he
shall receive a retirement pay equivalent to his last
monthly basic pay multiplied by his total service
credits or Two Hundred Ten Thousand Pesos
(P210,000.00) whichever is higher, provided
however, that his service record in the COMPANY
is from sixteen (16) to nineteen (19) years. Those
whose service record is less than sixteen (16)
years will be paid an amount equivalent to one (1)
months basic pay per year of service.
An employee who retires at the age of 60 or who is
separated from employment on account of illness
or death will be entitled to one (1) months basic
pay per year of service or Two Hundred Fifty
Thousand Pesos (P250,000.00) whichever is
higher, provided however, that his service record in
the COMPANY is not less than 20 years.
Section 2 Any payment under this provision shall
be chargeable against separation pay (other than
the Social Security System benefits) which may be
demandable under an applicable law.
Section 3[a] The COMPANY shall grant to all
employees whose employment is terminated due to
retrenchment or closure of business a termination
pay in accordance with the following schedule:
1. For employees who have rendered one
[1] year to five [5] years of continuous
and satisfactory service 100% of
monthly basic pay for every year of
service;
2. For employees who have rendered six
[6] years to nine [9] years of continuous
and satisfactory service 130% of
monthly basic pay for every year of
service;
3. For employees who have rendered ten
[10] [years] to fifteen [15] years of
continuous and satisfactory service
155% of monthly basic pay for every year
of service;
4. For employees who have rendered [at
least] sixteen [16] years x x x of
continuous and satisfactory service
160% of monthly basic pay for every year
of service.
[b] The COMPANY shall grant to all employees
whose employment is terminated due to merger,
redundancy or installation of labor-saving device a
termination pay in accordance with the following
schedule:
1. For employees who have rendered one
[1] year to five [5] years of continuous
and satisfactory service 120% of
monthly basic pay for every year of
service;
2. For employees who have rendered six
[6] years to nine [9] years of continuous
and satisfactory service 150% of
monthly basic pay for every year of
service;
3. For employees who have rendered ten
[10] [years] to fifteen [15] years of
continuous and satisfactory service
175% of monthly basic pay for every year
of service;
4. For employees who have rendered [at
least] sixteen [16] [years] x x x of
continuous and satisfactory service
185% of monthly basic pay for every year
of service.20 (Emphasis and Italics
supplied)
Section 2 of Article XIV explicitly states that any
payment of retirement gratuity shall be chargeable
against separation pay. Clearly, respondents cannot
have both retirement gratuity and separation pay,
as selecting one will preclude recovery of the other.
To illustrate the mechanics of how Section 2 of
Article XIV bars double recovery, if the employees
choose to retire, whatever amount they will
receive as retirement gratuity will be charged
against the separation pay they would have
received had their separation from employment
been for a cause which would entitle them to
severance pay. These causes are enumerated in
Section 3, Article XIV of the CBA (i.e., retrenchment,
closure of business, merger, redundancy, or
installation of labor-saving device). However, if the
cause of the termination of their employment was
any of the causes enumerated in said Section 3,
they could no longer claim retirement gratuity as
the fund from which the same would be taken had
already been used in paying their separation pay.
Put differently, employees who were separated
from the company cannot have both retirement
gratuity and separation pay as there is only one
fund from which said benefits would be taken.
Inarguably, Section 2 of Article XIV effectively
disallows recovery of both separation pay and
retirement gratuity. Consequently, respondents are
entitled only to one. Since they have already chosen
and accepted redundancy pay and have executed
the corresponding Release and Quitclaim, they are
now barred from claiming retirement gratuity.
In Suarez, Jr. v. National Steel Corporation,21 the same issue
cropped up whether the retrenched employees are entitled to
retirement gratuity even after they have received their separation
pay in accordance with the retrenchment program of the
company. In ruling in the negative, this Court observed that
Sections 1 and 3 of Article XIV on Retirement Benefits of the CBA
separately provide for retirement benefits and severance pay for
retrenched employees.
Section 1 thereof states, among others, that those retiring with at
least 10 years of service credits are entitled to a retirement pay
equivalent to one and one-half months of basic pay for every year
of service, while Section 3 extends two months base pay for every
year of service for laid-off employees pursuant to retrenchment
program. This Court elaborated thus:
A perusal of Article XIV of the parties 1994-1996 CBA readily
shows that retirement benefits shall be granted only to those
employees who, after rendering at least ten (10) years of
continuous services, would retire upon reaching the mandatory
retirement age, or would avail of optional voluntary retirement.
Nowhere can it be deduced from the CBA that those employees
whose employment was terminated through one of the
authorized causes are entitled to retirement benefits. In fact,
Section 3 of the afore-quoted Article XIV specifically provides that
retrenched employees shall be given two (2) months pay for every
year of service. Section 3 shows the intention of the parties to
exclude retrenched employees, like herein petitioners, from
receiving retirement benefits under the existing retirement plan as
set forth in Section 1.22 (Italics supplied)
Similarly, in this case, there is also nothing in the CBA which
would indicate that those employees whose services were
terminated by reason of redundancy are entitled to retirement
gratuity. As in Suarez, Sections 1 and 3 of Article XIV of the CBA of
the parties herein separately provide for the amount of benefits to
be received by retired employees on the one hand and those who
were terminated due to retrenchment, closure of business,
merger, redundancy, or installation of labor-saving device on the
other. In short, Sections 1 and 3 clearly spell out the difference in
the treatment of employees who retired as provided in Section 1
and those who were constrained to leave the company due to any
of the causes enumerated in Section 3. Such difference in the
treatment, as well as in the corresponding pay or gratuity,
indicates the parties intention to exclude retired employees from
receiving separation pay and vice versa. A contrary construction
would distort the clear intent of the parties and render useless the
classification specifically spelled out in the CBA.
The same ruling was arrived at in Salomon v. Associate of
International Shipping Lines, Incorporated.23 Section 1 of the
parties CBA in that case provides for separation pay in case an
employee is separated from the service for cause, i.e., redundancy.
Section 3, on the other hand, prescribes the amount of retirement
benefits for employees who have rendered at least 15 years of
continuous service in the association. This Court held that, as
prescribed by the CBA, the employees are entitled only to either
separation pay, if they are terminated for cause, or optional
retirement benefits, if they rendered at least 15 years of
continuous service. Since they were separated from the service
for cause, the employees are entitled to separation pay only.
The CA opined that since respondents were not at fault and had
nothing to do with their separation from the company by reason
of redundancy, they are therefore entitled to full retirement
benefits. It anchored its conclusion on Section 5 of Article V of the
Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may be
separated from the service of the Company for any cause not
attributable to his own fault or misconduct shall be entitled to full
benefits as provided for under Article V, Sections 1 and 2 above,
provided, however, that any employee, executive or supervisory
personnel separated for cause shall not be entitled to any benefit
as provided for under said Article V, Sections 1, 2 and 3.24
However, the same Retirement Gratuity Plan provides that in case
Zuellig is required by law or by lawful order to pay separation pay,
its employees shall not be entitled to both separation pay and the
benefits provided therein. The employees are entitled only either
to separation pay or retirement gratuity, depending on their own
choice. But they cannot have both. Section 2, Article VII of the
Retirement Gratuity Plan on Effect of Social Legislation is clear on
the matter. Thus:
Section 2 Other Laws and/or Government Awards, Rules and
Regulations
Except only as provided in the next preceding Section hereof, in
the event that the Company is required under the laws or by
lawful order of competent authority to give to its employees any
separation pay, or other benefits or emoluments similar or
analogous to those herein already provided, the employees
concerned shall not be entitled to both what the law or the lawful
order of competent authority requires the company to give and
the benefits herein provided, but shall be entitled only to the
benefit of his choice.25 (Italics supplied)
Having chosen and accepted redundancy pay, respondents are
thus precluded from seeking payment of retirement pay.
Moreover, as correctly pointed out by Zuellig, Section 5, Article V
of the 1968 Retirement Gratuity Plan was already superseded by
Section 2, Article XIV of the 1995 CBA, a much later contract which
reiterates the express prohibition against "double recovery." In
addition, unlike in Aquino where the employees have served the
company for at least ten years making them eligible for
retirement,26 none of the respondents herein appear to be
qualified for optional retirement. Under Section 1[a] and [b],
Article XIV of the CBA earlier quoted, to be entitled to retirement
gratuity, the employee must have reached 60 years of age,
resigned, suffered illness, or opted to retire even before reaching
the age of 60 but has been in the employ of Zuellig for at least 25
years. None of the respondents who initiated the complaints
appear to have met the above requirements. They never even
bothered to controvert Zuelligs contention that they are not
qualified for retirement.
Respondents are not entitled to the monetary equivalent of their
unused sick leave credits.
The pertinent provisions of Article VIII of the CBA on unused sick
leave provide:
Section 2[a] Sick leave Every regular employee who has
rendered:
1. One [1] year to fifteen [15] years of
continuous and satisfactory service shall be
entitled to fifteen [15] working days sick leave
with pay for every year;
2. Sixteen [16] years and above of continuous
and satisfactory service shall be entitled to
twenty [20] working days sick leave with pay
for every year; provided that the illness is
certified by the COMPANY physician or in
exceptional cases, by any other duly licensed
physician.
[b] Unspent sick leave shall accrue to a period not
exceeding one hundred twenty [120] working days.
[c] An employee who is sixty [60] years old and due for
compulsory retirement shall be entitled to encashment
of unused sick leave based on his/her service record in
the company in accordance with the following schedule:
1. 16 years and above of continuous service
100% encashment up to a maximum of four [4]
months basic salary
2. 11 years to 15 years of continuous service
50% encashment up to a maximum of two [2]
months basic salary
3. 10 years and below of continuous service
50 % encashment up to a maximum of one [1]
month basic salary
[d] An employee who retires before reaching the age of
sixty [60] shall be entitled to encashment of unused sick
leave based on his/her service record in the COMPANY
in accordance with the following schedule:
1. 25 years and above of continuous service
100% encashment up to a maximum of one
and one-half [1] months basic salary
2. 11 years to 24 years of continuous service
50% encashment up to a maximum of one [1]
month basic salary provided the retirement is
due to illness or disability as certified by the
company physician.27
According to the CA, since "the above enumerations fall short of
providing in the instances of the other causes of separation from
service such as redundancy as in the case of the petitioners, death,
merger, installation of labor cost-saving device, retrenchment or
closure of business, all of which are causes not attributable and
beyond the control of the employees,"28 the respondents should
be given the monetary equivalent of their unused sick leave.
This Court cannot agree.
The CAs ruling in effect put something into the CBA that is not
written in it, contrary to the old and familiar Latin maxim of
expressio unius est exclusio alterius. The express mention of one
person, thing, act, or consequence excludes all others. Put
differently, where the terms are expressly limited to certain
matters, it may not, by interpretation or construction, be extended
to other matters. In this case, Article VIII of the CBA covers only
(1) an employee who is 60 years old and due for compulsory
retirement; (2) an employee who retires prior to attaining the
compulsory retirement age but has served at least 25 years; and,
(3) an employee who retires before attaining compulsory
retirement age due to illness or disability. Necessarily, the
enumeration cannot be extended to include those who will be
leaving the company due to redundancy, death, merger, installation
of labor cost-saving device, retrenchment, or closure of business as
mistakenly ruled by the CA.
As the law between the parties, the CBA must be strictly complied
with.
It is a familiar and fundamental doctrine in labor law that the CBA
is the law between the parties and they are obliged to comply with
its provisions. In Honda Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda29 this Court elucidated as follows:
A collective bargaining agreement [or CBA] refers to the
negotiated contract between a legitimate labor organization and
the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the
law.30
Here, and as discussed above, the parties CBA provides in no
uncertain terms that whatever amount of money the employees
will receive as retirement gratuity shall be chargeable against
separation pay. It is the unequivocal manifestation of their
agreement that acceptance of retirement gratuity forecloses
receipt of separation pay and vice versa. The CBA likewise
exclusively enumerates departing employees who are entitled to
the monetary equivalent of their unused sick leave. These
agreements must prevail and be given full effect.
The Release and Quitclaim executed by each of the respondents
remains valid.
It is true that quitclaims executed by employees are often frowned
upon as contrary to public policy. But that is not to say that all
waivers and quitclaims are invalid as against public
policy.31 Quitclaims will be upheld as valid if the following
requisites are present: "(1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of
any of the parties; (3) the consideration of the quitclaim is credible
and reasonable; and, (4) the contract is not contrary to law, public
order, public policy, morals or good customs or prejudicial to a
third person with a right recognized by law."32
In this case, there is no showing that Zuellig coerced or forced
respondents to sign the Release and Quitclaim. In fact, there is no
allegation that Zuellig employed fraud or deceit in making
respondents sign the Release and Quitclaim. On the other hand,
respondents declared that they had received the separation pay in
full settlement of all claims arising from their employment with
Zuellig. For which reason, they have remised, released and
discharged Zuellig.
Notably, the Release and Quitclaim represents a reasonable and
fair settlement of respondents claims. Under Article 283 of the
Labor Code, the employers are required to pay employees
separated from employment by reason of redundancy at least one
(1) month pay or at least one (1) month pay for every year of
service, whichever is higher.33 Here, respondents received 100%
of their one (1) month basic pay for every year of service, plus a
premium ranging from 20% to 85% of such basic pay for every
year of service (depending on the number of years in service), as
separation pay. In Goodrich Manufacturing Corporation, v.
Ativo,34 this Court declared that
It is only where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step in
to annul the questionable transaction. But where it is shown that
the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.
WHEREFORE, the instant Petition is hereby GRANTED. The
December 4, 2003 Decision and the July 13, 2006 Resolution of
the Court of Appeals in CA-G.R. SP No. 50448 are ANNULLED and
SET ASIDE and the January 21, 1998 Decision of the National
Labor Relations Commission in NLRC NCR CA NO. 011914-96 is
REINSTATED and AFFIRMED.
The Temporary Restraining Order issued by this Court on August
23,2006 is made PERMANENT.
SO ORDERED.

G.R. No. 199547 September 24, 2012
THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER
M. ENANO-BOTE, Petitioners,
vs.
FRANCISCO N. DAKILA, Respondent.
R E S O L U T I O N
PERLAS-BERNABE, J.:
The Petition for Review on Certiorari1 assails the August 31,
20112 and November 23, 20113 Resolutions of the Court of
Appeals (CA) in CA-G.R. SP No. 113015 which affirmed the
September 10, 2009 Decision4 and December 15, 2009
Resolution5 of the National Labor Relations Commission (NLRC)
finding respondent Francisco N.Dakila (respondent Dakila) to have
been illegally dismissed.
The Factual Antecedents
Respondent Dakila was employed by petitionercorporation as
early as 1987 and terminated for cause in April 1997 when the
corporation was sold. In May 1997, he was rehired as consultant
by the petitioners under a Contract for Consultancy
Services6 dated April 30, 1997.
Thereafter, in a letter7 dated April 19, 2007, respondent Dakila
informed petitioners of his compulsory retirement effective May
2, 2007 and sought for the payment of his retirement benefits
pursuant to the Collective Bargaining Agreement. His request,
however, was not acted upon. Instead, he was terminated from
service effective May 1, 2007.
Consequently, respondent Dakila filed a complaint for constructive
illegal dismissal, non-payment of retirement benefits, under/non-
payment of wages and other benefits of a regular employee, and
damages against petitioners, The New Philippine Skylanders, Inc.
and its President and General Manager, Jennifer M. Eano-Bote,
before the NLRC. He averred, among others, that the consultancy
contract was a scheme to deprive him of the benefits of
regularization, claiming to have assumed tasks necessary and
desirable in the trade or business of petitioners and under their
direct control and supervision. In support of his claim, he
submitted, among others, copies of his time cards, Official
Business Itinerary Slips, Daily Attendance Sheets and other
documents prescribing the manner in which his tasks were to be
accomplished under the control of the petitioners and
acknowledging his status as a regular employee of the corporation.
On the other hand, petitioners, in their position paper,8 asserted
that respondent Dakilawas a consultant and not their regular
employee. The latter was not included in petitioners' payroll and
paid a fixed amount under the consultancy contract. He was not
required to observe regular working hours and was free to adopt
means and methods to accomplish his task except as to the results
of the work required of him. Hence, no employer-employee
relationship existed between them. Moreover, respondentDakila
terminated his contract in a letter dated April 19, 2007, thus,
negating his dismissal.
Ruling of the Labor Arbiter
On May 28, 2008, Labor Arbiter Thomas T. Que, Jr. rendered a
Decision9 finding respondent Dakila to have been illegally
dismissed and ordered his reinstatement with full backwages
computed from the time of his dismissal on May 1, 2007 until his
actual reinstatement as well as the payment of his unpaid benefits
under the Collective Bargaining Agreement (CBA). He declared
respondent Dakila to be a regular employee on the basis of the
unrebutted documentary evidence showing that he was under the
petitioners' direct control and supervision and performed tasks
that were either incidental or usually desirable and necessary in
the trade or business of petitioner corporation for a period of ten
years. Having been dismissed without cause and notice,
respondent Dakila was awarded moral and exemplary damages in
the amount of P 50,000.00 each. He is also entitled to avail of
thecorporation's retirement benefits upon his reinstatement.
Ruling of the NLRC
On appeal, the NLRC sustained the Labor Arbiter's (LA) finding
that respondent Dakila was a regular employee and that his
dismissal was illegal. However, it noted that since he was already
beyond the retirement age, his reinstatement was no longer
feasible. As such, it ordered the payment of his retirement pay to
be computed from 1997 until the date of the decision. Moreover, it
found respondent Dakila entitled to reinstatement wages from the
time petitioners received a copy of the LAs Decision on July 7,
2008 up to the date of the NLRC's decision. Thus, it ordered the
petitioners to pay respondent Dakila the additional amount
of P 278,508.33representing reinstatement wages and retirement
pay.10
The petitioners' motion for reconsideration having been denied in
the Resolution11 dated December 15, 2009, they filed a petition
for certiorari12 before the CA raising the following errors:
(1) the complaint should have been dismissed against
petitioner Jennifer M. Eano-Bote absent any showing of
bad faith;
(2) respondent Dakila is not a regular employee;
(3) respondent was not illegally dismissed as it was the
respondent who resigned; and
(4) theLAs monetary award has no basis.
Ruling of the CA
In the Resolution13 dated August 31, 2011, the CA dismissed the
petition for failure to show that the NLRC committed grave abuse
of discretion in affirming the LA's Decision. It found the factual
findings of the LA and the NLRC to be supported by substantial
evidence and thus, should be accorded respect and finality.
Petitioners' motion for reconsideration therefrom was likewise
denied in the Resolution14 dated November 23, 2011.
Hence, the instant petition reiterating the arguments raised before
the CA.
Ruling of the Court
The issue of illegal dismissal is premised on the existence of an
employer-employee relationship between the parties herein. It is
essentially a question of fact, beyond the ambit of a petition for
review on certiorari under Rule 45 of the Rules of Court unless
there is a clear showing of palpable error or arbitrary disregard of
evidence which does not obtain in this case. Records reveal that
both the LA and the NLRC, as affirmed by the CA, have found
substantial evidence to show that respondent Dakila was a regular
employee who was dismissed without cause.
Following Article 279 of the Labor Code, an employee who is
unjustly dismissed from work is entitled to reinstatement without
loss of seniority rights and other privileges and to his full
backwages computed from the time he was illegally dismissed.
However, considering that respondent Dakila was terminated on
May 1, 2007, or one (1) day prior to his compulsory retirement on
May 2, 2007, his reinstatement is no longer feasible. Accordingly,
the NLRC correctly held him entitled to the payment of his
retirement benefits pursuant to the CBA. On the other hand, his
backwages should be computed only for days prior to his
compulsory retirement which in this case is only a day.
Consequently, the award of reinstatement wages pending appeal
must be deleted for lack of basis.
Similarly, the Court finds no basis to hold petitioner Jennifer M.
Eano-Bote, President and General Manager of The New
Philippine Skylanders, Inc., jointly and severally liable with the
corporation for the payment of the monetary awards. The mere
lack of authorized or just cause to terminate one's employment
and the failure to observe due process do not ipso facto mean that
the corporate officer acted with malice or bad faith.15 There
must be independent proof of malice or bad faith which was not
established in this case. Perforce, petitioner Jennifer M. Eano-
Bote cannot be made personally liable for the liabilities of the
corporation which, by legal fiction, has a personality separate and
distinct from its officers, stockholders and members. Moreover, for
lack of factual and legal bases, the awards of moral and exemplary
damages cannot also be sustained.161wphi1
WHEREFORE, premises considered, the petition is PARTLY
GRANTED. The assailed August 31, 2011 and November 23, 2011
Resolutions of the Court of Appeals in CA-G.R. SP No. 113015 are
MODIFIED as follows:
(1) petitioner Jennifer M. Eano-Bote is ABSOLVED from
liability for payment of respondent Francisco N. Dakila's
monetary awards;
(2) the awards of reinstatement wages pending appeal
as well as the moral and exemplary damages are ordered
DELETED; and
(3) the computation of backwages should be limited only
for a day prior to his compulsory retirement.
The rest of the decision stands.
SO ORDERED.

G.R. No. 179293 August 14, 2009
EDEN LLAMAS, Petitioner,
vs.
OCEAN GATEWAY MARITIME AND MANAGEMENT,
INC. Respondent.
D E C I S I O N
CARPIO MORALES, J.:
Ocean Gateway Maritime and Management, Inc. (respondent or
the company) hired Eden Llamas (petitioner) on August 1, 2001
as an accounting manager.
On February 9, 2002, Mary Anne T. Macaraig (Mary Anne),
respondents Chief Executive Officer, called petitioners attention
to her failure, despite repeated demands, to accomplish the long
overdue monthly and annual company financial reports and to
remit the companys contributions to the Social Security System
(SSS) and PhilHealth for November and December 2001.
Subsequently or on February 20, 2002, Mary Anne again
instructed petitioner to remit on that day or until the following day
the companys contributions to the SSS and PhilHealth for January
2002. By petitioners claim, she failed to comply with the
instruction as money for the purpose was not, as of February 20,
2002, credited to the companys account at the bank. The
following day, February 21, 2002, petitioner did not report for
work as she was allegedly suffering from hypertension, hence, she
was again unable to remit the contributions.
On February 26, 2002 Mary Anne sent a memorandum to
petitioner charging her with gross and habitual neglect of duty
and/or misconduct or willful disobedience and insubordination,
detailing therein the bases of the charges, and requiring her to
submit a written explanation why she should not be penalized or
dismissed from employment.
Complying with the show cause order, petitioner claimed that the
delay was due to the fact that she was overloaded with work and
undermanned. Her explanation reads:
I was able to submit SSS/PhilHealth reports and payment from
July to October, 2001 because I was assisted by an on-the-job
trainee who stayed only up to November.
In spite of my repeated request to give me some help because of
my heavy load nothing has been provided. I have to stay working
for 10 to 12 hours a day and sometimes for more than 12 hours
without overtime pay just to lessen my load and meet the
deadlines.
In our February 9th meeting, Ms. Abigail Carranza was instructed
to help me in order to finish the needed report for SSS/Philhealth
for November up to January and she was able to finish on
February 14th after she unloaded herself of her regular duties and
concentrated on the SSS/Philhealth reports. Her regular work was
divided between Ms. Sonia Gonzales & Mr. Efren Robles.
On February 20th at about 12:10 P.M. Ms. Macaraig gave me, in
the presence of Capt. Picardal, the finished work of Ms. Carranza
and instructed me to pay the SSS on that day or the next day. I
called up BPI to check if the remittance from MMM has already
been credited to our bank account but I was informed by BPI
Forex Dept. that the money is not yet credited. The payment was
made the following day by Ms. Macaraig and Ms. Carranza since I
was not able to report because I got sick.
With the above explanation, the penalties imposed therefore, on
non-remittance of the contribution to SSS and PhilHealth on time
should not be blamed on me.
x x x x
I believe I did something good for the office when our declaration
of gross income submitted to City Hall for the renewal of our
municipal license was lower than our actual gross income for
which the office paid a lower amount. City Hall is only after the
gross income which amount I got from our Agency Fee received
during the year.
If only I will be provided with some assistance that I always
request, who will do some of my additional tasks especially the
vouchers & check preparation, reports for SSS/Philhealth, POEA &
BIR, and filing, I could perform all the tasks given to me by the
Management and submit all the reports on time;
x x x x1 (Underscoring supplied)
On account of the delay in the remittance of those contributions,
respondent was penalized in the amount ofP18,580.41 which it
charged to petitioner via salary deductions.
Sometime in July 2002, Mary Anne instructed petitioner to encash
a check and remit the proceeds thereof to the architect who
renovated respondents new office in Makati. Petitioner instead
suggested that she would ask one of the cadets to encash the
check because she was scheduled to go to the Bureau of Internal
Revenue, and reminded Mary Anne that it was very risky to pay in
cash. Insisting that she was the boss, Mary Anne told petitioner to
follow her orders. Petitioner complied. Getting wind of the
incident, respondents president asked her to give a statement of
facts thereof which she did.
As respondent found petitioners explanation unsatisfactory, it
sent her a notice of termination from employment on July 31,
2002,2 anchored on gross and habitual neglect of duty and/or
serious misconduct or willful disobedience/insubordination,
drawing, petitioner to file on August 5, 2002 before the National
Labor Relations Commission (NLRC) a Complaint3 against
respondent and Mary Anne for illegal dismissal, damages and
attorneys fees.
She later amended her complaint to include as cause of action non-
payment of overtime pay.4 Still, in her Position Paper,5 she
included illegal deductions as additional cause of action.
Petitioner, claiming that she was fired because of the heated
discussion between her and Mary Anne, maintained that her delay
in the remittance of the companys SSS/PhilHealth contributions
was occasioned by the circumstances she had spelled out.
Upon the other hand, respondent maintained its justification of
petitioners dismissal, highlighting her failure to accomplish the
companys monthly and annual financial reports for 2001
reflecting its gross income which is determinative of the amount to
be paid to secure government licenses and permits.
Respecting petitioners claim for overtime pay, respondent
contended that she, being a managerial employee and/or a
member of the managerial staff, is not entitled thereto.1avvphi1
By Decision6 of April 15, 2003, the Labor Arbiter found
petitioners dismissal to have been for a just cause and with due
process. However, he ordered respondent to pay petitioners
"proportionate 13th month pay for the year 2000 [sic] and final
assistance" in the amount of Thirty Three Thousand Two Hundred
Fifty Pesos (P33,250).
On appeal, the NLRC, finding petitioner to have been illegally
dismissed, set aside the Labor Arbiters decision and awarded
backwages, separation pay, and 13th month pay. It held that
petitioners dismissal was due to the heated argument between
her and Mary Anne and that she was already penalized when she
was required to pay via salary deduction the above-stated fine
meted the company.
On petition for certiorari, the Court of Appeals nullified the NLRC
decision and reinstated the Labor Arbiters decision.7 The
appellate court ruled that petitioner neglected her duties not just
once, but four times. Furthermore, it held that, following Amadeo
Fishing Corporation v. Nierra,8 as petitioner occupied a position
of trust and confidence, the company could not be compelled to
continuously engage her services which is detrimental to its
interests. Petitioners motion for reconsideration having been
denied by Resolution9 dated August 17, 2007, she filed the present
petition.10
The petition fails.
Under Article 282 (b) of the Labor Code, negligence must be both
gross and habitual to justify the dismissal of an employee. Gross
negligence is characterized by want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not
inadvertently but willfully and intentionally with a conscious
indifference to consequences insofar as other persons may be
affected.11
In the present case, petitioner, as respondents Accounting
Manager, failed to discharge her important duty of remitting
SSS/PhilHealth contributions not once but quadruple times,
resulting in respondents incurring of penalties
totaling P18,580.41, not to mention the employees/members
contributions being unupdated.
Her claim of being overworked and undermanned does not
persuade. As noted by respondent, the company had been in
operation for less than three (3) months at the time the
negligence and delays were committed, with only a few
transactions and only with one principal, Malaysian Merchant
Marine Bhd., hence, its financial and accounting books should not
have been difficult to prepare. Moreover, as claimed by respondent
which was not refuted by petitioner, she failed to remit the
contributions as early as November 2001 during which time,
however, on-the-job trainees were still with the company, hence,
her claim of being undermanned behind such failure does not lie.
As to the delay in the remittance of SSS/PhilHealth contributions
for January 2002, which petitioner claims to be due to the fact that
the money intended for payment was not yet credited as of
February 20, 2002 to respondents bank account, as well as to her
absence the following day or on February 21, 2002 due to
hypertension, the Court is not persuaded, given that at that time,
she had already been in delay in the performance of her duties.
On petitioners declaration that "I believe that I did something
good for our office when our declaration of gross income
submitted to City Hall for the renewal of our municipal license
was lower than our actual gross income for which the office had
paid a lower amount," the Court finds the same as betraying a
streak of dishonesty in her. It partakes of serious misconduct.
x x x Misconduct has been defined as improper or wrong conduct.
It is the 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 of judgment. The
misconduct to be serious must be of such grave and aggravated
character and not merely trivial and unimportant. Such
misconduct, however serious, must nevertheless be in connection
with the employees work to constitute just cause for his
separation. Thus, for misconduct or improper behavior to be a
just cause for dismissal, (a) it must be serious; (b) must relate to
the performance of the employees duties; and (c) must show that
the employee has become unfit to continue working for the
employer. Indeed, an employer may not be compelled to continue
to employ such person whose continuance in the service would be
patently inimical to his employers interest.12 (Emphasis
supplied)
For her act of understating the companys profits or financial
position was willful and not a mere error of judgment, committed
as it was in order to "save" costs, which to her warped mind, was
supposed to benefit respondent. It was not merely a violation of
company policy, but of the law itself, and put respondent at risk of
being made legally liable. Verily, it warrants her dismissal from
employment as respondents Accounting Manager, for as correctly
ruled by the appellate court, an employer cannot be compelled to
retain in its employ someone whose services is inimical to its
interests.
As to whether due process was accorded petitioner, the Court
rules in the affirmative. Far from being arbitrary, the termination
of her services was effected after she was afforded the
opportunity to, as she did, submit her explanation on why she
should not be disciplined or dismissed, which explanation, it bears
reiteration, was, however, found unsatisfactory.
WHEREFORE, the May 25, 2007 Decision of the Court of Appeals
reinstating the April 15, 2003 decision of the Labor Arbiter is
AFFIRMED.
SO ORDERED.

G.R. No. 163123. April 15, 2005
PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioners,
vs.
CHINESE GENERAL HOSPITAL AND MEDICAL
CENTER, Respondents.
D E C I S I O N
CORONA, J.:
Before us is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the March 29, 2004 decision1 of the Court
of Appeals, the dispositive portion of which read:
FOR THE FOREGOING DISQUISITIONS, the petition
is GRANTED, the Philippine Health Insurance Corporation2is
hereby ordered to give due course to petitioners, Chinese General
Hospital and Medical Center, claims for the period from 1989 to
1992, amounting to FOURTEEN MILLION TWO HUNDRED
NINETY ONE THOUSAND FIVE HUNDRED SIXTY EIGHT PESOS
and 71/100 PESOS (P14,291,568.71).3
The facts, as culled by the Court of Appeals, follow.
On February 14, 1995, Republic Act No. 7875, otherwise known
as "An Act Instituting a National Health Insurance Program for all
Filipinos and Establishing the Philippine Health Insurance
Corporation For the Purpose," was approved and signed into law.
As its guiding principle, it is provided in Section 2 thereof, thus:
"Section 2. Declaration of Principles and Policies. Section 11,
Article XIII of the Constitution of the Republic of the Philippines
declares that the state shall adopt an integrated and
comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services
available to all the people at affordable cost. Priority for the needs
of the underprivileged, sick, elderly, disabled, women, and children
should be recognized. Likewise, it shall be the policy of the State to
provide free medical care to paupers.
Prior to the enactment of R.A. 7875. CGH4 had been an accredited
health care provider under the Philippine Medical Care
Commission (PMCC), more popularly known as Medicare. As
defined by R.A. 7875, a health care provider refers to a health care
institution, which is duly licensed and accredited devoted
primarily to the maintenance and operation of facilities for health
promotion, prevention, diagnosis, treatment and care of
individuals suffering from illness, disease, injury, disability or
deformity, or in need of obstetrical or other medical and nursing
care.5
As such, petitioner6 filed its Medicare claims with the Social
Security System (SSS), which, together with the Government
Service Insurance System (GSIS), administered the Health
Insurance Fund of the PMMC. Thus, petitioner filed its claim from
1989 to 1992 with the SSS, amounting to EIGHT MILLION ONE
HUNDRED TWO THOUSAND SEVEN HUNDRED EIGHTY-TWO and
10/100 (P8,102,782.10). Its application for the payment of its
claim with the SSS was overtaken by the passage of R.A. 7875,
which in Section 51 and 52, provides:
SECTION 51. Merger. Within sixty (60) days from the
promulgation of the implementing rules and regulations, all
functions and assets of the Philippine Medical Care Commission
shall be merged with those of the Corporation (PHILHEALTH)
without need of conveyance, transfer or assignment. The PMCC
shall thereafter cease to exist.
The liabilities of the PMCC shall be treated in accordance with
existing laws and pertinent rules and regulations. xxx
SECTION 52. Transfer of Health Insurance Funds of the SSS and
GSIS. The Health Insurance Funds being administered by the SSS
and GSIS shall be transferred to the Corporation within sixty (60)
days from the promulgation of the implementing rules and
regulations. The SSS and GSIS shall, however, continue to perform
Medicare functions under contract with the Corporation until such
time that such functions are assumed by the Corporation xxx.
Being the successor of the PMCC, PHILHEALTH, in compliance
with the mandate of R.A. 7875,7 promulgated the rules and
regulations implementing said act, Section 52 of which provides:
SECTION 52. Fee for Service Guidelines on Claims Payment. xxx
b. All claims for payment of services rendered shall be filed within
sixty (60) calendar days from the date of discharge of the patient.
Otherwise, the claim shall be barred from payment except if the
delay in the filing of thee claim is due to natural calamities and
other fortuitous events. If the claim is sent through mail, the date
of the mailing as stamped by the post office of origin shall be
considered as the date of the filing.
If the delay in the filing is due to natural calamities or other
fortuitous events, the health care provider shall be accorded an
extension period of sixty (60) calendar days.
If the delay in the filing of the claim is caused by the health care
provider, and the Medicare benefits had already been deducted, the
claim will not be paid. If the claim is not yet deducted, it will be
paid to the member chargeable to the future claims of the health
care provider.
Instead of giving due course to petitioners claims totaling to
EIGHT MILLION ONE HUNDRED TWO THOUSAND SEVEN
HUNDRED EIGHTY-TWO and 10/100 (P8,102,782.10), only ONE
MILLION THREE HUNDRED SIXTY-FIVE THOUSAND FIVE
HUNDRED FIFTY-SIX and 32/100 Pesos (1,365,556.32) was paid
to petitioner, representing its claims from 1989 to 1992 (sic).
Petitioner again filed its claims representing services rendered to
its patients from 1998 to 1999, amounting to SEVEN MILLION
FIVE HUNDRED FIFTY FOUR THOUSAND THREE HUNDRED
FORTY TWO and 93/100 Pesos (P7,554,342.93). For being
allegedly filed beyond the sixty (60) day period allowed by the
implementing rules and regulations, Section 52 thereof,
petitioners claims were denied by the Claims Review Unit of
Philhealth in its letter dated January 14, 200, thus:
"xxx
This pertains to your three hundred seventy three Philhealth
medicare claims (373) which were primarily denied by Claims
Processing Department for late filing and for which you made an
appeal to this office. We regret to inform you that after thorough
evaluation of your claims, [your] 361 medicare
claims were DENIED, due to the fact that the claims were filed 5 to
16 months after discharge. However, the
remaining medicare claims have been forwarded to Claims
Processing Department (CPD) for payment.
SECTION 52 (B) Rule 52 (B) Rule VIII of the Implementing Rules
and Regulations of 7875 provides that all claims for payment of
services rendered shall be filed within sixty (60) days from the day of
discharge of the patient. However, Philhealth Circular No, 31-A,
series of 1998, state that all claims pending with Philhealth as of
September 15, 1998 and claims with discharge dates from
September to December 31, 1998 are given one hundred twenty
(120) days from the date of discharge to file their claim. In as much
as we would like to grant your request for reconsideration, the
Corporation could no longer extend the period of filing xxx.
Petitioners claim was denied with finality by PHILHEALTH in its
assailed decision dated June 6, 2000.
In a petition for review under Rule 43 of the Rules of Court, the
Court of Appeals ordered herein petitioner Philippine Health
Insurance Corporation (Philhealth) to pay the claims in the
amount of Fourteen Million Two Hundred Ninety-one Thousand
Five Hundred Sixty-eight Pesos and 71/100 (P14,291,568.71),
principally on the ground of liberal application of the 60-day rule
under Section 52 of RA 7875s Implementing Rules and
Regulations. According to the Court of Appeals:
The avowed policy in the creation of a national health program is,
as provided in Section 11, Article XIII of the 1987 Constitution, to
adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health
and other social services available to all people at affordable
cost. To assist the state in pursuing this policy, hospitals and
medical institutions such as herein petitioner are accredited to
provide health care. It is true, as aptly stated by the OGCC, that
petitioner was not required by the government to take part in its
program, it did so voluntarily. But the fact that the government did
not "twist" petitioners arm, so to speak, to participate does not
make petitioners participation in the program less commendable,
considering that at rate PHILHEALTH is denying claims of health
care givers, it is more risky rather than providential for health
care givers to take part in the governments health program.
It is Our firmly held view that the policy of the state in creating a
national health insurance program would be better served by
granting the instant petition. Thus, it is noteworthy to mention
that health care givers are threatening to "boycott" PHILHEALTH,
reasoning that the claims approved by PHILHEALTH are not
commensurate to the services rendered by them to its members.
Thus, how can these accredited health care givers be encouraged
to serve an increasing number of members when they end up on
the losing end of this venture. We must admit that the costs of
operating these medical institutions cannot be taken lightly. They
must also earn a modicum amount of profit in order to operate
properly.
Again, it is trite to emphasize that essentially, the purpose of the
national health insurance program is to provide members
immediate medical care with the least amount of cash expended.
Thus, with PHILHEALTH, members/patients need only to present
their card to prove their membership and the accredited health
care giver is mandated by law to provide the necessary medical
assistance, said health care giver shouldering the PHILHEALTH
part of the bill. However, it is the members/patients who bear the
brunt. Thus, they are made to shoulder the PHILHEALTH part of
the bill, and the refund thereof is subject to whether or not the
claims of the health care providers are approved by PHILHEALTH.
This is blatantly contrary to the very purpose for which the
National Health Insurance Program was created.8
x x x x x x x x x
We agree.
The state policy in creating a national health insurance program is
to grant discounted medical coverage to all citizens, with priority
to the needs of the underprivileged, sick, elderly, disabled, women
and children, and free medical care to paupers9.
The very same policy was adopted in RA 787510 which sought to:
a) provide all citizens of the Philippines with the mechanism to
gain financial access to health services;
b) create the National Health Insurance Program to serve as the
means to help the people pay for the health services;
c) prioritize and accelerate the provision of health services to all
Filipinos, especially that segment of the population who cannot
afford such services; and
d) establish the Philippine Health Insurance Corporation that will
administer the program at central and local levels.11
To assist the state in pursuing the aforementioned policy, health
institutions were granted the privilege of applying for
accreditation as health care providers.12 Respondent Chinese
General Hospital and Medical Center (CGH) was one of those
which received such accreditation.
Under the rules promulgated by the Philhealth Board pursuant to
RA 7875, any claim for payment of services rendered (to a
patient) shall be filed within sixty (60) calendar days from the date
of discharge of the patient. Otherwise, the claim is barred.13
But before a claim is filed with petitioner Philhealth for services
already rendered, an accredited health care provider like
respondent CGH is required to:
a. accomplish a Philhealth claim form;
b. accomplish an itemized list of the medicines administered to
and medical supplies used by the patient concerned, indicating
therein the quality, unit, price and total price corresponding
thereto;
c. require the patient concerned and his/her employer to
accomplish and submit a Philhealth member/employer
certification;
d. in case the patient gave birth, require her to submit a certified
true copy of the childs birth certificate;
e. in case the patient died, require the immediate relatives to
submit a certified true copy of the deceaseds death certificate;
and
f. in case a members dependent is hospitalized for which the
member seeks coverage, require the member to submit proof of
relationship to the patient and to execute an affidavit of
support.14
Apart from the foregoing requirements which often necessitate
securing documents from other government offices, and the fact
that most patients are unable to immediately accomplish and
submit the required documents, an accredited health care
provider like CGH has to contend with an average of about a
thousand members and/or dependents seeking medical treatment
for various illnesses per month.
Under these circumstances, it is unreasonable to expect
respondent CGH to comply 100% of the time with the prescribed
60-day rule of Philhealth. Despite the prescribed standard
procedures, respondent has no assurance of the members
prompt submission of the required documents. This factor is
completely beyond its control. There will always be delay not
attributable to respondent.
The unreasonably strict implementation of the 60-day rule,
without regard to the causes of delay beyond respondents control,
will be counter-productive to the long-term effectiveness of the
NHIP. Instead of placing a premium on participation in the
Program, Philhealth punishes an accredited health provider like
CGH by refusing to pay its claims for services already rendered.
Under these circumstances, no accredited provider will gamble on
honoring claims with delayed supporting papers no matter how
meritorious knowing that reimbursement from Philhealth will
not be forthcoming.
This Court will not hesitate, whenever necessary, to allow a liberal
implementation of the rules and regulations of an administrative
agency in cases where their unjustifiably rigid enforcement will
result in a deprivation of legal rights. In this case, respondent had
already rendered the services for which it was filing its claims.
Technicalities should not be allowed to defeat respondents right
to be reimbursed, specially since petitioners charter itself
guarantees such reimbursement.
A careful reading of RA 7875 shows that the law itself does not
provide for any specific period within which to file claims. We can
safely presume therefore that the period for filing was not per
se the principal concern of the legislature. More important than
mere technicalities is the realization of the state policy to provide
Philhealth members with the requisite medical care at the least
possible cost. Truly, nothing can be more disheartening than to
see the Acts noble objective frustrated by the overly stringent
application of technical rules.
The fact is that it was not RA 7875 itself but Section 52 of its
Implementing Rules and Regulations which established the 60-day
cut-off for the filing of claims.
While it is doctrinal in administrative law that the rules and
regulations of administrative bodies interpreting the law they are
entrusted to enforce have the force of law15, these issuances are
by no means iron-clad norms. Administrative bodies themselves
can and have in fact "bent the rules" for reasons of public interest.
On September 15, 1998, for instance, petitioner issued Philhealth
Circular No. 31-A:16
IN ORDER to allow members of the National Health Insurance
Program (NHIP) sufficient time to complete all documents to
support their medical care claims, Philhealth is temporarily
suspending the sixty (60)-day reglementary period for filing
claims.
While Section 52 (b), Rule VIII of the Implementing Rules and
Regulations of R.A. 7875 provides that all claims for payment
of services shall be filed within 60 calendar days from the day
of discharge of a patient, there is a need to extend this period
to minimize the incidence of late filing due to members
personal difficulties and circumstances beyond their control.
(emphasis ours)
And then again, on April 20, 1999, Philhealth Circular No. 50 was
issued:
TO MINIMIZE the incidence of late filing of claims due to
members personal difficulties in preparing the needed
documents, Philhealth is extending the period for filing of
claims xxx (emphasis ours)
The above circulars indubitably recognized the necessity of
extending the 60-day period because of the difficulties
encountered by members in completing the required documents,
often due to circumstances beyond their control. Petitioner
appeared to be well aware of the problems encountered by its
members in complying with the 60-day rule. Furthermore,
implicit in the wording of the circulars was the cognition of the
fact that the fault was not always attributable to the health care
providers like CGH but to the members themselves.
Delay on the part of members is an ordinary occurrence. There is
no need to make a mountain out of a molehill as far as this
particular point is concerned. To this day, members continue to
encounter delay in submitting their documents. There was
therefore no compelling reason for the exacting and meticulous
enforcement of the rule when, in at least two instances, petitioner
itself implemented it liberally and on the same ground that it was
using against respondent.
Petitioner likewise contends that respondent failed to exhaust
administrative remedies before resorting to judicial intervention.
We disagree.
Under the doctrine of exhaustion of administrative remedies, an
administrative decision must first be appealed to the
administrative superiors at the highest level before it may be
elevated to a court of justice for review.
This doctrine, however, is a relative one and its flexibility is
conditioned on the peculiar circumstances of a case.17There are a
number of instances when the doctrine has been held to be
inapplicable. Among the established exceptions are:
1) when the question raised is purely legal;
2) when the administrative body is in estoppel;
3) when the act complained of is patently illegal;
4) when there is urgent need for judicial intervention;
5) when the claim involved is small;
6) when irreparable damage will be suffered;
7) when there is no other plain, speedy and adequate remedy;
8) when strong public interest is involved;
9) when the subject of the controversy is private land;
10) in quo warranto proceedings.18
As explained by the appellate court:
It is Our view that the instant case falls as one of the exceptions,
concerning as it does public interest. As mentioned earlier,
although they were not made parties to the instant case, the rights
of millions of Filipinos who are members of PHILHEALTH and
who obviously rely on it for their health care, are considered,
nonetheless, parties to the present case. This Court is mandated
herein to take conscious and detailed consideration of the interplay
of the interests of the state, the health care giver and the
members. With these in mind, We hold that the greater interest of
the greater number of people, mostly members of PHILHEALTH,
is paramount.
Furthermore, when the representatives of herein petitioner met
with Dr. Enrique Zalamea, PHILHEALTHs President and Chief
Executive Officer, he informed them that, in lieu of protest to be
filed directly with him, the representatives could make
representations with the Office of the President, which petitioner
did to no avail, considering that the formal protest filed was
referred back by the Office of the President to Dr. Zalamea. Being
then the head of PHILHEALTH, and expected to have an intimate
knowledge of the law and the rules creating the National Health
Insurance Program, under which PHILHEALTH was created, he
instructed herein petitioner to pursue a remedy not sanctioned by
the rules and not in accord with the rule of exhaustion of
administrative remedies. In so doing, PHILHEALTH is deemed
estopped from assailing the instant petition for failure to exhaust
administrative remedies when PHILHEALTH itself, through its
president, does not subscribe to it.19
There is no need to belabor the fact that the baseless denial of
respondents claims will be gravely disturbing to the health care
industry, specially the providers whose claims will be unpaid. The
unfortunate reality is that there are today some health care
providers who admit numbers for treatment and/or confinement
yet require them to pay the portion which ought to be shouldered
by Philhealth. A refund is made only if their claim is first paid, due
to the apprehension of not being reimbursed. Simply stated, a
member cannot avail of his benefits under the NHIP at the time he
needs it most.
We cannot turn a deaf ear to respondents plea for fairness which
essentially demands that its claims for services already rendered
be honored as the National Health Insurance Program law
intended.
WHEREFORE, the assailed decision of the Court of Appeals is
hereby AFFIRMED. Petitioner is hereby ordered to pay
respondents claims representing services rendered to its
members from 1989 to 1992.
No costs.
SO ORDERED.

G.R. No. 192601 June 3, 2013
PHILIPPINE JOURNALISTS, INC., Petitioner,
vs.
JOURNAL EMPLOYEES UNION (JEU), FOR ITS UNION MEMBER,
MICHAEL ALFANTE, Respondents.
D E C I S I O N
BERSAMIN, J.:
The coverage of the term legal dependent as used in a stipulation
in a collective bargaining agreement (CBA) granting funeral or
bereavement benefit to a regular employee for the death of a legal
dependent, if the CBA is silent about it, is to be construed as
similar to the meaning that contemporaneous social legislations
have set. This is because the terms of such social legislations are
deemed incorporated in or adopted by the CBA.
The decision of the Court of Appeals (CA) under review
summarizes the factual and procedural antecedents, as follows:
Complainant Judith Pulido alleged that she was hired by
respondent as proofreader on 10 January 1991; that she was
receiving a monthly basic salary of P-15,493.66 plus P-155.00
longevity pay plus other benefits provided by law and their
Collective Bargaining Agreement; that on 21 February 2003, as
union president, she sent two letters to President Gloria Arroyo,
regarding their complaint of mismanagement being committed by
PIJ executive; that sometime in May 2003, the union was
furnished with a letter by Secretary Silvestre Afable, Jr. head of
Presidential Management Staff (PMS), endorsing their letter-
complaint to Ombudsman Simeon V. Marcelo; that respondents
took offense and started harassments to complainant union
president; that on 30 May 2003, complainant received a letter
from respondent Fundador Soriano, International Edition
managing editor, regarding complainants attendance record; that
complainant submitted her reply to said memo on 02 June 2003;
that on 06 June 2003, complainant received a memorandum of
reprimand; that on 04 July 2003, complainant received another
memo from Mr. Soriano, for not wearing her company ID, which
she replied the next day 05 July 2003; that on 04 August 2003,
complainant again received a memo regarding complainants
tardiness; that on 05 August 2003, complainant received another
memorandum asking her to explain why she should not be
accused of fraud, which she replied to on 07 August 2003; and
that on the same day between 3:00 to 4:00 P.M., Mr. Ernesto
"Estong" San Agustin, a staff of HRD handed her termination
paper.
Complainant added that in her thirteen (13) years with the
company and after so many changes in its management and
executives, she had never done anything that will cause them to
issue a memorandum against her or her work attitude, more so,
reasons to terminate her services; that she got dismissed because
she was the Union President who was very active in defending and
pursuing the rights of her union members, and in fighting against
the abuses of respondent Corporate Officers; and that she got the
ire of respondents when the employees filed a complaint against
the Corporate Officers before Malacaang and which was later
indorsed to the Office of the Ombudsman.
The second complainant Michael L. Alfante alleged that he started
to work with respondents as computer technician at Management
Information System under manager Neri Torrecampo on 16 May
2000; that on 15 July 2001, he was regularized receiving a
monthly salary of P9,070.00 plus other monetary benefits; that
sometime in 2001, Rico Pagkalinawan replaced Torrecampo,
which was opposed by complainant and three other co-
employees; that Pagkalinawan took offense of their objection; that
on 22 October 2002, complainant Alfante received a
memorandum from Pagkalinawan regarding his excessive
tardiness; that on 10 June 2003, complainant Alfante received a
memorandum from Executive Vice-President Arnold Banares,
requiring him to explain his side on the evaluation of his
performance submitted by manager Pagkalinawan; that one week
after complainant submitted his explanation, he was handed his
notice of dismissal on the ground of "poor performance"; and that
complainant was dismissed effective 28 July 2003.
Complainant Alfante submitted that he was dismissed without
just cause.
Respondents, in their position paper, averred that complainants
Pulido and Alfante were dismissed for cause and with due process.
With regard to complainant Pulido, respondents averred that in a
memorandum dated 30 May 2003, directed complainant to
explain her habitual tardiness, at least 75 times from January to
May of 2003. In a memorandum, dated 06 June 2003, directed
complainant to observe the 3 p.m. rule to avoid grammatical
lapses, use of stale stories just to beat the 10:00 p.m. deadline. In
the same memorandum complainant was given the warning that
any repeated violation of the rules shall be dealt with more
severely. Once again, in a memorandum, dated 04 August 2003,
complainant Pulido was required to explain why no disciplinary
action should be taken against her for habitual tardiness 18
times out of the 23 reporting days during the period from 27 June
27 July 2003 and on 05 August 2003, complainant was directed
to explain in writing why complainant should not be
administratively sanctioned for committing fraud or attempting to
commit fraud against respondents. Respondents found
complainants explanations unsatisfactory. On 07 August 2003,
respondents dismissed complainant Pulido for habitual tardiness,
gross insubordination, utter disrespect for superiors, and
committing fraud or attempting to commit fraud which led to the
respondents loss of confidence upon complainant Pulido.
In case of complainant Alfante, respondents averred in defense
that complainant was dismissed for "poor performance" after an
evaluation by his superior, and after being forewarned that
complainant may be removed if there was no showing of
improvement in his skills and knowledge on current technology.
In both instances, respondents maintained that they did not
commit any act of unfair labor practices; that they did not commit
acts tantamount to interfering, restraining, or coercing employees
in the exercise of their right to self-organization.
Respondents deny liabilities as far as complainants monetary
claims are concerned. Concerning violations of the provision on
wage distortion under Wage Order No. 9, respondents stressed
that complainants were not affected since their salary is way over
the minimum wage.
With respect to the alleged non-adjustment of longevity pay and
burial aid, respondent PJI pointed out that it complies with the
provisions of the CBA and that both complainants have not
claimed for the burial aid.
Respondents put forward the information that the alleged
nonpayment of rest days every Monday for the past three (3)
years is a matter that is still at issue in NLRC Case No. 02-
0402973-93, which case is still pending before this Commission.
Respondents asserted that the respondents Arturo Dela Cruz,
Bobby Capco, Arnold Banares, Ruby Ruiz-Bruno and Fundador
Soriano should not be held liable on account of complainants
dismissal as they merely acted as agents of respondent PJI.1
Upon the foregoing backdrop, Labor Arbiter Corazon C. Borbolla
rendered her decision on March 29, 2006, disposing thusly:
WHEREFORE, foregoing premises considered, judgment is hereby
rendered, finding complainant Judith Pulido to have been illegally
dismissed. As such, she is entitled to reinstatement and backwages
from 07 August 2003 up to her actual or payroll reinstatement. To
date, complainants backwages is P294,379.54.
Respondent Philippine Journalist, Inc. is hereby ordered to pay
complainant Judith Pulido her backwages from 07 August 2003 up
to her actual or payroll reinstatement and to reinstate her to her
former position without loss of seniority right.
Respondent is further ordered to submit a report to this Office on
complainants reinstatement ten (10) days from receipt of this
decision.
The charge of illegal dismissal by Michael Alfante is hereby
dismissed for lack of merit.
The charge of unfair labor practice is dismissed for lack of basis.
SO ORDERED.2
Complainant Michael Alfante (Alfante), joined by his labor
organization, Journal Employees Union (JEU), filed a partial appeal
in the National Labor Relations Commission (NLRC).3
In the meantime, on May 10, 2006, petitioner and Judith Pulido
(Pulido), the other complainant, jointly manifested to the NLRC
that the decision of March 29, 2006 had been fully satisfied as to
Pulido under the following terms, namely: (a) she would be
reinstated to her former position as editorial staffmember, or an
equivalent position, without loss of seniority rights, effective May
15, 2006; (b) she would go on maternity leave, and report to work
after giving birth; (c) she would be entitled to backwages
of P130,000.00; and (d) she would execute the quitclaim and
release on May 11, 2006 in favor of petitioner.4 This left Alfante as
the remaining complainant.
On January 31, 2007, the NLRC rendered its decision dismissing
the partial appeal for lack of merit.
JEU and Alfante moved for the reconsideration of the decision, but
the NLRC denied their motion on April 24, 2007.
Thereafter, JEU and Alfante assailed the decision of the NLRC
before the CA on certiorari (C.A.-G.R. SP No. 99407).
On February 5, 2010, the CA promulgated its decision in C.A.-G.R.
SP No. 99407,7 decreeing:
WHEREFORE, premises considered, the instant petition is PARTLY
GRANTED.
The twin Resolutions dated January 31, 2007 and April 24, 2007,
respectively, of the Third Division of the National Labor Relations
Commission (NLRC), in NLRC NCR CA No. 048785-06 (NLRC NCR
Case No. 00-10-11413-04), are MODIFIED insofar as the funeral
or bereavement aid is concerned, which is hereby GRANTED, but
only after submission of conclusive proofs that the deceased is a
parent, either father or mother, of the employees concerned, as
well as the death certificate to establish the fact of death of the
deceased legal dependent.
The rest of the findings of fact and law in the assailed Resolutions
are hereby AFFIRMED.
SO ORDERED.
Both parties moved for reconsideration, but the CA denied their
respective motions for reconsideration on June 2, 2010.8
JEU and Alfante appealed to the Court (G.R. No. 192478) to
challenge the CAs dispositions regarding the legality of: (a)
Alfantes dismissal; (b) the non-compliance with Minimum Wage
Order No. 9; and (c) the non-payment of the rest day.9
On August 18, 2010, the Court denied due course to the petition in
G.R. No. 192478 for failure of petitioners to sufficiently show that
the CA had committed any reversible error to warrant the Courts
exercise of its discretionary appellate jurisdiction.10
The Court denied with finality JEU and Alfantes ensuing motion
for reconsideration through the resolution of December 8,
2010.11 The entry of judgment in G.R. No. 192478 issued in due
course on February 1, 2011.12
On its part, petitioner likewise appealed (G.R. No. 192601),
seeking the review of the CAs disposition in the decision of
February 5, 2010 on the granting of the funeral and bereavement
aid stipulated in the CBA.
In its petition for review, petitioner maintained that under Section
4, Article XIII of the CBA, funeral and bereavement aid should be
granted upon the death of a legal dependent of a regular employee;
that consistent with the definition provided by the Social Security
System (SSS), the term legal dependent referred to the spouse and
children of a married regular employee, and to the parents and
siblings, 18 years old and below, of a single regular
employee;13 that the CBA considered the term dependents to have
the same meaning as beneficiaries, as provided in Section 5,
Article XIII of the CBA on the payment of death benefits;14 that its
earlier granting of claims for funeral and bereavement aid
without regard to the foregoing definition of the legal dependents
of married or single regular employees did not ripen into a
company policy whose unilateral withdrawal would constitute a
violation of Article 100 of the Labor Code,15 the law disallowing
the non-diminution of benefits;16 that it had approved only four
claims from 1999 to 2003 based on its mistaken interpretation of
the term legal dependents, but later corrected the same in
2000;17 that the grant of funeral and bereavement aid for the
death of an employees legal dependent, regardless of the
employees civil status, did not occur over a long period of time,
was not consistent and deliberate, and was partly due to its
mistake in appreciating a doubtful question of law; and that its
denial of subsequent claims did not amount to a violation of the
law against the non-diminution of benefits.18
In their comment,19 JEU and Alfante countered that the CBA was
a bilateral contractual agreement that could not be unilaterally
changed by any party during its lifetime; and that the grant of
burial benefits had already become a company practice favorable
to the employees, and could not anymore be reduced, diminished,
discontinued or eliminated by petitioner.
Issue
In view of the entry of judgment issued in G.R. No. 192478, JEU
and Alfantes submissions on the illegality of his dismissal, the
non-payment of his rest days, and the violation of Minimum Wage
Order No. 9 shall no longer be considered and passed upon.
The sole remaining issue is whether or not petitioners denial of
respondents claims for funeral and bereavement aid granted
under Section 4, Article XIII of their CBA constituted a diminution
of benefits in violation of Article 100 of the Labor Code.
Ruling
The petition for review lacks merit.
The nature and force of a CBA are delineated in Honda Phils., Inc. v.
Samahan ng Malayang Manggagawa sa Honda,20 thuswise:
A collective bargaining agreement (or CBA) refers to the
negotiated contract between a legitimate labor organization and
the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the
law.
Accordingly, the stipulations, clauses, terms and conditions of the
CBA, being the law between the parties, must be complied with by
them. The literal meaning of the stipulations of the CBA, as with
every other contract, control if they are clear and leave no doubt
upon the intention of the contracting parties.22
Here, a conflict has arisen regarding the interpretation of the term
legal dependent in connection with the grant of funeral and
bereavement aid to a regular employee under Section 4, Article
XIII of the CBA,23 which stipulates as follows:
SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to
grant a funeral/bereavement aid in the following instances:
a. Death of a regular employee in line of duty P50,000
b. Death of a regular employee not in line of duty
P40,000
c. Death of legal dependent of a regular employee
P15,000. (Emphasis supplied)
Petitioner insists that notwithstanding the silence of the CBA, the
term legal dependent should follow the definition of it under
Republic Act (R.A.) No. 8282 (Social Security Law),24 so that in
the case of a married regular employee, his or her legal dependents
include only his or her spouse and children, and in the case of a
single regular employee, his or her legal dependents include only
his or her parents and siblings, 18 years old and below; and that
the term dependents has the same meaning as beneficiaries as
used in Section 5, Article XIII of the CBA.
We cannot agree with petitioners insistence.
Social legislations contemporaneous with the execution of the CBA
have given a meaning to the term legal dependent. First of all,
Section 8(e) of the Social Security Law provides that a dependent
shall be the following, namely: (a) the legal spouse entitled by law
to receive support from the member; (b) the legitimate,
legitimated, or legally adopted, and illegitimate child who is
unmarried, not gainfully employed and has not reached 21 of age,
or, if over 21 years of age, is congenitally or while still a minor has
been permanently incapacitated and incapable of self-support,
physically or mentally; and (c) the parent who is receiving regular
support from the member. Secondly, Section 4(f) of R.A. No. 7875,
as amended by R.A. No. 9241,25 enumerates who are the legal
dependents, to wit: (a) the legitimate spouse who is not a member;
(b) the unmarried and unemployed legitimate, legitimated,
illegitimate, acknowledged children as appearing in the birth
certificate; legally adopted or step-children below 21 years of age;
(c) children who are 21 years old and order but suffering from
congenital disability, either physical or mental, or any disability
acquired that renders them totally dependent on the member of
our support; and (d) the parents who are 60 years old or older
whose monthly income is below an amount to be determined by
the Philippine Health Insurance Corporation in accordance with
the guiding principles set forth in Article I of R.A. No. 7875. And,
thirdly, Section 2(f) of Presidential Decree No. 1146, as amended
by R.A. No. 8291,dependent for support upon the member or
pensioner; (b) the legitimate, legitimated, legally adopted child,
including the illegitimate child, who is unmarried, not gainfully
employed, not over the age of majority, or is over the age of
majority but incapacitated and incapable of self-support due to a
mental or physical defect acquired prior to age of majority; and (c)
the parents dependent upon the member for support.1wphi1
It is clear from these statutory definitions of dependent that the
civil status of the employee as either married or single is not the
controlling consideration in order that a person may qualify as the
employees legal dependent. What is rather decidedly controlling is
the fact that the spouse, child, or parent is actually dependent for
support upon the employee. Indeed, the Court has adopted this
understanding of the term dependent in Social Security System v.
De Los Santos,27 viz:
Social Security System v. Aguas is instructive in determining the
extent of the required "dependency" under the SS Law. In Aguas,
the Court ruled that although a husband and wife are obliged to
support each other, whether one is actually dependent for support
upon the other cannot be presumed from the fact of marriage
alone.
Further, Aguas pointed out that a wife who left her family until
her husband died and lived with other men, was not dependent
upon her husband for support, financial or otherwise, during the
entire period.
Said the Court:
In a parallel case involving a claim for benefits under the GSIS law,
the Court defined a dependent as "one who derives his or her main
support from another. Meaning, relying on, or subject to, someone
else for support; not able to exist or sustain oneself, or to perform
anything without the will, power, or aid of someone else." It should
be noted that the GSIS law likewise defines a dependent spouse as
"the legitimate spouse dependent for support upon the member or
pensioner." In that case, the Court found it obvious that a wife
who abandoned the family for more than 17 years until her
husband died, and lived with other men, was not dependent on
her husband for support, financial or otherwise, during that
entire period. Hence, the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already
separated de facto from her husband cannot be said to be
"dependent for support" upon the husband, absent any showing to
the contrary. Conversely, if it is proved that the husband and wife
were still living together at the time of his death, it would be safe
to presume that she was dependent on the husband for support,
unless it is shown that she is capable of providing for herself.
Considering that existing laws always form part of any contract,
and are deemed incorporated in each and every contract,28 the
definition of legal dependents under the aforecited social
legislations applies herein in the absence of a contrary or different
definition mutually intended and adopted by the parties in the
CBA. Accordingly, the concurrence of a legitimate spouse does not
disqualify a child or a parent of the employee from being a legal
dependent provided substantial evidence is adduced to prove the
actual dependency of the child or parent on the support of the
employee.
In this regard, the differentiation among the legal dependents is
significant only in the event the CBA has prescribed a hierarchy
among them for the granting of a benefit; hence, the use of the
terms primary beneficiaries and secondary beneficiaries for that
purpose. But considering that Section 4, Article XIII of the CBA has
not included that differentiation, petitioner had no basis to deny
the claim for funeral and bereavement aid of Alfante for the death
of his parent whose death and fact of legal dependency on him
could be substantially proved.
Pursuant to Article 100 of the Labor Code, petitioner as the
employer could not reduce, diminish, discontinue or eliminate any
benefit and supplement being enjoyed by or granted to its
employees. This prohibition against the diminution of benefits is
founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full
protection.29 The application of the prohibition against the
diminution of benefits presupposes that a company practice,
policy or tradition favorable to the employees has been clearly
established; and that the payments made by the employer
pursuant to the practice, policy, or tradition have ripened into
benefits enjoyed by them.30 To be considered as a practice, policy
or tradition, however, the giving of the benefits should have been
done over a long period of time, and must be shown to have been
consistent and deliberate.31 It is relevant to mention that we have
not yet settled on the specific minimum number of years as the
length of time sufficient to ripen the practice, policy or tradition
into a benefit that the employer cannot unilaterally withdraw.32
The argument of petitioner that the grant of the funeral and
bereavement benefit was not voluntary but resulted from its
mistaken interpretation as to who was considered a legal
dependent of a regular employee deserves scant consideration. To
be sure, no doubtful or difficult question of law was involved
inasmuch as the several cogent statutes existing at the time the
CBA was entered into already defined who were qualified as the
legal dependents of another. Moreover, the voluntariness of the
grant of the benefit became even manifest from petitioners
admission that, despite the memorandum it issued in 200033 in
order to "correct" the interpretation of the term legal dependent, it
still approved in 2003 the claims for funeral and bereavement aid
of two employees, namely: (a) Cecille Bulacan, for the death of her
father; and (b) Charito Cartel, for the death of her mother, based
on its supposedly mistaken interpretation.34
It is further worthy to note that petitioner granted claims for
funeral and bereavement aid as early as 1999, then issued a
memorandum in 2000 to correct its erroneous interpretation of
legal dependent under Section 4, Article XIII of the CBA. This
notwithstanding, the 2001-2004 CBA35 still contained the same
provision granting funeral or bereavement aid in case of the death
of a legal dependent of a regular employee without differentiating
the legal dependents according to the employee's civil status as
married or single. The continuity in the grant of the funeral and
bereavement aid to regular employees for the death of their legal
dependents has undoubtedly ripened into a company policy. With
that, the denial of Alfante's qualified claim for such benefit
pursuant to Section 4, Article XIII of the CBA violated the law
prohibiting the diminution of benefits.
WHEREFORE, the Court AFFIRMS the decision promulgated on
February 5, 201 0; and ORDERS petitioner to pay the costs of suit.
SO ORDERED.

G.R. No. 146202 July 14, 2004
RUFINA PATIS FACTORY, and JESUS LUCAS, SR. petitioners,
vs.
JUAN ALUSITAIN, respondent.

D E C I S I O N

CARPIO MORALES, J.:
From the June 23, 2000 Decision1 of the Court of Appeals in CA-
G.R. SP No. 54722 affirming that of the National Labor Relations
Commission (NLRC) awarding retirement benefits in the amount
of P88,595.00 to respondent Juan Alusitain (Alusitain), petitioners
Rufina Patis Factory and Jesus Lucas, Sr. (Lucas) come to this
Court on a petition for review on certiorari.
The antecedent facts are as follows:
In March 1948, Alusitain was hired as a laborer at the
Rufina Patis Factory owned and operated by petitioner
Lucas. After close to forty three years or on February 19,
1991, Alusitain admittedly tendered his letter of
resignation which is quoted verbatim:
February 19, 1991
TO: MR. JESUS LUCAS, JR.
ASSISTANT MANAGER
RUFINA PATIS FACTORY
Gentlemen:
I would like to tender my separation letter as a laborer,
from your good company effective this 20th of February
1991. May I take this opportunity to extent my heartfelt
thanks to you for having given me the chance to commit
myself to work in your factory from which I owe varied
experiences that has made a part of me and be what I am
today. Anticipating your outmost consideration on this
matter. I remain.
VERY TRULY YOURS,
(Signed)
JUAN A. ALUSITAIN
RECEIVED THE ABOVE SEPARATION LETTER ON THIS
DAY, FEBRUARY 20, 1991.
(Signed)
BY: JESUS R. LUCAS, JR.
Assistant Manager2
On May 22, 1991, Alusitain executed a duly notarized affidavit of
separation from employment and submitted the same on even
date to the Pensions Department of the Social Security System
(SSS). The affidavit reads:
Republic of the Philippines )SSS
Quezon City )
AFFIDAVIT OF SEPARATION FROM EMPLOYMENT
I, JUAN ASERAS ALUSITAIN of legal age, 63, Filipino and
residing at Int. 18 Flores St., Mal. Mla, after having [been]
sworn to in accordance with law hereby depose and
state;
1. That I am [a] bonafide member of the Social
Security System with SSS Number 03-
0107252-0
2. That I was separated from my last employer
RUFINA PATIS FACTORY with address at 290 C.
Arellano St., Malabon, Metro Manila on 2-20-91
and thereafter, I was never again re-employed.
3. That I cannot secure a certification of
separation from my last employer because I
have not reached the company applicable age
of retirement.
4. That I am executing this affidavit to attest to
the truth of the foregoing facts and to support
my retirement paper.
FURTHER AFFIANT SAYETH NAUGHT.
(Signed)
Affiant3
On January 7, 1993, Republic Act No. 7641 (R.A. 7641),4 "AN ACT
AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. 442,
AS AMENDED OTHERWISE KNOWN AS THE LABOR CODE OF
THE PHILIPPINES, BY PROVIDING FOR RETIREMENT PAY TO
QUALIFIED PRIVATE SECTOR EMPLOYEES IN THE ABSENCE OF
ANY RETIRMENT PLAN IN THE ESTABLISHMENT," took
effect5 providing, among other things, thusly:
Art. 287. Retirement. Any employee may be retired
upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract.
x x x
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty five (65)
years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled
to retirement pay equivalent to at least one half (1/
2
)
month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the
term one half (1/
2
) month salary shall mean fifteen (15)
days plus one twelfth (1/
12
) of the 13th month pay and
the cash equivalent of not more than five (5) days of
service incentive leaves.
x x x
Violation of this provision is hereby declared unlawful
and subject to the penal provisions under Article 288 of
this Code.6
Sometime in 1995, Alusitain, claiming that he retired from the
company on January 31, 1995, having reached the age of 657 and
due to poor health, verbally demanded from petitioner Lucas for
the payment of his retirement benefits. By his computation, he
claimed that he was entitled to P86,710.008 broken down as
follows:
Retirement Benefits = month salary for every year of service
One-half month salary = P1,885.00
Years of Service = 47 years
Retirement Benefits = P86,710.009
Petitioner Lucas, however, refused to pay the retirement benefits
of Alusitain, prompting the latter to make a written demand on
September 20, 1995. Lucas, however, remained adamant in his
refusal to give in to Alusitain's demands.
Having failed to arrive at an amicable settlement, Alusitain filed on
November 17, 1995 a complaint before the NLRC against
petitioners Rufina Patis Factory and Lucas for non-payment of
retirement benefits. The complaint was docketed as NLRC Case No.
00-11-07474-95.
Petitioners maintained that Alusitain had resigned from the
company on February 19, 1991 per his letter of resignation and
the Affidavit of Separation dated May 22, 1991.10
On the other hand, while respondent admitted having tendered his
letter of resignation on February 19, 1991 and executed the
Affidavit of Separation on May 22, 1991,11 he nevertheless
maintained that he continued working for petitioners until
January 1995, the date of actual retirement, due to illness and old
age, and that he merely accomplished the foregoing documents in
compliance with the requirements of the SSS in order to avail of
his retirement benefits.12
By Decision13 of February 6, 1997, Executive Labor Arbiter
Valentin C. Guanio upheld Alusitain's position in this wise:
After carefully considering the respective submissions of
the parties and the evidence they adduced in support of
their opposing claims, this Office rules in favor of the
complainant.
To substantiate his allegation that he had continued
working for the respondents even after his supposed
resignation on February 19, 1991, the complainant
submitted in evidence his sworn statement and that of
his eldest daughter, Gloria Alusitain. In his affidavit, the
complainant swore that: "Bagamat ako ay pensionado ng
SSS, ako ay patuloy na naglilingkod/nagtratrabaho sa
kompanya ng Rufina Patis Factory hanggang noong
buwan ng Enero 1995." By way of corroboration, his
daughter on the other hand, stated under oath that since
elementary school (sic), she was the one who brought
food to her father at work in the Rufina Patis Factory;
and that the last time she brought him food at the said
factory was in the month of January 1995.
While the foregoing statements may appear to be self-
serving, still they have the ring of truth. From
experience, it is quite common that the eldest daughter
would be tasked with the duty of taking lunch to her
father at work. Besides, the respondents failed to
controvert these sworn declarations by submitting their
counter-affidavits. If it is true that the complainant had in
fact stopped working on February 1991, the respondents
could have produced a number of witnesses who could
have attested to this. Hence, their failure to submit even
a single affidavit does not speak well of their credibility
in this regard.
Thus, this Office finds that the complainant had executed
the letter of resignation and affidavit of separation from
employment in 1991 only for the purpose of securing a
pension from the SSS, but that despite this he remained
in the employ of the respondents until his actual
retirement on January 31, 1995, two years after the
effectivity of Republic Act 7641 on January 7, 1993. At
the time of his retirement, the complainant was already
sixty-five (65) years of age and had served the
respondent company for forty-seven (47) years and
therefore, he is legally entitled to the retirement benefits
granted by R.A. 7641 which is one-half (1/2) month
salary for every year of service which as computed will
amount to a total of P88,595.00 (P1,885.00 x 47 years).
WHEREFORE, in view of the foregoing, judgment is
hereby rendered ordering the respondents "Rufina Patis
Factory" and Jesus Lucas, Sr., jointly and severally to pay
complainant Juan Alusitain his retirement benefits in the
amount of P88,595.00.
SO ORDERED.14
On appeal, the NLRC, by Resolution15 of May 17, 1999, affirmed
the Labor Arbiter's decision.
Aggrieved by the NLRC resolution, petitioners brought the case on
certiorari16 to the Court of Appeals which, by the assailed
decision, dismissed it, holding that the NLRC committed no error
much less any grave abuse of discretion17 as Alusitain was able to
sufficiently establish that his letter of resignation and Affidavit of
Separation were executed only for the purpose of securing a
pension from the SSS and that he remained in the employ of
petitioners.18
Their motion for reconsideration having been denied by the Court
of Appeals by Resolution19 of December 6, 2000, petitioners
lodged the present petition.20
Petitioners argue that the appellate court erred when it did not
give weight and probative value to Alusitain's letter of resignation
and Affidavit of Separation, choosing instead to give credence to
his self-serving sworn statement and that of his daughter that he
remained in the employ of petitioners until January 31, 1995.
Petitioners assert that the Affidavit of Separation, being a public
document, is entitled to full faith and credit upon its face, and
proof is required to assail and controvert the same, citing Cacho v.
Court of Appeals21 and Arrieta v. Llosa.22
Petitioners further assert that the appellate court erred in
applying retroactively R.A. 7641 as said law does not expressly
provide for such retroactive application and to do so would defeat
the clear intent of Congress. Furthermore, petitioners insist that
the case of Oro Enterprises, Inc. v. NLRC23 is inapplicable and
submit that what is controlling is the case of J.V. Angeles
Construction Corp. v. NLRC24 where this Court held that before
R.A. 7641 could be given retroactive effect, the claimant should
still be an employee of the employer at the time the said law took
effect,.
The petition is impressed with merit.
This Court held in Oro25 that R.A. 7641 should be given
retroactive effect, viz:
R.A. 7641 is undoubtedly a social legislation. The law has
been enacted as a labor protection measure and as a
curative statute that absent a retirement plan devised
by, an agreement with, or a voluntary grant from, an
employer can respond, in part at least, to the financial
well-being of workers during their twilight years soon
following their life of labor. There should be little doubt
about the fact that the law can apply to labor
contracts still existing at the time the statute has taken
effect, and that its benefits can be reckoned not only
from the date of the law's enactment but retroactively to
the time said employment contracts have started. .
.26 (Underscoring supplied)
The doctrine enunciated in Oro has been clarified in several cases.
In CJC Trading, Inc. v. NLRC,27 this Court, speaking through Justice
Florentino Feliciano, held that R.A. 7641 may be given retroactive
effect where (1) the claimant for retirement benefits was still the
employee of the employer at the time the statute took effect; and
(2) the claimant had complied with the requirements for eligibility
under the statute for such retirement benefits.28These twin
requirements for the retroactive application of R.A. 7641 have
been reiterated in Philippine Scout Veterans Security and
Investigation Agency v. NLRC,29 Cabcaban v. NLRC,30 J.V. Angeles
Construction Corporation v. NLRC,31 and Manuel L. Quezon
University v. NLRC.32
It is thus clear that in order for respondent to claim retirement
benefits from petitioner Rufina Patis Factory, he has to prove that
he was its employee at the time R.A. 7641 took effect.
As a general rule, the factual findings and conclusions of quasi-
judicial agencies such as the NLRC are, on appeal, accorded great
weight and even finality, unless petitioners are able to show that
the NLRC arbitrarily disregarded the evidence before it or
misapprehended evidence of such nature as to compel a contrary
conclusion if properly appreciated.33
In affirming the decision of the NLRC and the Labor Arbiter, the
Court of Appeals disregarded Alusitain's letter of resignation and
Affidavit of Separation and gave weight to his and his daughter's
sworn statements that he remained in the employ of petitioners
until January 31, 1995.
It is a basic rule in evidence, however, that the burden of proof is
on the part of the party who makes the allegations34 ei incumbit
probatio, qui dicit, non qui negat.35 If he claims a right granted by
law, he must prove his claim by competent evidence, relying on
the strength of his own evidence and not upon the weakness of
that of his opponent.
In the case at bar, it was incumbent on Alusitain to prove that he
retired on January 31, 1995 and not on February 20, 1991 as
indicated on his letter of resignation. As the following discussion
will show, he utterly failed to discharge the onus.
Respondent's letter of resignation and May 22, 1991 Affidavit of
Separation which he admittedly voluntarily executed constitute
admissions against his own interest.36 The said documents belie
his claim that he retired on January 31, 1995. Being an admission
against interest, the documents are the best evidence which
affords the greatest certainty of the facts in dispute.37 The
rationale for the rule is based on the presumption that no man
would declare anything against himself unless such declaration
was true.38 Thus, it is fair to presume that the declaration
corresponds with the truth, and it is his fault if it does not.39
While these two documents may have facilitated the release of
Alusitain's retirement benefits from the SSS, hence, beneficial to
him at that time, they may still be considered admissions against
interest since the disserving quality of the admission is judged as
of the time it is used or offered in evidence and not when such
admission is made.40Thus, it matters not that the admission is
self-serving when it was made, so long as it is against respondent's
present claim.41
No doubt, admissions against interest may be refuted by the
declarant.42 It bears stressing, however, that Alusitain's Affidavit
of Separation filed with the SSS is a notarial
document,43 hence, prima facie evidence44 of the facts expressed
therein.45
Since notarial documents have in their favor the presumption of
regularity, to contradict the facts stated therein, there must be
evidence that is clear, convincing and more than merely
preponderant.46
Alusitain explains through his subsequent sworn statement that
he only executed these two documents in order to obtain his
retirement benefits from the SSS. His daughter, also by sworn
statement, corroborates his explanation. His position does not
persuade.
In order for a declarant to impugn a notarial document which he
himself executed, it is not enough for him to merely execute a
subsequent notarial document. What the law requires in order to
contradict the facts stated in a notarial document is clear and
convincing evidence. The subsequent notarial documents executed
by respondent and his daughter fall short of this standard.
The case of Reyes v. Zaballero47 is instructive. In said case, the
creditor executed on December 1, 1944 a notarial document
stating that he was releasing a real estate mortgage as the debtor
had already paid his debt. On even date, the creditor subsequently
executed an affidavit without the debtor's knowledge stating that
he had accepted the payment under protest and "obligado por las
circunstancias actuales." This Court held that the creditor's
statement in his affidavit that he received the money "obligado por
las circunstancias actuales" is self-serving evidence.48
A contrary rule would undermine the confidence of the public in
the integrity of notarial documents. In Dequito v. Llamas,49 this
Court held:
After executing the affidavit voluntarily wherein he made
admissions and declarations against his own interest
under the solemnity of an oath, he cannot be allowed to
spurn them and undo what he has done. He cannot, even
"with great repentance, retrieve the body he forsook and
now wishes to live."50
Neither is the sworn statement of Alusitain's daughter sufficient to
prove that he indeed retired on January 31, 1995. The February 6,
1997 Decision of Labor Arbiter Guanio relates the material
portion of the sworn statement of Alusitain's daughter as follows:
. . . By way of corroboration, his daughter on the other
hand, stated under oath that since elementary school
(sic), she was the one who brought food to her father at
work in the Rufina Patis Factory; and that the last time
she brought him food at the said factory was in the
month of January 1995.51 (Emphasis and underscoring
supplied)
Alusitain's daughter did not state, however, that her father worked
for petitioner Rufina Patis Factory until his alleged retirement on
January 31, 1995. All she said was that the last time she brought
him food at the factory was in January 1995. To conclude that
Alusitain was still employed on January 1995 from the mere fact
that his daughter brought him food at the Rufina Patis Factory
is non sequitur.
Lastly, while it is evident that Alusitain's subsequent sworn
statement is in the nature of a retraction of his May 22, 1991
Affidavit of Separation, such retraction does not necessarily negate
the affidavit. For retractions are generally unreliable and looked
upon with considerable disfavor by the courts as they can easily be
fabricated. Thus, before accepting a retraction, it is necessary to
examine the circumstances surrounding it and possible motives
for reversing the previous declaration, as these motives may not
necessarily be in consonance with the truth. To automatically
adopt them hook, line and sinker would allow unscrupulous
individuals to throw wide open the doors to fraud.
In the case at bar, Alusitain's retraction is highly suspect. Other
than his bare and self-serving allegations and the sworn
statement of his daughter which, as reflected above, cannot be
relied upon, he has not shown any scintilla of evidence that he was
employed with petitioner Rufina Patis Factory at the time R.A.
7641 took effect. He did not produce any documentary evidence
such as pay slips, income tax return, his identification card, or any
other independent evidence to substantiate his claim.
While the NLRC and its Labor Arbiters are not bound by technical
rules of procedure and evidence in the adjudication of
cases,52 this should not be construed as a license to disregard
fundamental rules on evidence in proving one's allegations.53
In fine, Alusitain having failed to prove that he was an employee of
petitioner at the time R.A. 7641 took effect, his claim for
retirement benefits thereunder must be disallowed.
WHEREFORE, the petition is GRANTED. The Court of Appeals
June 23, 2000 Decision and December 6, 2000 Resolution in CA-
G.R. SP No. 54722 are REVERSED and SET ASIDE.
SO ORDERED.

G.R. No. 156934 March 16, 2007
ALPHA C. JACULBE, Petitioner,
vs.
SILLIMAN UNIVERSITY,Respondent.
D E C I S I O N
CORONA, J.:
Petitioner comes to us via this petition for review on
certiorari1 to challenge a decision2 of the Court of Appeals (CA)
and the resolution3 affirming it.
Sometime in 1958, petitioner began working for respondents
university medical center as a nurse.4
In a letter dated December 3, 1992,5 respondent, through its
Human Resources Development Office, informed petitioner that
she was approaching her 35th year of service with the university
and was due for automatic retirement on November 18, 1993, at
which time she would be 57 years old. This was pursuant to
respondents retirement plan for its employees which provided
that its members could be automatically retired "upon reaching
the age of 65 or after 35 years of uninterrupted service to the
university."6 Respondent required certain documents in
connection with petitioners impending retirement.
A brief exchange of letters7 between petitioner and respondent
followed. Petitioner emphatically insisted that the compulsory
retirement under the plan was tantamount to a dismissal and
pleaded with respondent to be allowed to work until the age of 60
because this was the minimum age at which she could qualify for
SSS8 pension. But respondent stood pat on its decision to retire
her, citing "company policy."
On November 15, 1993, petitioner filed a complaint in the
National Labor Relations Commission (NLRC) for "termination of
service with preliminary injunction and/or restraining
order."9 On November 18, 1993, respondent compulsorily retired
petitioner.
After the parties submitted their position papers, the labor arbiter
rendered a decision finding respondent guilty of illegal dismissal
and ordered that petitioner be reinstated and paid full
backwages.10 On appeal, however, the NLRC reversed the labor
arbiters decision and dismissed the complaint for lack of
merit.11 The NLRC likewise denied petitioners motion for
reconsideration.12 In the assailed decision and resolution, the CA
affirmed the NLRC.
Hence, this petition.
The issues for our consideration are:
1) did respondents retirement plan imposing automatic
retirement after 35 years of service contravene the
security of tenure clause in the 1987 Constitution and
the Labor Code?
2) did respondent commit illegal dismissal by retiring
petitioner solely by reason of such provision in its
retirement plan?
Retirement plans allowing employers to retire employees who are
less than the compulsory retirement age of 65 are not per
se repugnant to the constitutional guaranty of security of tenure.
Article 287 of the Labor Code provides:
ART. 287. Retirement - Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
xxx
By its express language, the Labor Code permits employers and
employees to fix the applicable retirement age at below 60
years.13
However, after reviewing the assailed decision together with the
rules and regulations of respondents retirement plan, we find that
the plan runs afoul of the constitutional guaranty of security of
tenure contained in Article XIII, also known as the provision on
Social Justice and Human Rights.
The CA, in ruling against petitioner, premised its decision to
uphold the retirement plan on her voluntary participation therein:
The petitioner in this case may, however, argue that the Pantranco
case is not applicable in the case at bar as the controversy in the
said case involves a compulsory retirement on the basis of the
length of service rendered by the employee as agreed in an
existing CBA, whereas in the present case, the private respondent
compulsorily retired the petitioner not based on a CBA but on the
retirement scheme provided for in the private respondents
retirement plan. Nonetheless, this argument must fail. The
contract fixing for retirement age as allowed under Article 287 of
the Labor Code does not exclusively refer to CBA which provides
for an agreed retirement age. The said provision explicitly allows,
as well, other applicable employment contract to fix retirement
age.
The records disclose that the private respondents Retirement Plan
has been in effect for more than 30 years. The said plan is deemed
integrated into the employment contract between private
respondent and its employees as evidenced by the latters
voluntary contribution through monthly salary deductions.
Previous retirees have already enjoyed the benefits of the
retirement plan, and ever since the said plan was effected, no
questions or disagreement have been raised, until the same was
made to apply to the petitioner. xxx14 (emphasis ours)
The problem with this line of reasoning is that a perusal of the
rules and regulations of the plan shows that participation therein
was not voluntary at all.
Rule III of the plan, on membership, stated:
SECTION 1 MEMBERSHIP
All full-time Filipino employees of the University
will automatically become members of the Plan, provided,
however, that those who have retired from the University, even if
rehired, are no longer eligible for membership in the Plan. A
member who continues to serve the University cannot
withdraw from the Plan.
xxx xxx xxx
SECTION 2 EFFECTIVITY OF MEMBERSHIP
Membership in the Plan starts on the day a person is hired on a
full-time basis by the University.
SECTION 3 TERMINATION OF MEMBERSHIP
Termination of membership in the Plan shall be upon the death
of the member, resignation or termination of employees
contract by the University, or retirement from the
University.15 (emphasis ours).
Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount
equivalent to 3% of the basic salaries of the faculty and staff. To
this shall be added a 5% deduction from the basic salaries of the
faculty and staff.
A member on leave with the University approval shall continue
paying, based on his pay while on leave, his leave without pay
should pay his contributions to the Plan. However, a member, who
has been on leave without pay should pay his contributions based
on his salary plus the Universitys contributions while on leave or
the full amount within one month immediately after the date of
his reinstatement. Provided[,] further that if a member has no
sufficient source of income while on leave may pay within six
months after his reinstatement.16
From the language of the foregoing retirement plan rules, the
compulsory nature of both membership in and contribution to the
plan debunked the CAs theory that petitioners "voluntary
contributions" were evidence of her willing participation therein.
It was through no voluntary act of her own that petitioner became
a member of the plan. In fact, the only way she could have ceased
to be a member thereof was if she stopped working for
respondent altogether. Furthermore, in the rule on contributions,
the repeated use of the word "shall" ineluctably pointed to the
conclusion that employees had no choice but to contribute to the
plan (even when they were on leave).
According to the assailed decision, respondents retirement plan
"ha(d) been in effect for more than 30 years."17What was not
pointed out, however, was that the retirement plan came into
being in 197018 or 12 years after petitioner started working for
respondent. In short, it was not part of the terms of employment
to which petitioner agreed when she started working for
respondent. Neither did it become part of those terms shortly
thereafter, as the CA would have us believe.
Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the
latter, after reaching a certain age agrees to sever his or her
employment with the former.19 In Pantranco North Express, Inc. v.
NLRC,20 to which both the CA and respondent refer, the
imposition of a retirement age below the compulsory age of 65
was deemed acceptable because this was part of the CBA between
the employer and the employees. The consent of the employees, as
represented by their bargaining unit, to be retired even before the
statutory retirement age of 65 was laid out clearly in black and
white and was therefore in accord with Article 287.
In this case, neither the CA nor the respondent cited any
agreement, collective or otherwise, to justify the latters
imposition of the early retirement age in its retirement plan,
opting instead to harp on petitioners alleged "voluntary"
contributions to the plan, which was simply untrue. The truth was
that petitioner had no choice but to participate in the plan, given
that the only way she could refrain from doing so was to resign or
lose her job. It is axiomatic that employer and employee do not
stand on equal footing,21 a situation which often causes an
employee to act out of need instead of any genuine acquiescence
to the employer. This was clearly just such an instance.
Not only was petitioner still a good eight years away from the
compulsory retirement age but she was also still fully capable of
discharging her duties as shown by the fact that respondents
board of trustees seriously considered rehiring her after the
effectivity of her "compulsory retirement."22
As already stated, an employer is free to impose a retirement age
less than 65 for as long as it has the employees consent. Stated
conversely, employees are free to accept the employers offer to
lower the retirement age if they feel they can get a better deal with
the retirement plan presented by the employer. Thus, having
terminated petitioner solely on the basis of a provision of a
retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.
At this point, reinstatement is out of the
question.1awphi1.nt Petitioner is now 71 years old and therefore
well over the statutory compulsory retirement age. For this
reason, we grant her separation pay in lieu of reinstatement. It is
also for this reason that we modify the award of backwages in her
favor, to be computed from the time of her illegal dismissal on
November 18, 1993 up to her compulsory retirement age.
WHEREFORE, the petition is hereby GRANTED. The decision of
the Court of Appeals in CA-G.R. SP No. 50445
isREVERSED and SET ASIDE. The October 25, 1994 decision of
the labor arbiter finding respondent guilty of illegal dismissal
is REINSTATED, with the MODIFICATION that, in lieu of
reinstatement, petitioner is awarded separation pay, the award of
backwages to be computed from the time of her illegal dismissal
up to her compulsory retirement age.
SO ORDERED.

G.R. No. L-21642 July 30, 1966
SOCIAL SECURITY SYSTEM, petitioner-appellee,
vs.
CANDELARIA D. DAVAC, ET AL., respondents;
LOURDES Tuplano, respondent-appellant.
J. Ma. Francisco and N. G. Bravo for respondent-appellant.
Office of the Solicitor General Arturo A. Alafriz, Solicitor Camilo D.
Quiason and E. T. Duran for petitioner-appellee.
BARRERA, J.:
This is an appeal from the resolution of the Social Security
Commission declaring respondent Candelaria Davac as the person
entitled to receive the death benefits payable for the death of
Petronilo Davac.
The facts of the case as found by the Social Security Commission,
briefly are: The late Petronilo Davac, a former employee of Lianga
Bay Logging Co., Inc. became a member of the Social Security
System (SSS for short) on September 1, 1957. As such member, he
was assigned SS I.D. No. 08-007137. In SSS form E-1 (Member's
Record) which he accomplished and filed with the SSS on
November 21, 1957, he designated respondent Candelaria Davac
as his beneficiary and indicated his relationship to her as that of
"wife". He died on April 5, 1959 and, thereupon, each of the
respondents (Candelaria Davac and Lourdes Tuplano) filed their
claims for death benefit with the SSS. It appears from their
respective claims and the documents submitted in support
thereof, that the deceased contracted two marriages, the first,
with claimant Lourdes Tuplano on August 29, 1946, who bore him
a child, Romeo Davac, and the second, with Candelaria Davac on
January 18, 1949, with whom he had a minor daughter Elizabeth
Davac. Due to their conflicting claims, the processing thereof was
held in abeyance, whereupon the SSS filed this petition praying
that respondents be required to interpose and litigate between
themselves their conflicting claims over the death benefits in
question.1wph1.t
On February 25, 1963, the Social Security Commission issued the
resolution referred to above, Not satisfied with the said
resolution, respondent Lourdes Tuplano brought to us the present
appeal.
The only question to be determined herein is whether or not the
Social Security Commission acted correctly in declaring
respondent Candelaria Davac as the person entitled to receive the
death benefits in question.
Section 13, Republic Act No. 1161, as amended by Republic Act
No. 1792, in force at the time Petronilo Davac's death on April 5,
1959, provides:
1. SEC. 13. Upon the covered employee's death or total
and permanent disability under such conditions as the
Commission may define, before becoming eligible for
retirement and if either such death or disability is not
compensable under the Workmen's Compensation Act,
he or, in case of his death, his beneficiaries, as recorded by
his employer shall be entitled to the following benefit: ... .
(emphasis supplied.)
Under this provision, the beneficiary "as recorded" by the
employee's employer is the one entitled to the death benefits. In
the case of Tecson vs. Social Security System, (L-15798, December
28, 1961), this Court, construing said Section 13, said:
It may be true that the purpose of the coverage under
the Social Security System is protection of the employee
as well as of his family, but this purpose or intention of
the law cannot be enforced to the extent of contradicting
the very provisions of said law as contained in Section
13, thereof, ... . When the provision of a law are clear and
explicit, the courts can do nothing but apply its clear and
explicit provisions (Velasco vs. Lopez, 1 Phil, 270;
Caminetti vs. U.S., 242 U.S. 470, 61 L. ed. 442).
But appellant contends that the designation herein made in the
person of the second and, therefore, bigamous wife is null and
void, because (1) it contravenes the provisions of the Civil Code,
and (2) it deprives the lawful wife of her share in the conjugal
property as well as of her own and her child's legitime in the
inheritance.
As to the first point, appellant argues that a beneficiary under the
Social Security System partakes of the nature of a beneficiary in
life insurance policy and, therefore, the same qualifications and
disqualifications should be applied.
Article 2012 of the New Civil Code provides:
ART. 2012. Any person who is forbidden from receiving
any donation under Article 739 cannot be named
beneficiary of a life insurance policy by the person who
cannot make any donation to him according to said
article.
And Article 739 of the same Code prescribes:
ART. 739. The following donations shall be void:
(1) Those made between persons who were guilty of
adultery or concubinage at the time of the donation;
x x x x x x x x x
Without deciding whether the naming of a beneficiary of the
benefits accruing from membership in the Social Security System
is a donation, or that it creates a situation analogous to the relation
of an insured and the beneficiary under a life insurance policy, it is
enough, for the purpose of the instant case, to state that the
disqualification mentioned in Article 739 is not applicable to
herein appellee Candelaria Davac because she was not guilty of
concubinage, there being no proof that she had knowledge of the
previous marriage of her husband Petronilo.1
Regarding the second point raised by appellant, the benefits
accruing from membership in the Social Security System do not
form part of the properties of the conjugal partnership of the
covered member. They are disbursed from a public special fund
created by Congress in pursuance to the declared policy of the
Republic "to develop, establish gradually and perfect a social
security system which ... shall provide protection against the
hazards of disability, sickness, old age and death."2
The sources of this special fund are the covered employee's
contribution (equal to 2- per cent of the employee's monthly
compensation);3 the employer's contribution (equivalent to 3-
per cent of the monthly compensation of the covered
employee);4 and the Government contribution which consists in
yearly appropriation of public funds to assure the maintenance of
an adequate working balance of the funds of the
System.5 Additionally, Section 21 of the Social Security Act, as
amended by Republic Act 1792, provides:
SEC. 21. Government Guarantee. The benefits
prescribed in this Act shall not be diminished and to
guarantee said benefits the Government of the Republic
of the Philippines accepts general responsibility for the
solvency of the System.
From the foregoing provisions, it appears that the benefit
receivable under the Act is in the nature of a special privilege or an
arrangement secured by the law, pursuant to the policy of the
State to provide social security to the workingmen. The amounts
that may thus be received cannot be considered as property
earned by the member during his lifetime. His contribution to the
fund, it may be noted, constitutes only an insignificant portion
thereof. Then, the benefits are specifically declared not
transferable,6 and exempted from tax legal processes, and
lien.7Furthermore, in the settlement of claims thereunder the
procedure to be observed is governed not by the general
provisions of law, but by rules and regulations promulgated by the
Commission. Thus, if the money is payable to the estate of a
deceased member, it is the Commission, not the probate or regular
court that determines the person or persons to whom it is
payable.8 that the benefits under the Social Security Act are not
intended by the lawmaking body to form part of the estate of the
covered members may be gathered from the subsequent
amendment made to Section 15 thereof, as follows:
SEC. 15. Non-transferability of benefit. The system
shall pay the benefits provided for in this Act to such
persons as may be entitled thereto in accordance with
the provisions of this Act. Such benefits are not
transferable, and no power of attorney or other
document executed by those entitled thereto in favor of
any agent, attorney, or any other individual for the
collection thereof in their behalf shall be recognized
except when they are physically and legally unable to
collect personally such benefits: Provided, however, That
in the case of death benefits, if no beneficiary has been
designated or the designation there of is void, said
benefits shall be paid to the legal heirs in accordance
with the laws of succession. (Rep. Act 2658, amending
Rep. Act 1161.)
In short, if there is a named beneficiary and the designation is not
invalid (as it is not so in this case), it is not the heirs of the
employee who are entitled to receive the benefits (unless they are
the designated beneficiaries themselves). It is only when there is
no designated beneficiaries or when the designation is void, that
the laws of succession are applicable. And we have already held
that the Social Security Act is not a law of succession.9
Wherefore, in view of the foregoing considerations, the resolution
of the Social Security Commission appealed from is hereby
affirmed, with costs against the appellant.
So ordered.

G.R. No. 170195 March 28, 2011
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY
SYSTEM, Petitioner,
vs.
TERESA G. FAVILA, Respondent.
D E C I S I O N
DEL CASTILLO, J.:
A spouse who claims entitlement to death benefits as a primary
beneficiary under the Social Security Law must establish two
qualifying factors, to wit: (1) that he/she is the legitimate spouse;
and (2) that he/she is dependent upon the member for support.1
This Petition for Review on Certiorari assails the Decision2 dated
May 24, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 82763
which reversed and set aside the Resolution3 dated June 4, 2003
and Order4 dated January 21, 2004 of the Social Security
Commission (SSC) in SSC Case No. 8-15348-02. Likewise assailed
is the CA Resolution5 dated October 17, 2005 denying the Motion
for Reconsideration thereto.
Factual Antecedents
On August 5, 2002, respondent Teresa G. Favila (Teresa) filed a
Petition6 before petitioner SSC docketed as SSC Case No. 8-15348-
02. She averred therein that after she was married to Florante
Favila (Florante) on January 17, 1970, the latter designated her as
the sole beneficiary in the E-1 Form he submitted before
petitioner Social Security System (SSS), Quezon City Branch on
June 30, 1970. When they begot their children Jofel, Floresa and
Florante II, her husband likewise designated each one of them as
beneficiaries. Teresa further averred that when Florante died on
February 1, 1997, his pension benefits under the SSS were given
to their only minor child at that time, Florante II, but only until his
emancipation at age 21. Believing that as the surviving legal wife
she is likewise entitled to receive Florantes pension benefits,
Teresa subsequently filed her claim for said benefits before the
SSS. The SSS, however, denied the claim in a letter dated January
31, 2002, hence, the petition.
In its Answer,7 SSS averred that on May 6, 1999, the claim for
Florantes pension benefits was initially settled in favor of Teresa
as guardian of the minor Florante II. Per its records, Teresa was
paid the monthly pension for a total period of 57 months or from
February 1997 to October 2001 when Florante II reached the age
of 21. The claim was, however, re-adjudicated on July 11, 2002
and the balance of the five-year guaranteed pension was again
settled in favor of Florante II.8 SSS also alleged that Estelita Ramos,
sister of Florante, wrote a letter9stating that her brother had long
been separated from Teresa. She alleged therein that the couple
lived together for only ten years and then decided to go their
separate ways because Teresa had an affair with a married man
with whom, as Teresa herself allegedly admitted, she slept with
four times a week. SSS also averred that an interview conducted in
Teresas neighborhood in Tondo, Manila on September 18, 1998
revealed that although she did not cohabit with another man after
her separation with Florante, there were rumors that she had an
affair with a police officer. To support Teresas non-entitlement to
the benefits claimed, SSS cited the provisions of Sections 8(k) and
13 of Republic Act (RA) No. 1161, as amended otherwise known
as Social Security (SS) Law.10
Ruling of the Social Security Commission
In a Resolution11 dated June 4, 2003, SSC held that the surviving
spouses entitlement to an SSS members death benefits is
dependent on two factors which must concur at the time of the
latters death, to wit: (1) legality of the marital relationship; and (2)
dependency for support. As to dependency for support, the SSC
opined that same is affected by factors such as separation de
facto of the spouses, marital infidelity and such other grounds
sufficient to disinherit a spouse under the law. Thus, although
Teresa is the legal spouse and one of Florantes designated
beneficiaries, the SSC ruled that she is disqualified from claiming
the death benefits because she was deemed not dependent for
support from Florante due to marital infidelity. Under Section 8(k)
of the SS Law, the dependent spouse until she remarries is entitled
to death benefits as a primary beneficiary, together with the
deceased members legitimate minor children. According to SSC,
the word "remarry" under said provision has been interpreted as
to include a spouse who cohabits with a person other than his/her
deceased spouse or is in an illicit relationship. This is for the
reason that no support is due to such a spouse and to allow
him/her to enjoy the members death benefits would be
tantamount to circumvention of the law. Even if a spouse did not
cohabit with another, SSC went on to state that for purposes of
the SS Law, it is sufficient that the separation in-fact of the
spouses was precipitated by an adulterous act since the actual
absence of support from the member is evident from such
separation. Notable in this case is that while Teresa denied having
remarried or cohabited with another man, she did not, however,
deny her having an adulterous relationship. SSC therefore
concluded that Teresa was not dependent upon Florante for
support and consequently disqualified her from enjoying her
husbands death benefits.
SSC further held that Teresa did not timely contest her non-
entitlement to the award of benefits. It was only when Florante IIs
pension was stopped that she deemed it wise to file her claim. For
SSC, Teresas long silence led SSS to believe that she really suffered
from a disqualification as a beneficiary, otherwise she would have
immediately protested her non-entitlement. It thus opined that
Teresa is now estopped from claiming the benefits. Hence, SSC
dismissed the petition for lack of merit.
As Teresas Motion for Reconsideration12 of said Resolution was
also denied by SSC in an Order13 dated January 21, 2004, she
sought recourse before the CA through a Petition for
Review14 under Rule 43.
Ruling of the Court of Appeals
Before the CA, Teresa insisted that SSS should have granted her
claim for death benefits because she is undisputedly the legal
surviving spouse of Florante and is therefore entitled to such
benefits as primary beneficiary. She claimed that the SSCs finding
that she was not dependent upon Florante for support is unfair
because the fact still remains that she was legally married to
Florante and that her alleged illicit affair with another man was
never sufficiently established. In fact, SSS admitted that there was
no concrete evidence or proof of her amorous relationship with
another man. Moreover, Teresa found SSSs strict interpretation of
the SS Law as not only anti-labor but also anti-family. It is anti-
labor in the sense that it does not work to the benefit of a
deceased employees primary beneficiaries and anti-family
because in denying benefits to surviving spouses, it destroys
family solidarity. In sum, Teresa prayed for the reversal and
setting aside of the assailed Resolution and Order of the SSC.
The SSC and the SSS through the Office of the Solicitor General
(OSG) filed their respective Comments15 to the petition.
SSC contended that the word "spouse" under Section 8(k) of the
SS Law is qualified by the word "dependent". Thus, to be entitled
to death benefits under said law, a surviving spouse must have
been dependent upon the member spouse for support during the
latters lifetime including the very moment of contingency.
According to it, the fact of dependency is a mandatory
requirement of law. If it is otherwise, the law would have simply
used the word "spouse" without the descriptive word
"dependent". In this case, SSC emphasized that Teresa never
denied the fact that she and Florante were already separated and
living in different houses when the contingency happened. Given
this fact and since the conduct of investigation is standard
operating procedure for SSS, it being under legal obligation to
determine prior to the award of death benefit whether the
supposed beneficiary is actually receiving support from the
member or if such support was rightfully withdrawn prior to the
contingency, SSS conducted an investigation with respect to the
couples separation. And as said investigation revealed tales of
Teresas adulterous relationship with another man, SSS therefore
correctly adjudicated the entire death benefits in favor of Florante
II.
To negate Teresas claim that SSS failed to establish her marital
infidelity, SSC enumerated the following evidence: (1) the
letter16 of Florantes sister, Estelita Ramos, stating that the main
reasons why Teresa and Florante separated after only 10 years of
marriage were Teresas adulterous relationship with another man
and her propensity for gambling; (2) the Memorandum17 dated
August 30, 2002 of SSS Senior Analysts Liza Agilles and Jana
Simpas which ran through the facts in connection with the claim
for death benefits accruing from Florantes death. It indicates
therein, among others, that based on interviews conducted in
Teresas neighborhood, she did not cohabit with another man
after her separation from her husband although there were
rumors that she and a certain police officer had an affair.
However, there is not enough proof to establish their relationship
as Teresa and her paramour did not live together as husband and
wife; and (3) the field investigation report18 of SSS Senior Analyst
Fernando F. Nicolas which yielded the same findings. The SSC
deemed the foregoing evidence as substantial to support the
conclusion that Teresa indeed had an illicit relationship with
another man.
SSC also defended SSSs interpretation of the SS law and argued
that it is neither anti-labor nor anti-family. It is not anti-labor
because the subject matter of the case is covered by the SS Law
and hence, Labor Law has no application. It is likewise not anti-
family because SSS has nothing to do with Teresas separation
from her husband which resulted to the latters withdrawal of
support for her. At any rate, SSC advanced that even if Teresa is
entitled to the benefits claimed, same have already been received
in its entirety by Florante II so that no more benefits are due to
Florantes other beneficiaries. Hence, SSC prayed for the dismissal
of the petition.
For its part, the OSG likewise believed that Teresa is not entitled to
the benefits claimed as she lacks the requirement that the wife
must be dependent upon the member for support. This is in view
of the rule that beneficiaries under the SS Law need not be the
legal heirs but those who are dependent upon him for support.
Moreover, it noted that Teresa did not file a protest before the SSS
to contest the award of the five-year guaranteed pension to their
son Florante II. It posited that because of this, Teresa cannot raise
the matter for the first time before the courts. The OSG also
believed that no further benefits are due to Florantes other
beneficiaries considering that the balance of the five-year
guaranteed pension has already been settled.
In a Decision19 dated May 24, 2005, the CA found Teresas
petition impressed with merit. It gave weight to the fact that she
is a primary beneficiary because she is the lawful surviving
spouse of Florante and in addition, she was designated by Florante
as such beneficiary. There was no legal separation or annulment
of marriage that could have disqualified her from claiming the
death benefits and that her designation as beneficiary had not
been invalidated by any court of law. The CA cited Social Security
System v. Davac20 where it was held that it is only when there is
no designation of beneficiary or when the designation is void that
the SSS would have to decide who is entitled to claim the benefits.
It opined that once a spouse is designated by an SSS member as
his/her beneficiary, same forecloses any inquiry as to whether the
spouse is indeed a dependent deriving support from the member.
Thus, when SSS conducted an investigation to determine whether
Teresa is indeed dependent upon Florante, SSS was unilaterally
adding a requirement not imposed by law which makes it very
difficult for designated primary beneficiaries to claim for benefits.
To make things worse, the result of said investigation which
became the basis of Teresas non-entitlement to the benefits
claimed was culled from unfounded rumors.
Moreover, the CA saw SSSs conduct of investigations to be
violative of the constitutional right to privacy. It lamented that SSS
has no power to investigate and pry into the members and
his/her familys personal lives and should cease and desist from
conducting such investigations. Ultimately, the CA reversed and
set aside the assailed Resolution and Order of the SSC and directed
SSS to pay Teresas monetary claims which included the monthly
pension due her as the surviving spouse and the lump sum
benefit equivalent to thirty-six times the monthly pension.
SSC filed its Motion for Reconsideration21 of said Decision but
same was denied in a Resolution22 dated October 17, 2005.
Impleading SSS as co-petitioner, SSC thus filed this petition for
review on certiorari.
Issue
Is Teresa a primary beneficiary in contemplation of the Social
Security Law as to be entitled to death benefits accruing from the
death of Florante?
Petitioners Arguments
SSC reiterates the argument that to be entitled to death benefits, a
surviving spouse must have been actually dependent for support
upon the member spouse during the latters lifetime including the
very moment of contingency. To it, this is clearly the intention of
the legislature; otherwise, Section 8(k) of the SS law would have
simply stated "spouse" without the descriptive word "dependent".
Here, although Teresa is without question Florantes legal spouse,
she is not the "dependent spouse" referred to in the said provision
of the law. Given the reason for the couples separation for about
17 years prior to Florantes death and in the absence of proof that
during said period Teresa relied upon Florante for support, there
is therefore no reason to infer that Teresa is a dependent spouse
entitled to her husbands death benefits.
SSC adds that in the process of determining non-dependency status
of a spouse, conviction of a crime involving marital infidelity is not
an absolute necessity. It is sufficient for purposes of the award of
death benefits that a thorough investigation was conducted by SSS
through interviews of impartial witnesses and that same showed
that the spouse-beneficiary committed an act of marital infidelity
which caused the member to withdraw support from his spouse.
In this case, no less than Florantes sister, who does not stand to
benefit from the present controversy, revealed that Teresa
frequented a casino and was disloyal to her husband so that they
separated after only 10 years of marriage. This was affirmed
through the interview conducted in Teresas neighborhood.
Hence, it is not true that Teresas marital infidelity was not
sufficiently proven.
Likewise, SSC contends that contrary to the CAs posture, a
members designation of a primary beneficiary does not
guarantee the latters entitlement to death benefits because such
entitlement is determined only at the time of happening of the
contingency. This is because there may have been events which
supervened subsequent to the designation which would otherwise
disqualify the person designated as beneficiary such as
emancipation of a members child or separation from his/her
spouse. This is actually the same reason why SSS must conduct an
investigation of all claims for benefits.
Moreover, SSC justifies SSSs conduct of investigation and argues
that said office did not intrude into Florantes and his familys
personal lives as the investigation did not aggravate the situation
insofar as Teresas relationship with her deceased husband was
concerned. It merely led to the discovery of the true state of affairs
between them so that based on it, the death benefits were
awarded to the rightful primary beneficiary, Florante II. Clearly,
such an investigation is an essential part of adjudication process,
not only in this case but also in all claims for benefits filed before
SSS. Thus, SSC prays for the setting aside of the assailed CA
Decision and Resolution.
Respondents Arguments
To support her entitlement to the death benefits claimed, Teresa
cited Ceneta v. Social Security System,23 a case decided by the CA
which declared, viz:
Clearly then, the term dependent spouse, who must not re-marry
in order to be entitled to the SSS death benefits accruing from the
death of his/her spouse, refers to the legal spouse who, under the
law, is entitled to receive support from the other spouse.
Indubitably, petitioner, having been legally married to the
deceased SSS member until the latters death and despite his
subsequent marriage to respondent Carolina, is deemed
dependent for support under Article 68 of the Family Code. Said
provision reads:
The husband and wife are obliged to live together, observe
mutual love, respect and fidelity, and render mutual help and
support
Based on said law, petitioner is, therefore, entitled to the claimed
death benefits. Her marriage to the deceased not having been
lawfully severed, the law disputably presumes her to be
continually dependent for support.
No evidence or even a mere inference can be adduced to prove
that petitioner ceased to derive all her needs indispensable for her
sustenance, and thus, she remains a legal dependent. A dependent
spouse is primary beneficiary entitled to the death benefits of a
deceased SSS member spouse unless he or she remarries. A mere
allegation of adultery not substantially proven can not validly
deprive petitioner of the support referred to under the law, and
consequently, of her claim under the SSS Law.
Thus, being the legal wife, Teresa asserts that she is presumed to
be dependent upon Florante for support. The bare allegation of
Estelita that she had an affair with another man is insufficient to
deprive her of support from her husband under the law and,
conversely, of the death benefits from SSS. Moreover, Teresa points
out that despite their separation and the rumors regarding her
infidelity, Florante did not withdraw her designation as primary
beneficiary. Under this circumstance, Teresa believes that Florante
really intended for her to receive the benefits from SSS.
Teresa also agrees with the CAs finding that SSS unilaterally added
to the
requirements of the law the condition that a surviving spouse
must be actually dependent for support upon the member spouse
during the latters lifetime. She avers that this could not have been
the lawmakers intention as it would make it difficult or even
impossible for beneficiaries to claim for benefits under the SS Law.
She stresses that courts (or quasi-judicial agencies for that
matter), may not, in the guise of interpretation, enlarge the scope
of a statute and include therein situations not provided nor
intended by lawmakers. Courts are not authorized to insert into
the law what they think should be in it or to supply what they
think the legislature would have supplied if its attention had been
called to the omission. Hence, Teresa prays that the assailed CA
Decision and Resolution be affirmed in toto.
Our Ruling
We find merit in the petition.
The law in force at the time of Florantes death was RA 1161.
Section 8 (e) and (k) of said law provides:
Section 8. Terms Defined. For the purposes of this Act, the
following terms shall, unless the context indicates otherwise, have
the following meanings:
x x x x
(e) Dependent The legitimate, legitimated or legally adopted child
who is unmarried, not gainfully employed and not over twenty-
one years of age, or over twenty-one years of age, provided that he
is congenitally incapacitated and incapable of self-support,
physically or mentally; the legitimate spouse dependent for
support upon the employee; and the legitimate parents wholly
dependent upon the covered employee for regular support.
x x x x
(k) Beneficiaries The dependent spouse until he remarries and
dependent children, who shall be the primary beneficiaries. In
their absence, the dependent parents and, subject to the
restrictions imposed on dependent children, the legitimate
descendants and illegitimate children who shall be the secondary
beneficiaries. In the absence of any of the foregoing, any other
person designated by the covered employee as secondary
beneficiary. (Emphasis ours.)
From the above-quoted provisions, it is plain that for a spouse to
qualify as a primary beneficiary under paragraph (k) thereof,
he/she must not only be a legitimate spouse but also a dependent
as defined under paragraph (e), that is, one who is dependent
upon the member for support. Paragraphs (e) and (k) of Section 8
of RA 1161 are very clear. "Hence, we need only apply the law.
Under the principles of statutory construction, if a statute is clear,
plain and free from ambiguity, it must be given its literal meaning
and applied without attempted interpretation. This plain meaning
rule or verba legis, derived from the maxim index animo sermo
est (speech is the index of intention), rests on the valid
presumption that the words employed by the legislature in a
statute correctly express its intent by the use of such words as are
found in the statute. Verba legis non est recedendum, or, from the
words of a statute there should be no departure."24
Thus, in Social Security System v. Aguas25 we held that:
[I]t bears stressing that for her (the claimant) to qualify as a
primary beneficiary, she must prove that she was the legitimate
spouse dependent for support from the employee. The claimant-
spouse must therefore establish two qualifying factors: (1) that
she is the legitimate spouse, and (2) that she is dependent upon
the member for support. x x x
Here, there is no question that Teresa was Florantes legal wife.
What is at point, however, is whether Teresa is dependent upon
Florante for support in order for her to fall under the term
"dependent spouse" under Section 8(k) of RA 1161.
What the SSC relies on in concluding that Teresa was not
dependent upon Florante for support during their separation for
17 years was its findings that Teresa maintained an illicit
relationship with another man. Teresa however counters that
such illicit relationship has not been sufficiently established and,
hence, as the legal wife, she is presumed to be continually
dependent upon
Florante for support.
We agree with Teresa that her alleged affair with another man
was not sufficiently established. The Memorandum of SSS Senior
Analysts Liza Agilles and Jana Simpas reveals that it was Florante
who was in fact living with a common law wife, Susan Favila
(Susan) and their three minor children at the time of his death.
Susan even filed her own claim for death benefits with the SSS but
same was, however, denied. With respect to Teresa, we quote the
pertinent portions of said Memorandum, viz:
SUSAN SUBMITTED A LETTER SIGNED BY ESTELITA RAMOS,
ELDER SISTER OF THE DECEASED STATING THAT MEMBER WAS
SEPARATED FROM TERESA AFTER 10 YEARS OF LIVING IN FOR
THE REASONS THAT HIS WIFE HAD COHABITED WITH A
MARRIED MAN. ALSO, PER ESTELITA, THE WIFE HERSELF
ADMITTED THAT THE MAN SLEPT WITH HER 4 TIMES A WEEK.
TERESA SUBMITTED AN AFFIDAVIT EXECUTED
BY NAPOLEON AND JOSEFINA, BROTHER AND
SISTER (IN) LAW, RESPECTIVELY, OF THE
DECEASED THAT TERESA HAS NEVER RE-
MARRIED NOR COHABITED WITH ANOTHER
MAN.
BASED ON THE INTERVIEW (DATED 9/18/98)
CONDUCTED FROM THE NEIGHBORHOOD OF
TERESA AND BGY. KAGAWAD IN TONDO,
MANILA, IT WAS ESTABLISHED THAT TERESA
DID NOT COHABIT WITH ANOTHER MAN
AFTER THE SEPARATION ALTHOUGH THERE
ARE RUMORS THAT SHE AND A CERTAIN
POLICE OFFICER HAD AN AFFAIR. BUT [NOT]
ENOUGH PROOF TO ESTABLISH THEIR
RELATIONSHIP SINCE THEY DID NOT LIVE-IN
AS HUSBAND AND WIFE.
BASED ON THE INTERVIEW WITH JOSEFINA
FAVILA, MEMBER AND TERESA WERE
SEPARATED FOR A NUMBER OF YEARS AND
THAT SHE HAD NO KNOWLEDGE IF TERESA
COHABITED WITH ANOTHER MAN ALTHOUGH
SHE HEARD OF THE RUMORS THAT SAID WIFE
HAD AN AFFAIR WITH ANOTHER
MAN. NAPOLEON WAS NOT INTERVIEWED.
(Emphasis ours)
While SSC believes that the foregoing constitutes substantial
evidence of Teresas amorous relationship, we, however, find
otherwise. It is not hard to see that Estelitas claim of Teresas
cohabitation with a married man is a mere allegation without
proof. Likewise, the interviews conducted by SSS revealed rumors
only that Teresa had an affair with a certain police officer. Notably,
not one from those interviewed confirmed that such an affair
indeed existed. "The basic rule is that mere allegation is not
evidence and is not equivalent to proof. Charges based on mere
suspicion and speculation likewise cannot be given
credence."26 "Mere uncorroborated hearsay or rumor does not
constitute substantial evidence."27 Remarkably, the Memorandum
itself stated that there is not enough proof to establish Teresas
alleged relationship with another man since they did not live as
husband and wife.
This notwithstanding, we still find untenable Teresas assertion
that being the legal wife, she is presumed dependent upon
Florante for support. In Re: Application for Survivors Benefits of
Manlavi,28 this Court defined "dependent" as "one who derives his
or her main support from another [or] relying on, or subject to,
someone else for support; not able to exist or sustain oneself, or to
perform anything without the will, power or aid of someone else."
Although therein, the wifes marriage to the deceased husband
was not dissolved prior to the latters death, the Court denied the
wifes claim for survivorship benefits from the Government
Service Insurance System (GSIS) because the wife abandoned her
family to live with other men for more than 17 years until her
husband died. Her whereabouts was unknown to her family and
she never attempted to communicate with them or even check up
on the well-being of her daughter with the deceased. From these,
the Court concluded that the wife during said period was not
dependent on her husband for any support, financial or
otherwise, hence, she is not a dependent within the contemplation
of RA 829129 as to be entitled to survivorship benefits. It is
worthy to note that under Section 2(f) RA 8291, a legitimate
spouse dependent for support is likewise included in the
enumeration of dependents and under Section 2(g), the legal
dependent spouse in the enumeration of primary beneficiaries.
Under this premise, we declared in Aguas that "the obvious
conclusion is that a wife who is already separated de facto from
her husband cannot be said to be dependent for support upon
the husband, absent any showing to the contrary. Conversely, if it
is proved that the husband and wife were still living together at
the time of his death, it would be safe to presume that she was
dependent on the husband for support, unless it is shown that she
is capable of providing for herself."30 Hence, we held therein that
the wife-claimant had the burden to prove that all the statutory
requirements have been complied with, particularly her
dependency on her husband at the time of his death. And, while
said wife-claimant was the legitimate wife of the deceased, we
ruled that she is not qualified as a primary beneficiary since she
failed to present any proof to show that at the time of her
husbands death, she was still dependent on him for support even
if they were already living separately.
In this case, aside from Teresas bare allegation that she was
dependent upon her husband for support and her misplaced
reliance on the presumption of dependency by reason of her valid
and then subsisting marriage with Florante, Teresa has not
presented sufficient evidence to discharge her burden of proving
that she was dependent upon her husband for support at the time
of his death. She could have done this by submitting affidavits of
reputable and disinterested persons who have knowledge that
during her separation with Florante, she does not have a known
trade, business, profession or lawful occupation from which she
derives income sufficient for her support and such other evidence
tending to prove her claim of dependency. While we note from the
abovementioned SSS Memorandum that Teresa submitted
affidavits executed by Napoleon Favila and Josefina Favila, same
only pertained to the fact that she never remarried nor cohabited
with another man. On the contrary, what is clear is that she and
Florante had already been separated for about 17 years prior to
the latters death as Florante was in fact, living with his common
law wife when he died. Suffice it to say that "[w]hoever claims
entitlement to the benefits provided by law should establish his or
her right thereto by substantial evidence."31Hence, for Teresas
failure to show that despite their separation she was dependent
upon Florante for support at the time of his death, Teresa cannot
qualify as a primary beneficiary.1wphi1 Hence, she is not
entitled to the death benefits accruing on account of Florantes
death.
As a final note, we do not agree with the CAs pronouncement that
the investigations conducted by SSS violate a persons right to
privacy. SSS, as the primary institution in charge of extending
social security protection to workers and their beneficiaries is
mandated by Section 4(b)(7) of RA 828232 to require reports,
compilations and analyses of statistical and economic data and to
make an investigation as may be needed for its proper
administration and development. Precisely, the investigations
conducted by SSS are appropriate in order to ensure that the
benefits provided under the SS Law are received by the rightful
beneficiaries. It is not hard to see that such measure is necessary
for the systems proper administration, otherwise, it will be
swamped with bogus claims that will pointlessly deplete its funds.
Such scenario will certainly frustrate the purpose of the law which
is to provide covered employees and their families protection
against the hazards of disability, sickness, old age and death, with a
view to promoting their well-being in the spirit of social justice.
Moreover and as correctly pointed out by SSC, such investigations
are likewise necessary to carry out the mandate of Section 15 of
the SS Law which provides in part, viz:
Sec. 15. Non-transferability of Benefits. The SSS shall pay the
benefits provided for in this Act to such [x x x] persons as may be
entitled thereto in accordance with the provisions of this Act x
x x. (Emphasis ours.)
WHEREFORE, the Petition for Review on Certiorari is GRANTED.
The assailed Decision and Resolution of the Court of Appeals dated
May 24, 2005 and October 17, 2005 in CA-G.R. SP No. 82763 are
hereby REVERSED and SET ASIDE. Respondent Teresa G. Favila is
declared to be not a dependent spouse within the contemplation of
Republic Act No. 1161 and is therefore not entitled to death
benefits accruing from the death of Florante Favila.
SO ORDERED.

G.R. No. 132529. February 2, 2001
SUSAN NICDAO CARIO, petitioner,
vs.
SUSAN YEE CARIO, respondent.
D E C I S I O N
YNARES-SANTIAGO, J.:
The issue for resolution in the case at bar hinges on the validity of
the two marriages contracted by the deceased SPO4 Santiago S.
Cario, whose death benefits is now the subject of the
controversy between the two Susans whom he
married. 1wphi1.nt
Before this Court is a petition for review on certiorari seeking to
set aside the decision 1 of the Court of Appeals in CA-G.R. CV No.
51263, which affirmed in toto the decision 2 of the Regional Trial
Court of Quezon City, Branch 87, in Civil Case No. Q-93-18632.
During the lifetime of the late SPO4 Santiago S. Cario, he
contracted two marriages, the first was on June 20, 1969, with
petitioner Susan Nicdao Cario (hereafter referred to as Susan
Nicdao), with whom he had two offsprings, namely, Sahlee and
Sandee Cario; and the second was on November 10, 1992, with
respondent Susan Yee Cario (hereafter referred to as Susan Yee),
with whom he had no children in their almost ten year
cohabitation starting way back in 1982.
In 1988, SPO4 Santiago S. Cario became ill and bedridden due to
diabetes complicated by pulmonary tuberculosis. He passed away
on November 23, 1992, under the care of Susan Yee, who spent
for his medical and burial expenses. Both petitioner and
respondent filed claims for monetary benefits and financial
assistance pertaining to the deceased from various government
agencies. Petitioner Susan Nicdao was able to collect a total of
P146,000.00 from MBAI, PCCUI, Commutation, NAPOLCOM,
[and] Pag-ibig, 3 while respondent Susan Yee received a total of
P21,000.00 from GSIS Life, Burial (GSIS) and burial (SSS). 4
On December 14, 1993, respondent Susan Yee filed the instant
case for collection of sum of money against petitioner Susan
Nicdao praying, inter alia, that petitioner be ordered to return to
her at least one-half of the one hundred forty-six thousand pesos
(P146,000.00) collectively denominated as death benefits which
she (petitioner) received from MBAI, PCCUI, Commutation,
NAPOLCOM, [and] Pag-ibig. Despite service of summons,
petitioner failed to file her answer, prompting the trial court to
declare her in default.
Respondent Susan Yee admitted that her marriage to the deceased
took place during the subsistence of, and without first obtaining a
judicial declaration of nullity of, the marriage between petitioner
and the deceased. She, however, claimed that she had no
knowledge of the previous marriage and that she became aware
of it only at the funeral of the deceased, where she met petitioner
who introduced herself as the wife of the deceased. To bolster her
action for collection of sum of money, respondent contended that
the marriage of petitioner and the deceased is void ab
initio because the same was solemnized without the required
marriage license. In support thereof, respondent presented: 1) the
marriage certificate of the deceased and the petitioner which
bears no marriage license number; 5 and 2) a certification dated
March 9, 1994, from the Local Civil Registrar of San Juan, Metro
Manila, which reads
This is to certify that this Office has no record of marriage license of
the spouses SANTIAGO CARINO (sic) and SUSAN NICDAO, who are
married in this municipality on June 20, 1969. Hence, we cannot
issue as requested a true copy or transcription of Marriage License
number from the records of this archives.
This certification is issued upon the request of Mrs. Susan Yee
Cario for whatever legal purpose it may serve. 6
On August 28, 1995, the trial court ruled in favor of respondent,
Susan Yee, holding as follows:
WHEREFORE, the defendant is hereby ordered to pay the plaintiff
the sum of P73,000.00, half of the amount which was paid to her in
the form of death benefits arising from the death of SPO4 Santiago
S. Cario, plus attorneys fees in the amount of P5,000.00, and costs
of suit.
IT IS SO ORDERED. 7
On appeal by petitioner to the Court of Appeals, the latter affirmed
in toto the decision of the trial court. Hence, the instant petition,
contending that:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN AFFIRMING THE FINDINGS OF THE LOWER COURT
THAT VDA. DE CONSUEGRA VS. GSIS IS APPLICABLE TO
THE CASE AT BAR.
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN APPLYING EQUITY IN THE INSTANT CASE INSTEAD
OF THE CLEAR AND UNEQUIVOCAL MANDATE OF THE
FAMILY CODE.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN NOT FINDING THE CASE OF VDA. DE CONSUEGRA VS
GSIS TO HAVE BEEN MODIFIED, AMENDED AND EVEN
ABANDONED BY THE ENACTMENT OF THE FAMILY
CODE. 8
Under Article 40 of the Family Code, the absolute nullity of a
previous marriage may be invoked for purposes of remarriage on
the basis solely of a final judgment declaring such previous
marriage void. Meaning, where the absolute nullity of a previous
marriage is sought to be invoked for purposes of contracting a
second marriage, the sole basis acceptable in law, for said
projected marriage to be free from legal infirmity, is a final
judgment declaring the previous marriage void. 9 However, for
purposes other than remarriage, no judicial action is necessary to
declare a marriage an absolute nullity. For other purposes, such as
but not limited to the determination of heirship, legitimacy or
illegitimacy of a child, settlement of estate, dissolution of property
regime, or a criminal case for that matter, the court may pass
upon the validity of marriage even after the death of the parties
thereto, and even in a suit not directly instituted to question the
validity of said marriage, so long as it is essential to the
determination of the case. 10 In such instances, evidence must be
adduced, testimonial or documentary, to prove the existence of
grounds rendering such a previous marriage an absolute nullity.
These need not be limited solely to an earlier final judgment of a
court declaring such previous marriage void. 11
It is clear therefore that the Court is clothed with sufficient
authority to pass upon the validity of the two marriages in this
case, as the same is essential to the determination of who is
rightfully entitled to the subject death benefits of the deceased.
Under the Civil Code, which was the law in force when the
marriage of petitioner Susan Nicdao and the deceased was
solemnized in 1969, a valid marriage license is a requisite of
marriage, 12 and the absence thereof, subject to certain
exceptions, 13 renders the marriage void ab initio. 14
In the case at bar, there is no question that the marriage of
petitioner and the deceased does not fall within the marriages
exempt from the license requirement. A marriage license,
therefore, was indispensable to the validity of their marriage. This
notwithstanding, the records reveal that the marriage contract of
petitioner and the deceased bears no marriage license number
and, as certified by the Local Civil Registrar of San Juan, Metro
Manila, their office has no record of such marriage license.
In Republic v. Court of Appeals, 15 the Court held that such a
certification is adequate to prove the non-issuance of a marriage
license. Absent any circumstance of suspicion, as in the present
case, the certification issued by the local civil registrar enjoys
probative value, he being the officer charged under the law to
keep a record of all data relative to the issuance of a marriage
license.
Such being the case, the presumed validity of the marriage of
petitioner and the deceased has been sufficiently overcome. It
then became the burden of petitioner to prove that their marriage
is valid and that they secured the required marriage license.
Although she was declared in default before the trial court,
petitioner could have squarely met the issue and explained the
absence of a marriage license in her pleadings before the Court of
Appeals and this Court. But petitioner conveniently avoided the
issue and chose to refrain from pursuing an argument that will
put her case in jeopardy. Hence, the presumed validity of their
marriage cannot stand.
It is beyond cavil, therefore, that the marriage between petitioner
Susan Nicdao and the deceased, having been solemnized without
the necessary marriage license, and not being one of the
marriages exempt from the marriage license requirement, is
undoubtedly void ab initio.
It does not follow from the foregoing disquisition, however, that
since the marriage of petitioner and the deceased is declared void
ab initio, the death benefits under scrutiny would now be
awarded to respondent Susan Yee. To reiterate, under Article 40 of
the Family Code, for purposes of remarriage, there must first be a
prior judicial declaration of the nullity of a previous marriage,
though void, before a party can enter into a second marriage,
otherwise, the second marriage would also be void.
Accordingly, the declaration in the instant case of nullity of the
previous marriage of the deceased and petitioner Susan Nicdao
does not validate the second marriage of the deceased with
respondent Susan Yee. The fact remains that their marriage was
solemnized without first obtaining a judicial decree declaring the
marriage of petitioner Susan Nicdao and the deceased void. Hence,
the marriage of respondent Susan Yee and the deceased is,
likewise, void ab initio.
One of the effects of the declaration of nullity of marriage is the
separation of the property of the spouses according to the
applicable property regime. 16 Considering that the two
marriages are void ab initio, the applicable property regime would
not be absolute community or conjugal partnership of property,
but rather, be governed by the provisions of Articles 147 and 148
of the Family Code on Property Regime of Unions Without
Marriage.
Under Article 148 of the Family Code, which refers to the property
regime of bigamous marriages, adulterous relationships,
relationships in a state of concubine, relationships where both
man and woman are married to other persons, multiple alliances
of the same married man, 17 -
... [O]nly the properties acquired by both of the parties through
their actual joint contribution of money, property, or industry shall
be owned by them in common in proportion to their respective
contributions ...
In this property regime, the properties acquired by the parties
through their actual joint contribution shall belong to the co-
ownership. Wages and salaries earned by each party belong to
him or her exclusively. Then too, contributions in the form of care
of the home, children and household, or spiritual or moral
inspiration, are excluded in this regime. 18
Considering that the marriage of respondent Susan Yee and the
deceased is a bigamous marriage, having been solemnized during
the subsistence of a previous marriage then presumed to be valid
(between petitioner and the deceased), the application of Article
148 is therefore in order.
The disputed P146,000.00 from MBAI [AFP Mutual Benefit
Association, Inc.], NAPOLCOM, Commutation, Pag-ibig, and PCCUI,
are clearly renumerations, incentives and benefits from
governmental agencies earned by the deceased as a police officer.
Unless respondent Susan Yee presents proof to the contrary, it
could not be said that she contributed money, property or industry
in the acquisition of these monetary benefits. Hence, they are not
owned in common by respondent and the deceased, but belong to
the deceased alone and respondent has no right whatsoever to
claim the same. By intestate succession, the said death benefits
of the deceased shall pass to his legal heirs. And, respondent, not
being the legal wife of the deceased is not one of them.
As to the property regime of petitioner Susan Nicdao and the
deceased, Article 147 of the Family Code governs. This article
applies to unions of parties who are legally capacitated and not
barred by any impediment to contract marriage, but whose
marriage is nonetheless void for other reasons, like the absence of
a marriage license. Article 147 of the Family Code reads -
Art. 147. When a man and a woman who are capacitated to marry
each other, live exclusively with each other as husband and wife
without the benefit of marriage or under a void marriage, their
wages and salaries shall be owned by them in equal shares and the
property acquired by both of them through their work or industry
shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while
they lived together shall be presumed to have been obtained by
their joint efforts, work or industry, and shall be owned by them in
equal shares. For purposes of this Article, a party who did not
participate in the acquisition by the other party of any property
shall be deemed to have contributed jointly in the acquisition
thereof if the formers efforts consisted in the care and maintenance
of the family and of the household.
x x x
When only one of the parties to a void marriage is in good faith, the
share of the party in bad faith in the co-ownership shall be forfeited
in favor of their common children. In case of default of or waiver by
any or all of the common children or their descendants, each vacant
share shall belong to the respective surviving descendants. In the
absence of descendants, such share shall belong to the innocent
party. In all cases, the forfeiture shall take place upon termination
of the cohabitation.
In contrast to Article 148, under the foregoing article, wages and
salaries earned by either party during the cohabitation shall be
owned by the parties in equal shares and will be divided equally
between them, even if only one party earned the wages and the
other did not contribute thereto. 19 Conformably, even if the
disputed death benefits were earned by the deceased alone as a
government employee, Article 147 creates a co-ownership in
respect thereto, entitling the petitioner to share one-half thereof.
As there is no allegation of bad faith in the present case, both
parties of the first marriage are presumed to be in good faith.
Thus, one-half of the subject death benefits under scrutiny shall
go to the petitioner as her share in the property regime, and the
other half pertaining to the deceased shall pass by, intestate
succession, to his legal heirs, namely, his children with Susan
Nicdao.
In affirming the decision of the trial court, the Court of Appeals
relied on the case of Vda. de Consuegra v. Government Service
Insurance System, 20 where the Court awarded one-half of the
retirement benefits of the deceased to the first wife and the other
half, to the second wife, holding that:
... [S]ince the defendants first marriage has not been dissolved or
declared void the conjugal partnership established by that marriage
has not ceased. Nor has the first wife lost or relinquished her status
as putative heir of her husband under the new Civil Code, entitled to
share in his estate upon his death should she survive him.
Consequently, whether as conjugal partner in a still subsisting
marriage or as such putative heir she has an interest in the
husbands share in the property here in dispute.... And with respect
to the right of the second wife, this Court observed that although
the second marriage can be presumed to be void ab initio as it was
celebrated while the first marriage was still subsisting, still there is
need for judicial declaration of such nullity. And inasmuch as the
conjugal partnership formed by the second marriage was dissolved
before judicial declaration of its nullity, [t]he only just and
equitable solution in this case would be to recognize the right of the
second wife to her share of one-half in the property acquired by her
and her husband, and consider the other half as pertaining to the
conjugal partnership of the first marriage. 21
It should be stressed, however, that the aforecited decision is
premised on the rule which requires a prior and separate judicial
declaration of nullity of marriage. This is the reason why in the
said case, the Court determined the rights of the parties in
accordance with their existing property regime.
In Domingo v. Court of Appeals, 22 however, the Court, construing
Article 40 of the Family Code, clarified that a prior and separate
declaration of nullity of a marriage is an all important condition
precedent only for purposes of remarriage. That is, if a party who
is previously married wishes to contract a second marriage, he or
she has to obtain first a judicial decree declaring the first marriage
void, before he or she could contract said second marriage,
otherwise the second marriage would be void. The same rule
applies even if the first marriage is patently void because the
parties are not free to determine for themselves the validity or
invalidity or their marriage. However, for purposes other than to
remarry, like for filing a case for collection of sum of money
anchored on a marriage claimed to be valid, no prior and separate
judicial declaration of nullity is necessary. All that a party has to do
is to present evidence, testimonial or documentary, that would
prove that the marriage from which his or her rights flow is in fact
valid. Thereupon, the court, if material to the determination of the
issues before it, will rule on the status of the marriage involved
and proceed to determine the rights of the parties in accordance
with the applicable laws and jurisprudence. Thus, in Nial v.
Bayadog, 23 the Court explained:
[T]he court may pass upon the validity of marriage even in a suit
not directly instituted to question the same so long as it is essential
to the determination of the case. This is without prejudice to any
issue that may arise in the case. When such need arises, a final
judgment of declaration of nullity is necessary even if the purpose is
other than to remarry. The clause on the basis of a final judgment
declaring such previous marriage void in Article 40 of the Family
Code connoted that such final judgment need not be obtained only
for purpose of remarriage.
WHEREFORE, the petition is GRANTED, and the decision of the
Court of Appeals in CA-G.R. CV No. 51263 which affirmed the
decision of the Regional Trial Court of Quezon City ordering
petitioner to pay respondent the sum of P73,000.00 plus
attorneys fees in the amount of P5,000.00, is REVERSED and SET
ASIDE. The complaint in Civil Case No. Q-93-18632, is hereby
DISMISSED. No pronouncement as to costs.

G.R. No. 171298 April 15, 2013
SPOUSES OSCAR and THELMA CACAYORIN, Petitioners,
vs.
ARMED FORCES AND POLICE MUTUAL BENEFIT
ASSOCIATION, INC., Respondent.
D E C I S I O N
DEL CASTILLO, J.:
Consignation is necessarily judicial. Article 1258 of the Civil Code
specifically provides that consignation shall be made by depositing
the thing or things due at the disposal of judicial authority. The
said provision clearly precludes consignation in venues other than
the courts.
Assailed in this Petition for Review on Certiorari1 are the
September 29, 2005 Decision2 of the Court of Appeals (CA) which
granted the Petition for Certiorari in CA-G.R. SP No. 84446 and its
January 12, 2006 Resolution3denying petitioners' Motion for
Reconsideration.4
Factual Antecedents
Petitioner Oscar Cacayorin (Oscar) is a member of respondent
Armed Forces and Police Mutual Benefit Association, Inc.
(AFPMBAI), a mutual benefit association duly organized and
existing under Philippine laws and engaged in the business of
developing low-cost housing projects for personnel of the Armed
Forces of the Philippines, Philippine National Police, Bureau of
Fire Protection, Bureau of Jail Management and Penology, and
Philippine Coast Guard. He filed an application with AFPMBAI to
purchase a piece of property which the latter owned, specifically
Lot 5, Block 8, Phase I, Kalikasan Mutual Homes, San Pedro, Puerto
Princesa City (the property), through a loan facility.
On July 4, 1994, Oscar and his wife and co-petitioner herein,
Thelma, on one hand, and the Rural Bank of San Teodoro (the
Rural Bank) on the other, executed a Loan and Mortgage
Agreement5 with the former as borrowers and the Rural Bank as
lender, under the auspices of Pag-IBIG or Home Development
Mutual Funds Home Financing Program.
The Rural Bank issued an August 22, 1994 letter of
guaranty6 informing AFPMBAI that the proceeds of petitioners
approved loan in the amount of P77,418.00 shall be released to
AFPMBAI after title to the property is transferred in petitioners
name and after the registration and annotation of the parties
mortgage agreement.
On the basis of the Rural Banks letter of guaranty, AFPMBAI
executed in petitioners favor a Deed of Absolute Sale,7 and a new
title Transfer Certificate of Title No. 370178 (TCT No. 37017)
was issued in their name, with the corresponding annotation of
their mortgage agreement with the Rural Bank, under Entry No.
3364.9
Unfortunately, the Pag-IBIG loan facility did not push through and
the Rural Bank closed and was placed under receivership by the
Philippine Deposit Insurance Corporation (PDIC). Meanwhile,
AFPMBAI somehow was able to take possession of petitioners
loan documents and TCT No. 37017, while petitioners were unable
to pay the loan/consideration for the property.
AFPMBAI made oral and written demands for petitioners to pay
the loan/ consideration for the property.10
In July 2003, petitioners filed a Complaint11 for consignation of
loan payment, recovery of title and cancellation of mortgage
annotation against AFPMBAI, PDIC and the Register of Deeds of
Puerto Princesa City. The case was docketed as Civil Case No. 3812
and raffled to Branch 47 of the Regional Trial Court (RTC) of
Puerto Princesa City (Puerto Princesa RTC). Petitioners alleged in
their Complaint that as a result of the Rural Banks closure and
PDICs claim that their loan papers could not be located, they were
left in a quandary as to where they should tender full payment of
the loan and how to secure cancellation of the mortgage
annotation on TCT No. 37017. Petitioners prayed, thus:
a. That after the filing of this complaint an order be made
allowing the consignation x x x of Php77,418.00.
b. For the court to compute and declare the amount of
interest to be paid by the plaintiffs and thereafter to
allow the consignation of the interest payments in order
to give way for the full discharge of the loan.
c. To order the AFPMBAI to turn over to the custody of
the court the loan records and title (T.C.T. No. 37017) of
the plaintiffs if the same are in their possession.
d. To declare the full payment of the principal loan and
interest and ordering the full discharge from mortgage
of the property covered by T.C.T. No. 37017.
e. To order the Register of Deeds of Puerto Princesa City
to cancel the annotation of real estate mortgage under
Entry No. 3364 at the back of T.C.T. No. 37017.
f. Thereafter, to turn over to the plaintiffs their title free
from the aforesaid mortgage loan.12
AFPMBAI filed a Motion to Dismiss13 claiming that petitioners
Complaint falls within the jurisdiction of the Housing and Land
Use Regulatory Board (HLURB) and not the Puerto Princesa RTC,
as it was filed by petitioners in their capacity as buyers of a
subdivision lot and it prays for specific performance of contractual
and legal obligations decreed under Presidential Decree No.
95714 (PD 957). It added that since no prior valid tender of
payment was made by petitioners, the consignation case was
fatally defective and susceptible to dismissal.
Ruling of the Regional Trial Court
In an October 16, 2003 Order,15 the trial court denied AFPMBAIs
Motion to Dismiss, declaring that since title has been transferred
in the name of petitioners and the action involves consignation of
loan payments, it possessed jurisdiction to continue with the case.
It further held that the only remaining unsettled transaction is
between petitioners and PDIC as the appointed receiver of the
Rural Bank.
AFPMBAI filed a Motion for Reconsideration,16 which the trial
court denied in its March 19, 2004 Order.17
Ruling of the Court of Appeals
AFPMBAI thus instituted CA-G.R. SP No. 84446, which is a Petition
for Certiorari18 raising the issue of jurisdiction. On September
29, 2005, the CA rendered the assailed Decision decreeing as
follows:
WHEREFORE, premises considered, this Petition is GRANTED. The
Assailed 16 October 2003 and 19 March 2004 Orders of the public
respondent judge are hereby ordered VACATED and SET ASIDE.
SO ORDERED.19
The CA held that Civil Case No. 3812 is a case for specific
performance of AFPMBAIs contractual and statutory obligations
as owner/developer of Kalikasan Mutual Homes, which makes PD
957 applicable and thus places the case within the jurisdiction of
the HLURB. It said that since one of the remedies prayed for is the
delivery to petitioners of TCT No. 37017, the case is cognizable
exclusively by the HLURB.
Petitioners moved for reconsideration which was denied by the CA
in its January 12, 2006 Resolution.
Hence, the instant Petition.
Issue
The sole issue that must be resolved in this Petition is: Does the
Complaint in Civil Case No. 3812 fall within the exclusive
jurisdiction of the HLURB?
Petitioners Arguments
Petitioners assert that the elements which make up a valid case
for consignation are present in their Complaint. They add that
since a deed of absolute sale has been issued in their favor, and
possession of the property has been surrendered to them, not to
mention that title has been placed in their name, the HLURB lost
jurisdiction over their case. And for this same reason, petitioners
argue that their case may not be said to be one for specific
performance of contractual and legal obligations under PD 957 as
nothing more was left to be done in order to perfect or consolidate
their title.
Petitioners thus pray that the herein assailed Decision and
Resolution of the CA be set aside, and that the trial court be
ordered to continue with the proceedings in Civil Case No. 3812.
Respondent's Arguments
Respondent, on the other hand, insists in its Comment20 that
jurisdiction over petitioners case lies with the HLURB, as it
springs from their contractual relation as seller and buyer,
respectively, of a subdivision lot. The prayer in petitioners
Complaint involves the surrender or delivery of the title after full
payment of the purchase price, which respondent claims are
reciprocal obligations in a sale transaction covered by PD 957.
Respondent adds that in effect, petitioners are exacting specific
performance from it, which places their case within the
jurisdiction of the HLURB.
Our Ruling
The Court grants the Petition.
The Complaint makes out a case for consignation.
The settled principle is that "the allegations of the Complaint
determine the nature of the action and consequently the
jurisdiction of the courts. This rule applies whether or not the
plaintiff is entitled to recover upon all or some of the claims
asserted therein as this is a matter that can be resolved only after
and as a result of the trial."21
Does the Complaint in Civil Case No. 3812 make out a case for
consignation? It alleges that:
6.0 Not long after however, RBST22 closed shop and
defendant Philippine Deposit Insurance Corporation
(PDIC) was appointed as its receiver. The plaintiffs,
through a representative, made a verbal inquiry to the
PDIC regarding the payment of their loan but were told
that it has no information or record of the said loan. This
made [sic] the plaintiffs in quandary as to where or
whom they will pay their loan, which they intend to pay
in full, so as to cancel the annotation of mortgage in their
title.
7.0 It was discovered that the loan papers of the
plaintiffs, including the duplicate original of their title,
were in the possession of defendant AFPMBAI. It was
unclear though why the said documents including the
title were in the possession of AFPMBAI. These papers
should have been in RBSTs possession and given to
PDIC after its closure in the latters capacity as receiver.
8.0 Plaintiffs are now intending to pay in full their real
estate loan but could not decide where to pay the same
because of RBST [sic] closure and PDICs failure to locate
the loan records and title. This courts intervention is
now needed in order to determine to [sic] where or
whom the loan should be paid.
9.0 Plaintiffs hereby respectfully prays [sic] for this
court to allow the deposit of the amount of
Php77,418.00 as full payment of their principal loan,
excluding interest, pursuant to the Loan and Mortgage
Agreement on 4 July 1994.23
From the above allegations, it appears that the petitioners debt is
outstanding; that the Rural Banks receiver, PDIC, informed
petitioners that it has no record of their loan even as it took over
the affairs of the Rural Bank, which on record is the petitioners
creditor as per the July 4, 1994 Loan and Mortgage Agreement;
that one way or another, AFPMBAI came into possession of the
loan documents as well as TCT No. 37017; that petitioners are
ready to pay the loan in full; however, under the circumstances,
they do not know which of the two the Rural Bank or AFPMBAI
should receive full payment of the purchase price, or to whom
tender of payment must validly be made.
Under Article 1256 of the Civil Code,24 the debtor shall be released
from responsibility by the consignation of the thing or sum due,
without need of prior tender of payment, when the creditor is
absent or unknown, or when he is incapacitated to receive the
payment at the time it is due, or when two or more persons claim
the same right to collect, or when the title to the obligation has
been lost. Applying Article 1256 to the petitioners case as shaped
by the allegations in their Complaint, the Court finds that a case
for consignation has been made out, as it now appears that there
are two entities which petitioners must deal with in order to fully
secure their title to the property: 1) the Rural Bank (through
PDIC), which is the apparent creditor under the July 4, 1994 Loan
and Mortgage Agreement; and 2) AFPMBAI, which is currently in
possession of the loan documents and the certificate of title, and
the one making demands upon petitioners to pay. Clearly, the
allegations in the Complaint present a situation where the creditor
is unknown, or that two or more entities appear to possess the
same right to collect from petitioners. Whatever transpired
between the Rural Bank or PDIC and AFPMBAI in respect of
petitioners loan account, if any, such that AFPMBAI came into
possession of the loan documents and TCT No. 37017, it appears
that petitioners were not informed thereof, nor made privy
thereto.
Indeed, the instant case presents a unique situation where the
buyer, through no fault of his own, was able to obtain title to real
property in his name even before he could pay the purchase price
in full. There appears to be no vitiated consent, nor is there any
other impediment to the consummation of their agreement, just
as it appears that it would be to the best interests of all parties to
the sale that it be once and for all completed and terminated. For
this reason, Civil Case No. 3812 should at this juncture be allowed
to proceed.
Moreover, petitioners position is buttressed by AFPMBAIs own
admission in its Comment25 that it made oral and written
demands upon the former, which naturally aggravated their
confusion as to who was their rightful creditor to whom payment
should be made the Rural Bank or AFPMBAI. Its subsequent
filing of the Motion to Dismiss runs counter to its demands to pay.
If it wanted to be paid with alacrity, then it should not have moved
to dismiss Civil Case No. 3812, which was brought precisely by
the petitioners in order to be able to finally settle their obligation
in full.
Finally, the lack of prior tender of payment by the petitioners is
not fatal to their consignation case. They filed the case for the
exact reason that they were at a loss as to which between the two
the Rural Bank or AFPMBAI was entitled to such a tender of
payment. Besides, as earlier stated, Article 1256 authorizes
consignation alone, without need of prior tender of payment,
where the ground for consignation is that the creditor is
unknown, or does not appear at the place of payment; or is
incapacitated to receive the payment at the time it is due; or
when, without just cause, he refuses to give a receipt; or when
two or more persons claim the same right to collect; or when the
title of the obligation has been lost.
Consignation is necessarily judicial; hence, jurisdiction lies with
the RTC, not with the HLURB.
On the question of jurisdiction, petitioners case should be tried in
the Puerto Princesa RTC, and not the HLURB. Consignation is
necessarily judicial,26 as the Civil Code itself provides that
consignation shall be made by depositing the thing or things due
at the disposal of judicial authority, thus:
Art. 1258. Consignation shall be made by depositing the things
due at the disposal of judicial authority, before whom the tender of
payment shall be proved, in a proper case, and the announcement
of the consignation in other cases.
The consignation having been made, the interested parties shall
also be notified thereof. (Emphasis and underscoring supplied)
The above provision clearly precludes consignation in venues
other than the courts.1wphi1 Elsewhere, what may be made is a
valid tender of payment, but not consignation. The two, however,
are to be distinguished.
Tender of payment must be distinguished from consignation.
Tender is the antecedent of consignation, that is, an act
preparatory to the consignation, which is the principal, and from
which are derived the immediate consequences which the debtor
desires or seeks to obtain. Tender of payment may be extrajudicial,
while consignation is necessarily judicial, and the priority of the
first is the attempt to make a private settlement before proceeding
to the solemnities of consignation. (8 Manresa 325).27
While it may be true that petitioners claim relates to the terms
and conditions of the sale of AFPMBAIs subdivision lot, this is
overshadowed by the fact that since the Complaint in Civil Case
No. 3812 pleads a case for consignation, the HLURB is without
jurisdiction to try it, as such case may only be tried by the regular
courts.
WHEREFORE, premises considered, the Petition is GRANTED. The
September 29, 2005 Decision and January 12, 2006 Resolution of
the Court of Appeals in CA-G.R. SP No. 84446 are ANNULLED and
SET ASIDE. The October 16, 2003 and March 19, 2004 Orders of
the Regional Trial Court of Puerto Princesa City, Branch 47, are
REINSTATED, and the case is REMANDED to the said court for
continuation of the proceedings.
SO ORDERED.

G.R. No. 170292 June 22, 2011
HOME DEVELOPMENT MUTUAL FUND (HDMF), Petitioner,
vs.
Spouses FIDEL and FLORINDA R. SEE and Sheriff MANUEL L.
ARIMADO, Respondents.
D E C I S I O N
DEL CASTILLO, J.:
A party that loses its right to appeal by its own negligence cannot
seek refuge in the remedy of a writ of certiorari.
This is a Petition for Review on Certiorari1 under Rule 45 of the
Rules of Court assailing the August 31, 2005 Decision,2 as well as
the October 26, 2005 Resolution,3 of the Court of Appeals (CA) in
CA-G.R. SP No. 70828. The dispositive portion of the assailed CA
Decision reads thus:
WHEREFORE, premises considered, the instant petition is DENIED
DUE COURSE and is accordingly DISMISSED. The assailed
Decision of the Regional Trial Court, Branch 6, Legazpi City dated
February 21, 2002 and its Order dated March 15, 2002 are
AFFIRMED.
SO ORDERED.4
Factual Antecedents
Respondent-spouses Fidel and Florinda See (respondent-spouses)
were the highest bidders in the extrajudicial foreclosure sale of a
property5 that was mortgaged to petitioner Home Development
Mutual Fund or Pag-ibig Fund (Pag-ibig). They paid the bid price
of P272,000.00 in cash to respondent Sheriff Manuel L. Arimado
(Sheriff Arimado). In turn, respondent-spouses received a
Certificate of Sale wherein Sheriff Arimado acknowledged receipt
of the purchase price, and an Official Receipt No. 11496038 dated
January 28, 2000 from Atty. Jaime S. Narvaez, the clerk of court
with whom Sheriff Arimado deposited the respondent-spouses
payment.6
Despite the expiration of the redemption period, Pag-ibig refused
to surrender its certificate of title to the respondent-spouses
because it had yet to receive the respondent-spouses payment
from Sheriff Arimado7 who failed to remit the same despite
repeated demands.8 It turned out that Sheriff Arimado withdrew
from the clerk of court the P272,000.00 paid by respondent-
spouses, on the pretense that he was going to deliver the same to
Pag-ibig. The money never reached Pag-ibig and was spent by
Sheriff Arimado for his personal use.9
Considering Pag-ibigs refusal to recognize their payment,
respondent-spouses filed a complaint for specific performance
with damages against Pag-ibig and Sheriff Arimado before Branch
3 of the Regional Trial Court (RTC) of Legazpi City. The complaint
alleged that the law on foreclosure authorized Sheriff Arimado to
receive, on behalf of Pag-ibig, the respondent-spouses payment.
Accordingly, the payment made by respondent-spouses to Pag-
ibigs authorized agent should be deemed as payment to Pag-
ibig.10 It was prayed that Sheriff Arimado be ordered to remit the
amount of P 272,000.00 to Pag-ibig and that the latter be ordered
to release the title to the auctioned property to respondent-
spouses.11
Pag-ibig admitted the factual allegations of the complaint (i.e., the
bid of respondent-spouses,12 their full payment in cash to Sheriff
Arimado,13 and the fact that Sheriff Arimado misappropriated the
money14) but maintained that respondent-spouses had no cause
of action against it. Pag-ibig insisted that it has no duty to deliver
the certificate of title to respondent-spouses unless Pag-ibig
actually receives the bid price. Pag-ibig denied that the
absconding sheriff was its agent for purposes of the foreclosure
proceedings.15
When the case was called for pre-trial conference, the parties
submitted their Compromise Agreement for the courts approval.
The Compromise Agreement reads:
Undersigned parties, through their respective counsels[,] to this
Honorable Court respectfully submit this Compromise Agreement
for their mutual interest and benefit that this case be amicably
settled, the terms and conditions of which are as follows:
1. [Respondent] Manuel L. Arimado, Sheriff IV RTC,
Legazpi acknowledges his obligation to the Home
Development Mutual Fund (PAG-IBIG), Regional Office V,
Legazpi City and/or to [respondent-spouses] the amount
of P300,000.00, representing payment for the bid price
and other necessary expenses incurred by the
[respondent-spouses], the latter being the sole bidder of
the property subject matter of the Extrajudicial
Foreclosure Sale conducted by Sheriff Arimado on
January 14, 2000, at the Office of the Clerk of Court, RTC,
Legazpi;
x x x x
3. Respondent Manuel L. Arimado due to urgent financial
need acknowledge[s] that he personally used the money
paid to him by [respondent-spouses] which represents
the bid price of the above[-]mentioned property subject
of the foreclosure sale. The [money] should have been
delivered/paid by Respondent Arimado to Home
Development Mutual Fund (PAG-IBIG) as payment and in
satisfaction of its mortgage claim.
4. Respondent Manuel L. Arimado obligates himself to
pay in cash to [petitioner] Home Development Mutual
Fund (PAG-IBIG) the amount of P272,000.00
representing full payment of its claim on or before
October 31, 2001 [so] that the title to the property
[could] be released by PAG-IBIG to [respondent-spouses].
An additional amount of P28,000.00 shall likewise be
paid by [respondent] Arimado to the [respondent-
spouses] as reimbursement for litigation expenses;
5. [Petitioner] Home Development Mutual Fund (PAG-
IBIG) shall upon receipt of the P272,000.00 from
[respondent] Manuel L. Arimado release immediately
within a period of three (3) days the certificate of title of
the property above-mentioned to [respondent-spouses]
being the rightful buyer or owner of the property;
6. In the event [respondent] Manuel L. Arimado fails to
pay [petitioner] Home Development Mutual Fund (PAG-
IBIG), or, [respondent-spouses] the amount
of P272,000.00 on or before October 31, 2001, the
[respondent-spouses] shall be entitled to an immediate
writ of execution without further notice to respondent
Manuel L. Arimado and the issue as to whether
[petitioner] Home Development Mutual Fund (PAG-IBIG)
shall be liable for the release of the title to [respondent
spouses] under the circumstances or allegations
narrated in the complaint shall continue to be litigated
upon in order that the Honorable Court may resolve the
legality of said issue;
7. In the event [respondent] Manuel L. Arimado complies
with the payment as above-stated, the parties mutually
agree to withdraw all claims and counterclaim[s] they
may have against each other arising out of the above-
entitled case.16
The trial court approved the compromise agreement and
incorporated it in its Decision dated October 31, 2001. The trial
court stressed the implication of paragraph 6 of the approved
compromise agreement:
Accordingly, the parties are enjoined to comply strictly with the
terms and conditions of their Compromise Agreement.
In the event that [respondent] Manuel L. Arimado fails to pay
[petitioner] HDMF (Pag-ibig), or [respondent-spouses] the
amount of P272,000.00 on October 31, 2001, the Court, upon
motion of [respondent-spouses], may issue the necessary writ of
execution.
In this connection, with respect to the issue as to whether or not
[petitioner] HDMF (Pag-ibig) shall be liable for the release of the
title of the [respondent-spouses] under the circumstances
narrated in the Complaint which necessitates further litigation in
court, let the hearing of the same be set on December 14, 2001 at
9:00 oclock in the morning.
SO ORDERED.17
None of the parties sought a reconsideration of the aforequoted
Decision.
When Sheriff Arimado failed to meet his undertaking to pay on or
before October 31, 2001, the trial court proceeded to rule on the
issue of whether Pag-ibig is liable to release the title to respondent-
spouses despite non-receipt of their payment.18
Ruling of the Regional Trial Court19
The trial court rendered its Decision dated February 21, 2002 in
favor of respondent-spouses, reasoning as follows: Under Article
1240 of the Civil Code, payment is valid when it is made to a
person authorized by law to receive the same. In foreclosure
proceedings, the sheriff is authorized by Act No. 3135 and the
Rules of Court to receive payment of the bid price from the
winning bidder. When Pag-ibig invoked the provisions of these
laws by applying for extrajudicial foreclosure, it likewise
constituted the sheriff as its agent in conducting the foreclosure
and receiving the proceeds of the auction. Thus, when the
respondent-spouses paid the purchase price to Sheriff Arimado, a
legally authorized representative of Pag-ibig, this payment
effected a discharge of their obligation to Pag-ibig.
The trial court thus ordered Pag-ibig to deliver the documents of
ownership to the respondent-spouses. The dispositive portion
reads thus:
WHEREFORE, premises considered, decision is hereby rendered in
favor of the [respondent-spouses] and against the [petitioner]
HDMF, ordering said [petitioner] to execute a Release and/or
Discharge of Mortgage, and to deliver the same to the
[respondent-spouses] together with the documents of ownership
and the owners copy of Certificate of Title No. T-78070 covering
the property sold [to respondent-spouses] in the auction sale
within ten (10) days from the finality of this decision.
Should [petitioner] HDMF fail to execute the Release and/or
Discharge of Mortgage and to deliver the same together with the
documents of ownership and TCT No. T-78070 within ten (10)
days from the finality of this decision, the court shall order the
Clerk of Court to execute the said Release and/or Discharge of
Mortgage and shall order the cancellation of TCT No. T-78070 and
the issuance of a second owners copy thereof.
SO ORDERED.20
Pag-ibig filed a motion for reconsideration on the sole ground that
"[Pag-ibig] should not be compelled to release the title to x x x
[respondent-spouses] See because Manuel Arimado [has] yet to
deliver to [Pag-ibig] the sum ofP272,000.00."21
The trial court denied the motion on March 15, 2002. It explained
that the parties compromise agreement duly authorized the
court to rule on Pag-ibigs liability to respondent-spouses despite
Sheriff Arimados non-remittance of the proceeds of the auction.22
Pag-ibig received the denial of its motion for reconsideration on
March 22, 200223 but took no further action. Hence, on April 23,
2002, the trial court issued a writ of execution of its February 21,
2002 Decision.24
On May 24, 2002,25 Pag-ibig filed before the CA a Petition for
Certiorari under Rule 65 in order to annul and set aside the
February 21, 2002 Decision of the trial court. Pag-ibig argued that
the February 21, 2002 Decision, which ordered Pag-ibig to deliver
the title to respondent-spouses despite its non-receipt of the
proceeds of the auction, is void because it modified the final and
executory Decision dated October 31, 2001.26 It maintained that
the October 31, 2001 Decision already held that Pag-ibig will
deliver its title to respondent-spouses only upon receipt of the
proceeds of the auction from Sheriff Arimado. Since Sheriff
Arimado did not remit the said amount to Pag-ibig, the latter has
no obligation to deliver the title to the auctioned property to
respondent-spouses.27
Further, Pag-ibig contended that the February 21, 2002 Decision
was null and void because it was issued without affording
petitioner the right to trial.28
Ruling of the Court of Appeals29
The CA denied the petition due course. The CA noted that
petitioners remedy was to appeal the February 21, 2002 Decision
of the trial court and not a petition for certiorari under Rule 65. At
the time the petition was filed, the Decision of the trial court had
already attained finality. The CA then held that the remedy of
certiorari was not a substitute for a lost appeal.30
The CA also ruled that petitioners case fails even on the merits. It
held that the February 21, 2002 Decision did not modify the
October 31, 2001 Decision of the trial court. The latter Decision of
the trial court expressly declared that in case Sheriff Arimado fails
to pay the P272,000.00 to Pag-ibig, the court will resolve the
remaining issue regarding Pag-ibigs obligation to deliver the title
to the respondent-spouses.31
As to the contention that petitioner was denied due process when
no trial
was conducted for the reception of evidence, the CA held that
there was no need for the trial court to conduct a full-blown trial
given that the facts of the case were already admitted by Pag-ibig
and what was decided in the February 21, 2002 Decision was only
a legal issue.32
Petitioner filed a motion for reconsideration33 which was denied
for lack of merit in the Resolution dated October 26, 2005.34
Issues
Petitioner then raises the following issues for the Courts
consideration:
1. Whether certiorari was the proper remedy;
2. Whether the February 21, 2002 Decision of the trial
court modified its October 31, 2001 Decision based on
the compromise agreement;
3. Whether petitioner was entitled to a trial prior to the
rendition of the February 21, 2002 Decision.
Our Ruling
Petitioner argues that the CA erred in denying due course to its
petition for certiorari and maintains that the remedy of certiorari
is proper for two reasons: first, the trial court rendered its
February 21, 2002 Decision without the benefit of a trial; and
second, the February 21, 2002 Decision modified the October 31,
2001 Decision, which has already attained finality. These are
allegedly two recognized instances where certiorari lies to annul
the trial courts Decision because of grave abuse of discretion
amounting to lack of jurisdiction.35
The argument does not impress.
"[C]ertiorari is a limited form of review and is a remedy of last
recourse."36 It is proper only when appeal is not available to the
aggrieved party.37 In the case at bar, the February 21, 2002
Decision of the trial court was appealable under Rule 41 of the
Rules of Court because it completely disposed of respondent-
spouses case against Pag-ibig. Pag-ibig does not explain why it did
not resort to an appeal and allowed the trial courts decision to
attain finality. In fact, the February 21, 2002 Decision was already
at the stage of execution when Pag-ibig belatedly resorted to a
Rule 65 Petition for Certiorari. Clearly, Pag-ibig lost its right to
appeal and tried to remedy the situation by resorting to certiorari.
It is settled, however, that certiorari is not a substitute for a lost
appeal, "especially if the [partys] own negligence or error in [the]
choice of remedy occasioned such loss or lapse."38
Moreover, even assuming arguendo that a Rule 65 certiorari could
still be resorted to, Pag-ibigs petition would still have to be
dismissed for having been filed beyond the reglementary period of
60 days from notice of the denial of the motion for
reconsideration.39 Pag-ibig admitted receiving the trial courts
Order denying its Motion for Reconsideration on March 22,
2002;40 it thus had until May 21, 2002 to file its petition for
certiorari. However, Pag-ibig filed its petition only on May 24,
2002,41 which was the 63rd day from its receipt of the trial
courts order and obviously beyond the reglementary 60-day
period.
Pag-ibig stated that its petition for certiorari was filed "within
sixty (60) days from receipt of the copy of the writ of execution by
petitioner [Pag-ibig] on 07 May 2002," which writ sought to
enforce the Decision assailed in the petition.42 This submission is
beside the point. Rule 65, Section 4 is very clear that the
reglementary 60-day period is counted "from notice of the
judgment, order or resolution" being assailed, or "from notice of
the denial of the motion [for reconsideration]," and not from
receipt of the writ of execution which seeks to enforce the
assailed judgment, order or resolution. The date of Pag-ibigs
receipt of the copy of the writ of execution is therefore immaterial
for purposes of computing the timeliness of the filing of the
petition for certiorari.1avvphi1
Since Pag-ibigs petition for certiorari before the CA was an
improper remedy and was filed late, it is not even necessary to
look into the other issues raised by Pag-ibig in assailing the
February 21, 2002 Decision of the trial court and the CAs rulings
sustaining the same. At any rate, Pag-ibigs arguments on these
other issues are devoid of merit.
As to Pag-ibigs argument that the February 21, 2002 Decision of
the RTC is null and void for having been issued without a trial, it is
a mere afterthought which deserves scant consideration. The
Court notes that Pag-ibig did not object to the absence of a trial
when it sought a reconsideration of the February 21, 2002
Decision. Instead, Pag-ibig raised the following lone argument in
their motion:
3. Consequently, [Pag-ibig] should not be compelled to release the
title to other [respondent-spouses] See because Manuel Arimado
[has] yet to deliver to [Pag-ibig] the sum of P 272,000.00.43
Under the Omnibus Motion Rule embodied in Section 8 of Rule 15
of the Rules of Court, all available objections that are not included
in a partys motion shall be deemed waived.
Pag-ibig next argues that the February 21, 2002 Decision of the
trial court, in ordering Pag-ibig to release the title despite Sheriff
Arimados failure to remit the P272,000.00 to Pag-ibig, "modified"
the October 31, 2001 Decision. According to Pag-ibig, the October
31, 2001 Decision allegedly decreed that Pag-ibig would deliver
the title to respondent-spouses only after Sheriff Arimado has paid
the P272,000.00.44 In other words, under its theory, Pag-ibig
cannot be ordered to release the title if Sheriff Arimado fails to pay
the said amount.
The Court finds no merit in this argument. The October 31, 2001
Decision (as well as the Compromise Agreement on which it is
based) does not provide that Pag-ibig cannot be ordered to release
the title if Sheriff Arimado fails to pay. On the contrary, what the
Order provides is that if Sheriff Arimado fails to pay, the trial court
shall litigate (and, necessarily, resolve) the issue of whether Pag-
ibig is obliged to release the title. This is based on paragraph 6 of
the Compromise Agreement which states that in the event Sheriff
Arimado fails to pay, "the [respondent-spouses] shall be entitled to
an immediate writ of execution without further notice to [Sheriff]
Arimado and the issue as to whether [Pag-ibig] shall be liable for
the release of the title to [respondent spouses] under the
circumstances or allegations narrated in the complaint shall
continue to be litigated upon in order that the Honorable Court
may resolve the legality of said issue." In fact, the trial court, in its
October 31, 2001 Decision, already set the hearing of the same
"on December 14, 2001 at 9:00 oclock in the morning."45
It is thus clear from both the October 31, 2001 Decision and the
Compromise Agreement that the trial court was authorized to
litigate and resolve the issue of whether Pag-ibig should release
the title upon Sheriff Arimados failure to pay the P272,000.00. As
it turned out, the trial court eventually resolved the issue against
Pag-ibig, i.e., it ruled that Pag-ibig is obliged to release the title. In
so doing, the trial court simply exercised the authority provided in
the October 31, 2001 Decision (and stipulated in the Compromise
Agreement). The trial court did not thereby "modify" the October
31, 2001 Decision.
WHEREFORE, premises considered, the petition is DENIED. The
assailed August 31, 2005 Decision, as well as the October 26, 2005
Resolution, of the Court of Appeals in CA-G.R. SP No. 70828 are
AFFIRMED.
SO ORDERED.