Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-58639 August 12, 1987
CEBU ROYAL PLANT (SAN MIGUEL CORPORATION), petitioner,
vs.
THE HONORABLE DEPUTY MINISTER OF LABOR and RAMON PILONES, respondents.

CRUZ, J.:
The private respondent was removed by the petitioner and complained to the Ministry of Labor. His complaint was dismissed by the
regional director, who was, however, reversed by the public respondent. Required to reinstate the separated employee and pay him
back wages, the petitioner has come to us, faulting the Deputy Minister with grave abuse of discretion. We have issued in the
meantime a temporary restraining order. 1
The public respondent held that Ramon Pilones, the private respondent, was already a permanent employee at the time of his dismissal
and so was entitled to security of tenure. The alleged ground for his removal, to wit, "pulmonary tuberculosis minimal," was not
certified as incurable within six months as to justify his separation. 2 Additionally, the private respondent insists that the petitioner
should have first obtained a clearance, as required by the regulations then in force, for the termination of his employment.
The petitioner for its part claims that the private respondent was still on probation at the time of his dismissal and so had no security of
tenure. His dismissal was not only in conformity with company policy but also necessary for the protection of the public health, as he
was handling ingredients in the processing of soft drinks which were being sold to the public. It is also argued that the findings of the
regional director, who had direct access to the facts, should not have been disturbed on appeal. For these same reasons, it contends, the
employee's reinstatement as ordered by the public respondent should not be allowed.
The original findings were contained in a one-page order 3 reciting simply that "complainant was employed on a probationary period
of employment for six (6) months. After said period, he underwent medical examination for qualification as regular employee but the
results showed that he is suffering from PTB minimal. Consequently, he was informed of the termination of his employment by
respondent." The order then concluded that the termination was "justified." That was all.
As there is no mention of the basis of the above order, we may assume it was the temporary payroll authority 4 submitted by the
petitioner showing that the private respondent was employed on probation on February 16, 1978. Even supposing that it is not selfserving, we find nevertheless that it is self-defeating. The six-month period of probation started from the said date of appointment and
so ended on August 17, 1978, but it is not shown that the private respondent's employment also ended then; on the contrary, he
continued working as usual. Under Article 282 of the Labor Code, "an employee who is allowed to work after a probationary period
shall be considered a regular employee." Hence, Pilones was already on permanent status when he was dismissed on August 21, 1978,
or four days after he ceased to be a probationer.
The petitioner claims it could not have dismissed the private respondent earlier because the x-ray examination was made only on
August 17, 1978, and the results were not immediately available. That excuse is untenable. We note that when the petitioner had all of
six months during which to conduct such examination, it chose to wait until exactly the last day of the probation period. In the light of
such delay, its protestations now that reinstatement of Pilones would prejudice public health cannot but sound hollow and hypocritical.
By its own implied admission, the petitioner had exposed its customers to the employee's disease because of its failure to examine him
before entrusting him with the functions of a "syrup man." Its belated concern for the consuming public is hardly persuasive, if not
clearly insincere and self-righteous.
There is proof in fact that the private respondent was first hired not on February 16, 1978, but earlier in 1977. This is the 1977
withholding tax statement 5 issued for him by the petitioner itself which it does not and cannot deny. The petitioner stresses that this is
the only evidence of the private respondent's earlier service and notes that he has not presented any co-worker to substantiate his

1 | Page

claim. This is perfectly understandable. Given the natural reluctance of many workers to antagonize their employers, we need not
wonder why none of them testified against the petitioner.
We are satisfied that whether his employment began on February 16, 1978, or even earlier as he claims, the private respondent was
already a regular employee when he was dismissed on August 21, 1978. As such, he could validly claim the security of tenure
guaranteed to him by the Constitution and the Labor Code.
The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I, Book VI, of the Rules and Regulations
Implementing the Labor Code reading as follows:
Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall
not terminate his employment unless there is a certification by a competent public health authority that the disease is
of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee
but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position
immediately upon the restoration of his normal health.
The record does not contain the certification required by the above rule. The medical certificate offered by the petitioner came from its
own physician, who was not a "competent public health authority," and merely stated the employee's disease, without more. We may
surmise that if the required certification was not presented, it was because the disease was not of such a nature or seriousness that it
could not be cured within a period of six months even with proper medical treatment. If so, dismissal was unquestionably a severe and
unlawful sanction.
It is also worth noting that the petitioner's application for clearance to terminate the employment of the private respondent was filed
with the Ministry of Labor only on August 28, 1978, or seven days after his dismissal. 6 As the NLRC has repeatedly and correctly
said, the prior clearance rule (which was in force at that time) was not a "trivial technicality." It required "not just the mere filing of a
petition or the mere attempt to procure a clearance" but that "the said clearance be obtained prior to the operative act of termination. 7
We agree that there was here an attempt to circumvent the law by separating the employee after five months' service to prevent him
from becoming a regular employee, and then rehiring him on probation, again without security of tenure. We cannot permit this
subterfuge if we are to be true to the spirit and mandate of social justice. On the other hand, we have also the health of the public and
of the dismissed employee himself to consider. Hence, although we must rule in favor of his reinstatement, this must be conditioned
on his fitness to resume his work, as certified by competent authority.
We take this opportunity to reaffirm our concern for the lowly worker who, often at the mercy of his employers, must look up to the
law for his protection. Fittingly, that law regards him with tenderness and even favor and always with faith and hope in his capacity to
help in shaping the nation's future. It is error to take him for granted. He deserves our abiding respect. How society treats him will
determine whether the knife in his hands shall be a caring tool for beauty and progress or an angry weapon of defiance and revenge.
The choice is obvious, of course. If we cherish him as we should, we must resolve to lighten "the weight of centuries" of exploitation
and disdain that bends his back but does not bow his head.
WHEREFORE, the petition is DISMISSED and the temporary restraining order of November 18, 1981, is LIFTED. The Order of the
public respondent dated July 14, 1981, is AFFIRMED, but with the modification that the backwages shall be limited to three years
only and the private respondent shall be reinstated only upon certification by a competent public health authority that he is fit to return
to work. Costs against the petitioner.
SO ORDERED.

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Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 75662 September 15, 1989
MERCURY DRUG CORPORATION, petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION, NLRC SHERIFF and CESAR E. LADISLA, respondents.
Veronica G. de Vera for petitioner.
David B. Agoncillo for private respondent.

FERNAN, C.J.:
Petitioner assails in this petition for review on certiorari the Resolution dated July 24, 1986 of the National Labor Relations
Commission in NLRC Case No. RB-IV-19301-78-T denying petitioner's motion for reconsideration of its decision dated April 30,
1986 which reversed the decision of Labor Arbiter Ceferina J. Diosana and ordered the reinstatement of private respondent Cesar E.
Ladisla to his former position with full backwages.
Records show that private respondent Cesar E. Ladisla was employed by petitioner Mercury Drug Corporation as a Stock Analyst at
its Claro M. Recto Branch. He had been with the company for two years and nine months when on August 15, 1977 he was
apprehended by representatives of Mercury Drug while in the act of pilfering company property consisting of three (3) bottles of
Persantin and one (1) bottle of Valoron at 100 tablets per bottle with a total value of P272.00. He admitted his guilt to the investigating
representatives of petitioner company and executed a handwritten admission. Said admission was repeated verbally at the police
station before the arresting officer as shown in the Booking Sheet and Arrest Report which was signed and authenticated by Ladisla. 1
Thus, on August 19, 1977, petitioner, while simultaneously placing private respondent on preventive suspension, filed before the
Department of Labor an application for the termination of private respondent's employment on grounds of dishonesty and breach of
trust.
Private respondent opposed the aforesaid application for clearance to terminate his services alleging among others, that his suspension
and proposed dismissal were unfounded and baseless being premised on the machinations and incriminatory acts of Ms. Leonora
Suarez and Edgardo Imperial, Manager and Retail Supervisor, respectively, of petitioner's Claro M. Recto Branch; and that he was not
given the opportunity to be heard nor allowed to explain his side before he was summarily suspended.
The parties were then required by the Arbitration Branch of the Department of Labor to file their respective position papers. While the
case was being heard by Labor Arbiter Ceferina J. Diosana petitioner filed a criminal complaint for attempted qualified theft against
private respondent before the Fiscal's Office of Manila but this was dismissed by the court before the arraignment of the accused.
However, the case was refiled and docketed as Criminal Case No. 43096 before Judge Pedro A. Ramirez of the then Court of First
Instance, subsequently the Regional Trial Court of Manila, Branch XXX.
In a decision dated November 8, 1979. 2 Labor Arbiter Ceferina J. Diosana sustained the validity of private respondent's dismissal and
granted petitioner's application for clearance to terminate, the services of the former. Private respondent appealed his aforesaid
dismissal to the National Labor Relations Commission. Pending resolution of the appeal, herein petitioner filed a Manifestation with
said Commission notifying the latter of the ongoing trial in Criminal Case No. 43096 against private respondent. On September 15,
1983, judgment was rendered in Criminal Case No. 43096, finding private respondent accused guilty of the crime of simple theft. 3 No

3 | Page

appeal was taken from the decision in the subject criminal case, private respondent having availed himself of the benefits of the
Probation Law. He was eventually discharged from probation on December 27, 1984, after complying with the terms and conditions
thereof. 4
On April 30, 1986, public respondent National Labor Relations Commission reversed the decision of the Labor Arbiter because it
found no substantial evidence establishing the charge against private respondent Ladisla stating thus:
WHEREFORE, the Decision appealed from is hereby set aside and a new one entered ordering respondent to
immediately reinstate him in (sic) his former position with full back wages.
SO ORDERED. 5
Petitioner filed a motion for reconsideration of the aforementioned decision, which was denied by public respondent Commission in
its resolution dated July 24, 1986. 6 Hence, this petition assailing the latter's reversal of the labor arbiter's decision and its order for the
reinstatement with full back wages of private respondent.
Petitioner submits that it was serious legal error on the part of public respondent to order the reinstatement of private respondent who
was convicted of the crime of simple theft by Judge Pedro Ramirez in Criminal Case No. 43096 filed by petitioner against said private
respondent-employee involving the same facts obtaining in the present case for termination. On the other hand, private respondent
maintains that he was a victim of revenge and incriminatory machinations as the charge of qualified theft of company property was a
frame-up.
We hold that public respondent National Labor Relations Commission committed a grave abuse of discretion amounting to lack of
jurisdiction in finding no substantial evidence to sustain the charge against private respondent. This conclusion is in complete and utter
disregard of the Regional Trial Court's conviction of private respondent for the crime of simple theft which decision was rendered
prior to its own assailed decision. It must be remembered that proceedings in criminal cases such as that held in the subject criminal
case require proof beyond reasonable doubt to establish the guilt of the accused and findings of fact of the trial court on this matter are
generally accorded great weight by appellate courts most especially where no appeal had been filed thereafter, thus rendering the said
findings final. As mentioned earlier, private respondent did not appeal from the decision of the lower court but instead availed himself
of the benefits of the probation law which was correspondingly granted by the Regional Trial Court.
Dismissal of a dishonest employee is to the best interest not only of management but also of labor. As a measure of self-protection
against acts inimical to its interest, a company has the right to dismiss its erring employees. An employer cannot be compelled to
continue in employment an employee guilty of acts inimical to its interest, justifying loss of confidence in him. The law does not
impose unjust situations on either labor or management. 7 We therefore find justification in the termination of private respondent Cesar
E. Ladisla's employment by petitioner Mercury Drug Corporation.
Under Article 282(c) of the Labor Code, an employer may terminate an employment for "fraud or willful breach by the employee of
the trust reposed in him by his employer or his duly authorized representative." Loss of confidence is established as a valid ground for
the dismissal of an employee. The law does not require proof beyond reasonable doubt of the employee's misconduct to invoke such a
justification. It is sufficient that there is some basis for the loss of trust or that the employer has reasonable grounds to believe that the
employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and confidence demanded
of his position. 8
Private respondent's admission of his guilt as earlier stated, his subsequent conviction in Criminal Case No. 43096 and his acceptance
of the same as implied in the absence of an appeal therefrom and his subsequent application for probation established beyond
reasonable doubt his guilt for the crime of simple theft. It was this same act which gave rise to his conviction by the trial court that
was the basis for the termination of his employment by petitioner.
We have held that the eventual conviction of the employee who is prosecuted for his misconduct is not indispensable to warrant his
dismissal by his employer. 9 More specifically, an employee who has been exonerated from a criminal charge of theft of gasoline on
the basis of technicality may still be dismissed from employment if the employer has ample reason to mistrust him. 10 If acquittal from
the criminal charge does not negate the existence of a ground for loss of trust and confidence, with more reason should conviction for
such criminal charge fortify said mistrust.

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Anent private respondent's claim of summary suspension without being given the opportunity to be heard, the Court takes note that, in
addition to the fact that his suspension was merely preventive pending approval by the Department of Labor of its application for
clearance to terminate the services of private respondent, the latter was given the chance to defend himself in several instances: at the
Police Precinct No. III, Western Police District, Metro Manila where he was brought for investigation or questioning immediately after
the occurrence of the alleged pilferage of medicines and where he was given the opportunity to state his defenses, and thereafter,
before the arbitration branch of the Department of Labor where he was required and did submit his position paper.
The law in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. 11 While the
Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every
labor dispute will be automatically decided in favor of labor. Management also has its own rights, which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, the Supreme Court
has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however,
has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts
and applicable law and doctrine . 12
WHEREFORE, the assailed resolution of the National Labor Relations Commission is reversed and set aside and the Labor Arbiter's
decision of November 8, 1979 dismissing Cesar E. Ladisla as petitioner's stock analyst is hereby reinstated. No costs.
SO ORDERED.

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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-48926 December 14, 1987
MANUEL SOSITO, petitioner,
vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent.

CRUZ, J.:
We gave due course to this petition and required the parties to file simultaneous memoranda on the sole question of whether or not the
petitioner is entitled to separation pay under the retrenchment program of the private respondent.
The facts are as follows:
Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was in charge of logging
importation, with a monthly salary of P675.00, 1 when he went on indefinite leave with the consent of the company on January 16,
1976. 2 On July 20, 1976, the private respondent, through its president, announced a retrenchment program and offered separation pay
to employees in the active service as of June 30, 1976, who would tender their resignations not later than July 31, 1976. The petitioner
decided to accept this offer and so submitted his resignation on July 29, 1976, "to avail himself of the gratuity benefits" promised. 3
However, his resignation was not acted upon and he was never given the separation pay he expected. The petitioner complained to the
Department of Labor, where he was sustained by the labor arbiter. 4 The company was ordered to pay Sosito the sum of P 4,387.50,
representing his salary for six and a half months. On appeal to the National Labor Relations Commission, this decision was reversed
and it was held that the petitioner was not covered by the retrenchment program. 5 The petitioner then came to us.
For a better understanding of this case, the memorandum of the private respondent on its retrenchment program is reproduced in full
as follows: 76
Memorandum To: ALL EMPLOYEES
Re: RETRENCHMENT PROGRAM
As you are all aware, the operations of wood-based industries in the Philippines for the last two (2) years were
adversely affected by the worldwide decline in the demand for and prices of logs and wood products. Our company
was no exception to this general decline in the market, and has suffered tremendous losses. In 1975 alone, such
losses amounted to nearly P20,000,000.00.

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The company has made a general review of its operations and has come to the unhappy decision of the need to make
adjustments in its manpower strength if it is to survive. This is indeed an unfortunate and painful decision to make,
but it leaves the company no alternative but to reduce its tremendous and excessive overhead expense in order to
prevent an ultimate closure.
Although the law allows the Company, in a situation such as this, to drastically reduce it manpower strength without
any obligation to pay separation benefits, we recognize the need to provide our employees some financial assistance
while they are looking for other jobs.
The Company therefore is adopting a retrenchment program whereby employees who are in the active service as of
June 30, 1976 will be paid separation benefits in an amount equivalent to the employee's one-half (1/2) month's
basic salary multiplied by his/her years of service with the Company. Employees interested in availing of the
separation benefits offered by the Company must manifest such intention by submitting written letters of resignation
to the Management not later than July 31, 1976. Those whose resignations are accepted shall be informed
accordingly and shall be paid their separation benefits.
After July 31, 1976, this offer of payment of separation benefits will no longer be available. Thereafter, the
Company shall apply for a clearance to terminate the services of such number of employees as may be necessary in
order to reduce the manpower strength to such desired level as to prevent further losses.
(SGD.) JOSE G.
RICAFORT
Presiden
t
N.B.
For additional information
and/or resignation forms,
please see Mr. Vic Maceda
or Atty. Ben Aritao. 6
It is clear from the memorandum that the offer of separation pay was extended only to those who were in the active service of the
company as of June 30, 1976. It is equally clear that the petitioner was not eligible for the promised gratuity as he was not actually
working with the company as of the said date. Being on indefinite leave, he was not in the active service of the private respondent
although, if one were to be technical, he was still in its employ. Even so, during the period of indefinite leave, he was not entitled to
receive any salary or to enjoy any other benefits available to those in the active service.
It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private respondent. He has insulated
himself from the insecurities of the floundering firm but at the same time would demand the benefits it offers. Being on indefinite
leave from the company, he could seek and try other employment and remain there if he should find it acceptable; but if not, he could
go back to his former work and argue that he still had the right to return as he was only on leave.
There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, the record shows that he
voluntarily sought the indefinite leave which the private respondent granted. It is strange that the company should agree to such an
open-ended arrangement, which is obviously one-sided. The company would not be free to replace the petitioner but the petitioner
would have a right to resume his work as and when he saw fit.
We note that under the law then in force the private respondent could have validly reduced its work force because of its financial
reverses without the obligation to grant separation pay. This was permitted under the original Article 272(a), of the Labor Code, 7
which was in force at the time. To its credit, however, the company voluntarily offered gratuities to those who would agree to be
phased out pursuant to the terms and conditions of its retrenchment program, in recognition of their loyalty and to tide them over their

7 | Page

own financial difficulties. The Court feels that such compassionate measure deserves commendation and support but at the same time
rules that it should be available only to those who are qualified therefore. We hold that the petitioner is not one of them.
While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed
that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are
entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court
has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however,
has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.
WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against the petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA AND AMERICA,
respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office and Sycip, Salazar, Feliciano & Hernandez Law
Office for respondents.

MAKASIAR, J.:+.wph!1
This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent Deputy Minister of Labor, Amado G.
Inciong, in NLRC case No. RB-IV-1561-76 entitled "Insular Bank of Asia and America Employees' Union (complainant-appellee), vs.
Insular Bank of Asia and America" (respondent-appellant), the dispositive portion of which reads as follows: t.hqw
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment. promulgated dismissing the
instant case for lack of merit (p. 109 rec.).
The antecedent facts culled from the records are as follows:

8 | Page

On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of holiday pay before the then Department
of Labor, National Labor Relations Commission, Regional Office No. IV in Manila. Conciliation having failed, and upon the request
of both parties, the case was certified for arbitration on July 7, 1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled case, granting petitioner's complaint
for payment of holiday pay. Pertinent portions of the decision read: t.hqw
xxx xxx xxx
The records disclosed that employees of respondent bank were not paid their wages on unworked regular holidays as
mandated by the Code, particularly Article 208, to wit: t.hqw
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than 10 workers.
(b) The term "holiday" as used in this chapter, shall include: New Year's Day, Maundy Thursday,
Good Friday, the ninth of April the first of May, the twelfth of June, the fourth of July, the thirtieth
of November, the twenty-fifth and the thirtieth of December and the day designated by law for
holding a general election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate of pay of the bank employees was computed in the past
with the unworked regular holidays as excluded for purposes of determining the deductible amount for absences
incurred Thus, if the employer uses the factor 303 days as a divisor in determining the daily rate of monthly paid
employee, this gives rise to a presumption that the monthly rate does not include payments for unworked regular
holidays. The use of the factor 303 indicates the number of ordinary working days in a year (which normally has 365
calendar days), excluding the 52 Sundays and the 10 regular holidays. The use of 251 as a factor (365 calendar days
less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives rise likewise to the same presumption that the
unworked Saturdays, Sundays and regular holidays are unpaid. This being the case, it is not amiss to state with
certainty that the instant claim for wages on regular unworked holidays is found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for all regular h(olidays since November 1, 1974 (pp. 9799, rec., underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied with the order of Arbiter Ricarte T. Soriano by paying
their holiday pay up to and including January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among others, the provisions of the Labor Code on
the right to holiday pay to read as follows: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wages during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation
equivalent to twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day, Maundy Thursday, Good Friday, the ninth of April,
the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and the thirtieth of
December, and the day designated by law for holding a general election.

9 | Page

Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the Department of Labor (now Ministry of Labor)
promulgated the rules and regulations for the implementation of holidays with pay. The controversial section thereof reads: t.
hqw
Sec. 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of
the number of working days therein, with a salary of not less than the statutory or established minimum wage shall
be presumed to be paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365
days divided by twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now Minister) interpreting the above-quoted
rule, pertinent portions of which read: t.hqw
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of
monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are
entitled to the benefit.
Under the rules implementing P.D. 850, this policy has been fully clarified to eliminate controversies on the
entitlement of monthly paid employees, The new determining rule is this: If the monthly paid employee is receiving
not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to
December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from
his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid
legal holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article 94 of the Labor Code and by Policy
Instruction No. 9, stopped the payment of holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's decision of August 25, 1975, whereby the
respondent bank was ordered to pay its employees their daily wage for the unworked regular holidays.
On September 10, 1975, respondent bank filed an opposition to the motion for a writ of execution alleging, among others, that: (a) its
refusal to pay the corresponding unworked holiday pay in accordance with the award of Labor Arbiter Ricarte T. Soriano dated August
25, 1975, is based on and justified by Policy Instruction No. 9 which interpreted the rules implementing P. D. 850; and (b) that the said
award is already repealed by P.D. 850 which took effect on December 16, 1975, and by said Policy Instruction No. 9 of the
Department of Labor, considering that its monthly paid employees are not receiving less than P240.00 and their monthly pay is
uniform from January to December, and that no deductions are made from the monthly salaries of its employees on account of
holidays in months where they occur (pp. 64-65, NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution, issued an order enjoining the respondent
bank to continue paying its employees their regular holiday pay on the following grounds: (a) that the judgment is already final and
the findings which is found in the body of the decision as well as the dispositive portion thereof is res judicata or is the law of the case
between the parties; and (b) that since the decision had been partially implemented by the respondent bank, appeal from the said
decision is no longer available (pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the above-cited order of Labor Arbiter Soriano to the National Labor
Relations Commission, reiterating therein its contentions averred in its opposition to the motion for writ of execution. Respondent
bank further alleged for the first time that the questioned order is not supported by evidence insofar as it finds that respondent bank
discontinued payment of holiday pay beginning January, 1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its resolution en banc dismissing respondent bank's appeal,
the dispositive portion of which reads as follows: t.hqw

10 | P a g e

In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss, respondent's appeal; to set aside Labor
Arbiter Ricarte T. Soriano's order of 18 October 1976 and, as prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February 9, 1979 or almost eight. (8) months after it was
promulgated, while copies were served on the respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion for reconsideration/appeal with urgent
prayer to stay execution, alleging therein the following: (a) that there is prima facie evidence of grave abuse of discretion, amounting
to lack of jurisdiction on the part of the National Labor Relations Commission, in dismissing the respondent's appeal on pure
technicalities without passing upon the merits of the appeal and (b) that the resolution appealed from is contrary to the law and
jurisprudence (pp. 260-274, NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged the following grounds: (a) that the
office of the Minister of Labor has no jurisdiction to entertain the instant appeal pursuant to the provisions of P. D. 1391; (b) that the
labor arbiter's decision being final, executory and unappealable, execution is a matter of right for the petitioner; and (c) that the
decision of the labor arbiter dated August 25, 1975 is supported by the law and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that a writ of execution be issued by the
National Labor Relations Commission pending appeal of the case with the Office of the Minister of Labor. Respondent bank filed its
opposition thereto on August 8, 1979.
On August 13, 1979, the National Labor Relations Commission issued an order which states: t.hqw
The Chief, Research and Information Division of this Commission is hereby directed to designate a Socio-Economic
Analyst to compute the holiday pay of the employees of the Insular Bank of Asia and America from April 1976 to
the present, in accordance with the Decision of the Labor Arbiter dated August 25, 1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado G. Inciong, issued an order, the
dispositive portion of which states: t.hqw
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment promulgated dismissing the instant
case for lack of merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of discretion amounting to lack or excess
of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of regular holiday pay can still be set aside
on appeal by the Deputy Minister of Labor even though it has already become final and had been partially executed, the finality of
which was affirmed by the National Labor Relations Commission sitting en banc, on the basis of an Implementing Rule and Policy
Instruction promulgated by the Ministry of Labor long after the said decision had become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9
issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay,
they in effect amended them by enlarging the scope of their exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers. ...

11 | P a g e

The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82 thereof which reads:
t.hqw
Art. 82. Coverage. The provision of this Title shall apply to employees in all establishments and undertakings,
whether for profit or not, but not to government employees, managerial employees, field personnel members of the
family of the employer who are dependent on him for support domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are not excluded from the benefits of holiday pay. However,
the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly paid employees from the said
benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section 2, which provides that: "employees who are
uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy Instruction No. 9 were issued to clarify the policy in
the implementation of the ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays are deemed paid insofar as monthly
paid employees are concerned if (a) they are receiving not less than the statutory minimum wage, (b) their monthly pay is uniform
from January to December, and (c) no deduction is made from their monthly salary on account of holidays in months where they
occur. As explained in Policy Instruction No, 9, 'The ten (10) paid legal holidays law, to start with, is intended to benefit principally
daily paid employees. In case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal
holidays are entitled to the benefit' " (pp. 340-341, rec.). This contention is untenable.
It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal the law must be taken
to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are
clear and explicit - it provides for both the coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then Secretary
of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of
the Labor Code, which states that "All doubts in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that the legislature
intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky vs.
Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor Code authorizing
him to promulgate the necessary implementing rules and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday pay law, as expressed by the Secretary of Labor in the
case of Chartered Bank Employees Association v. The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct
the disadvantages inherent in the daily compensation system of employment holiday pay is primarily intended to benefit the daily
paid workers whose employment and income are circumscribed by the principle of "no work, no pay." This argument may sound
meritorious; but, until the provisions of the Labor Code on holiday pay is amended by another law, monthly paid employees are
definitely included in the benefits of regular holiday pay. As earlier stated, the presumption is always in favor of law, negatively put,
the Labor Code is always strictly construed against management.
While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is to enforce it should be
given great weight by the courts, still if such construction is so erroneous, as in the instant case, the same must be declared as null and
void. It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or statutory) interpretation, in the context
of the interactions of the three branches of the government, almost always in situations where some agency of the State has engaged in
action that stems ultimately from some legitimate area of governmental power (The Supreme Court in Modern Role, C. B. Swisher
1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations Commission (106 SCRA 444, July 31, 1981)
where the Secretary of Labor enlarged the scope of exemption from the coverage of a Presidential Decree granting increase in
emergency allowance, this Court ruled that: t.hqw

12 | P a g e

... the Secretary of Labor has exceeded his authority when he included paragraph (k) in Section 1 of the Rules
implementing P. D. 1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory authority granted to the Secretary of Labor, and the
same is therefore void, as ruled by this Court in a long line of cases . . . .. t.hqw
The recognition of the power of administrative officials to promulgate rules in the administration
of the statute, necessarily limited to what is provided for in the legislative enactment, may be
found in the early case of United States vs. Barrios decided in 1908. Then came in a 1914
decision, United States vs. Tupasi Molina (29 Phil. 119) delineation of the scope of such
competence. Thus: "Of course the regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law, and for the sole purpose of carrying
into effect its general provisions. By such regulations, of course, the law itself cannot be extended.
So long, however, as the regulations relate solely to carrying into effect the provisions of the law,
they are valid." In 1936, in People vs. Santos, this Court expressed its disapproval of an
administrative order that would amount to an excess of the regulatory power vested in an
administrative official We reaffirmed such a doctrine in a 1951 decision, where we again made
clear that where an administrative order betrays inconsistency or repugnancy to the provisions of
the Act, 'the mandate of the Act must prevail and must be followed. Justice Barrera, speaking for
the Court in Victorias Milling inc. vs. Social Security Commission, citing Parker as well as Davis
did tersely sum up the matter thus: "A rule is binding on the Courts so long as the procedure fixed
for its promulgation is followed and its scope is within the statutory authority granted by the
legislature, even if the courts are not in agreement with the policy stated therein or its innate
wisdom. ... On the other hand, administrative interpretation of the law is at best merely advisory,
for it is the courts that finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the authority of the President, in whom all
executive power resides, to take care that the laws be faithfully executed. No lesser administrative
executive office or agency then can, contrary to the express language of the Constitution assert for
itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate.
There must be strict compliance with the legislative enactment. Its terms must be followed the
statute requires adherence to, not departure from its provisions. No deviation is allowable. In the
terse language of the present Chief Justice, an administrative agency "cannot amend an act of
Congress." Respondents can be sustained, therefore, only if it could be shown that the rules and
regulations promulgated by them were in accordance with what the Veterans Bill of Rights
provides" (Phil. Apparel Workers Union vs. National Labor Relations Commission, supra, 463,
464, citing Teozon vs. Members of the Board of Administrators, PVA 33 SCRA 585; see also
Santos vs. Hon. Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of Internal Revenue, 100 Phil.
295; Sy Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and Trinidad, 43
Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire & Cable Workers Union (TUPAS) vs. The National Labor
Relations Commission and American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy instruction No. 9 issued
by the then Secretary of Labor must be declared null and void. Accordingly, public respondent Deputy Minister of Labor Amado G.
Inciong had no basis at all to deny the members of petitioner union their regular holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975, had already become final, and was, in
fact, partially executed by the respondent bank.

13 | P a g e

However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61 SCRA 49, November 13, 1974, he can annul
the final decision of Labor Arbiter Soriano since the ensuing promulgation of the integrated implementing rules of the Labor Code
pursuant to P.D. 850 on February 16, 1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the then Secretary of
Labor are facts and circumstances that transpired subsequent to the promulgation of the decision of the labor arbiter, which renders the
execution of the said decision impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the public respondent is not a labor case wherein the express
mandate of the Constitution on the protection to labor is applied. Thus Article 4 of the Labor Code provides that, "All doubts in the
implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in
favor of labor and Article 1702 of the Civil Code provides that, " In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the members of petitioner union of their
vested right acquired by virtue of a final judgment on the basis of a labor statute promulgated following the acquisition of the "right".
On the question of whether or not a law or statute can annul or modify a judicial order issued prior to its promulgation, this Court,
through Associate Justice Claro M. Recto, said: t.hqw
xxx xxx xxx
We are decidedly of the opinion that they did not. Said order, being unappealable, became final on the date of its
issuance and the parties who acquired rights thereunder cannot be deprived thereof by a constitutional provision
enacted or promulgated subsequent thereto. Neither the Constitution nor the statutes, except penal laws favorable to
the accused, have retroactive effect in the sense of annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "... when a court renders a decision or promulgates
a resolution or order on the basis of and in accordance with a certain law or rule then in force, the subsequent amendment or even
repeal of said law or rule may not affect the final decision, order, or resolution already promulgated, in the sense of revoking or
rendering it void and of no effect." Thus, the amendatory rule (Rule IV, Book III of the Rules to Implement the Labor Code) cannot be
given retroactive effect as to modify final judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al., Ibid).
Furthermore, the facts of the case relied upon by the public respondent are not analogous to that of the case at bar. The case of De
Luna speaks of final and executory judgment, while iii the instant case, the final judgment is partially executed. just as the court is
ousted of its jurisdiction to annul or modify a judgment the moment it becomes final, the court also loses its jurisdiction to annul or
modify a writ of execution upon its service or execution; for, otherwise, we will have a situation wherein a final and executed
judgment can still be annulled or modified by the court upon mere motion of a panty This would certainly result in endless litigations
thereby rendering inutile the rule of law.
Respondent bank counters with the argument that its partial compliance was involuntary because it did so under pain of levy and
execution of its assets (p. 138, rec.). WE find no merit in this argument. Respondent bank clearly manifested its voluntariness in
complying with the decision of the labor arbiter by not appealing to the National Labor Relations Commission as provided for under
the Labor Code under Article 223. A party who waives his right to appeal is deemed to have accepted the judgment, adverse or not, as
correct, especially if such party readily acquiesced in the judgment by starting to execute said judgment even before a writ of
execution was issued, as in this case. Under these circumstances, to permit a party to appeal from the said partially executed final
judgment would make a mockery of the doctrine of finality of judgments long enshrined in this jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall issue as a matter of right upon the expiration of the
period to appeal ... or if no appeal has been duly perfected." This rule applies to decisions or orders of labor arbiters who are
exercising quasi-judicial functions since "... the rule of execution of judgments under the rules should govern all kinds of execution of
judgment, unless it is otherwise provided in other laws" Sagucio vs. Bulos 5 SCRA 803) and Article 223 of the Labor Code provides
that "... decisions, awards, or orders of the Labor Arbiter or compulsory arbitrators are final and executory unless appealed to the
Commission by any or both of the parties within ten (10) days from receipt of such awards, orders, or decisions. ..."

14 | P a g e

Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment and the
judgment becomes final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978; see
also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75
SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961, where the lower court modified a final
order, this Court ruled thus: t.hqw
xxx xxx xxx
The lower court was thus aware of the fact that it was thereby altering or modifying its order of January 8, 1959.
Regardless of the excellence of the motive for acting as it did, we are constrained to hold however, that the lower
court had no authorities to make said alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take the action complained of cannot offset the dem ands of
public policy and public interest which are also responsive to the tenets of equity requiring that an issues
passed upon in decisions or final orders that have become executory, be deemed conclusively disposed of and
definitely closed for, otherwise, there would be no end to litigations, thus setting at naught the main role of courts of
justice, which is to assist in the enforcement of the rule of law and the maintenance of peace and order, by settling
justiciable controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court said: t.hqw
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule is absolute that after a judgment
becomes final by the expiration of the period provided by the rules within which it so becomes, no further
amendment or correction can be made by the court except for clerical errors or mistakes. And such final judgment is
conclusive not only as to every matter which was offered and received to sustain or defeat the claim or demand but
as to any other admissible matter which must have been offered for that purpose (L-7044, 96 Phil. 526). In the
earlier case of Contreras and Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306), it was stated that the
rule must be adhered to regardless of any possible injustice in a particular case for (W)e have to subordinate the
equity of a particular situation to the over-mastering need of certainty and immutability of judicial pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G. Inciong divested the members of the petitioner union of their rights
acquired by virtue of a final judgment is tantamount to a deprivation of property without due process of law Public respondent
completely ignored the rights of the petitioner union's members in dismissing their complaint since he knew for a fact that the
judgment of the labor arbiter had long become final and was even partially executed by the respondent bank.
A final judgment vests in the prevailing party a right recognized and protected by law under the due process clause of the Constitution
(China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a vested interest which it is right
and equitable that the government should recognize and protect, and of which the individual could no. be deprived arbitrarily without
injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
lt is by this guiding principle that the due process clause is interpreted. Thus, in the pithy language of then Justice, later Chief Justice,
Concepcion "... acts of Congress, as well as those of the Executive, can deny due process only under pain of nullity, and judicial
proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding
(Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis supplied), And "(I)t has been likewise established that a violation

15 | P a g e

of a constitutional right divested the court of jurisdiction; and as a consequence its judgment is null and void and confers no rights"
(Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA 211, June 5, 1973).
Tested by and pitted against this broad concept of the constitutional guarantee of due process, the action of public respondent Amado
G. Inciong is a clear example of deprivation of property without due process of law and constituted grave abuse of discretion,
amounting to lack or excess of jurisdiction in issuing the order dated November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC RESPONDENT IS SET ASIDE, AND THE
DECISION OF LABOR ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA
SO ORDERED.1wph1.t

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 78085 October 16, 1989
ROYAL CROWN INTERNATIONALE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSI0N and VIRGILIO P. NACIONALES, respondents.

16 | P a g e

Ceferino Padua Law Office for petitioner.

Acosta & Rico Law Offices for private respondent.

CORTES, J.:
Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor Relations Commission (NLRC)
which affirmed a decision of the Philippine Overseas Employment Administration (POEA) holding it liable to pay, jointly and
severally with Zamel-Turbag Engineering and Architectural Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary
and vacation pay corresponding to the unexpired portion of his employment contract with ZAMEL.
In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private respondent for employment with
ZAMEL as an architectural draftsman in Saudi Arabia. On May 25, 1983, a service agreement was executed by private respondent and
ZAMEL whereby the former was to receive per month a salary of US$500.00 plus US$100.00 as allowance for a period of one (1)
year commencing from the date of his arrival in Saudi Arabia. Private respondent departed for Saudi Arabia on June 28,1983.
On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground that his performance was below par.
For three (3) successive days thereafter, he was detained at his quarters and was not allowed to report to work until his exit papers
were ready. On February 16, 1984, he was made to board a plane bound for the Philippines.
Private respondent then filed on April 23, 1984 a complaint for illegal termination against petitioner and ZAMEL with the POEA,
docketed as POEA Case No. (L) 84-04-401.
Based on a finding that petitioner and ZAMEL failed to establish that private respondent was terminated for just and valid cause, the
Workers' Assistance and Adjudication Office of the POEA issued a decision dated June 23, 1986 signed by Deputy Administrator and
Officer-in-Charge Crescencio M. Siddayao, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the complainant and against respondents, ordering the latter
to pay, jointly and severally, to complainant the following amounts:
1. TWO THOUSAND SIX HUNDRED FORTY US DOLLARS (US$2,640.00) or its equivalent in Philippine
currency at the time of payment, representing the salaries corresponding to the unexpired portion of complainant's
contract;
2. SIX HUNDRED US DOLLARS (US$ 600.00) less partial payment of FIVE HUNDRED FIFTY-EIGHT SAUDI
RIYALS (SR558), or its equivalent in Philippine currency at the time of actual payment, representing the unpaid
balance of complainant's vacation pay;
3. THREE HUNDRED FIFTY US DOLLARS (US$350.00) or its equivalent in Philippine currency at the time of
actual payment representing reimbursement of salary deductions for return travel fund;
4. Ten percent (10%) of the above-stated amounts, as and for attorney's fees.
Complainant's claim for legal and transportation expenses are hereby DISMISSED for lack of merit.
SO ORDERED.
[POEA Decision, p. 5; Rollo, p. 34.]
On July 18, 1986, petitioner filed thru its new counsel a motion for reconsideration which was treated as an appeal to the NLRC by the
POEA. Petitioner alleged that the POEA erred in holding it solidarity liable for ZAMEL's violation of private respondent's service
agreement even if it was not a party to the agreement.

17 | P a g e

In a resolution promulgated on December 11, 1986, the NLRC affirmed the POEA decision, holding that, as a duly licensed private
employment agency, petitioner is jointly and severally liable with its foreign principal ZAMEL for all claims and liabilities which may
arise in connection with the implementation of the employment contract or service agreement [NLRC Decision, pp. 3-4; Rollo, pp. 2627].
On March 30, 1987, the NLRC denied for lack of merit petitioner's motion for reconsideration.
Hence, petitioner filed the present petition captioned as "Petition for Review".
At this point, it is not amiss to note that the filing of a "Petition for Review" under Rule 45 of the Rules of Court is not the proper
means by which NLRC decisions are appealed to the Supreme Court. It is only through a petition for certiorari under Rule 65 that
NLRC decisions may be reviewed and nullified on the grounds of lack of jurisdiction or grave abuse of discretion amounting to lack
or excess of jurisdiction. Nevertheless, in the interest of justice, this Court opted to treat the instant petition as if it were a petition for
certiorari. Thus, after the filing of respondents' comments, petitioner's joint reply thereto, and respondents' rejoinders, the Court
resolved to consider the issues joined and the case submitted for decision.
The case at bar involves two principal issues, to wit:
I. Whether or not petitioner as a private employment agency may be held jointly and severally liable with the
foreign-based employer for any claim which may arise in connection with the implementation of the employment
contracts of the employees recruited and deployed abroad;
II. Whether or not sufficient evidence was presented by petitioner to establish the termination of private respondent's
employment for just and valid cause.
I.
Petitioner contends that there is no provision in the Labor Code, or the omnibus rules implementing the same, which either provides
for the "third-party liability" of an employment agency or recruiting entity for violations of an employment agreement performed
abroad, or designates it as the agent of the foreign-based employer for purposes of enforcing against the latter claims arising out of an
employment agreement. Therefore, petitioner concludes, it cannot be held jointly and severally liable with ZAMEL for violations, if
any, of private respondent's service agreement.
Petitioner's conclusion is erroneous. Petitioner conveniently overlooks the fact that it had voluntarily assumed solidary liability under
the various contractual undertakings it submitted to the Bureau of Employment Services. In applying for its license to operate a private
employment agency for overseas recruitment and placement, petitioner was required to submit, among others, a document or verified
undertaking whereby it assumed all responsibilities for the proper use of its license and the implementation of the contracts of
employment with the workers it recruited and deployed for overseas employment [Section 2(e), Rule V, Book 1, Rules to Implement
the Labor Code (1976)]. It was also required to file with the Bureau a formal appointment or agency contract executed by the foreignbased employer in its favor to recruit and hire personnel for the former, which contained a provision empowering it to sue and be sued
jointly and solidarily with the foreign principal for any of the violations of the recruitment agreement and the contracts of employment
[Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code (1976)]. Petitioner was required as well to post such
cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules
and regulations, and terms and conditions of employment as appropriate [Section 1 of Pres. Dec. 1412 (1978) amending Article 31 of
the Labor Code].
These contractual undertakings constitute the legal basis for holding petitioner, and other private employment or recruitment agencies,
liable jointly and severally with its principal, the foreign-based employer, for all claims filed by recruited workers which may arise in
connection with the implementation of the service agreements or employment contracts [See Ambraque International Placement and
Services v. NLRC, G.R. No. 77970, January 28, 1988, 157 SCRA 431; Catan v. NLRC, G.R. No. 77279, April 15, 1988, 160 SCRA
691; Alga Moher International Placement Services v. Atienza, G.R. No. 74610, September 30, 1988].
In a belated attempt to bolster its position, petitioner contends in its joint reply that the omnibus rules implementing the Labor Code
are invalid for not having been published in the Official Gazette pursuant to the Court's pronouncements in the cases of Tanada v.
Tuvera [G.R. No. 63915, April 25, 1985, 136 SCRA 27; December 29, 1986, 146 SCRA 446]. Petitioner further contends that the 1985

18 | P a g e

POEA Rules and Regulations, in particular Section 1, Rule I of Book VII** quoted in the NLRC decision, should not have been
retroactively applied to the case at bar.
But these contentions are irrelevant to the issues at bar. They proceed from a misapprehension of the legal basis of petitioner's
liabilities as a duly licensed private employment agency. It bears repeating that the basis for holding petitioner jointly and severally
liable with the foreign-based employer ZAMEL is the contractual undertakings described above which it had submitted to the Bureau
of Employment Services. The sections of the omnibus rules implementing the Labor Code cited by this Court merely enumerate the
various documents or undertakings which were submitted by petitioner as applicant for the license to operate a private employment
agency for overseas recruitment and placement. These sections do not create the obligations and liabilities of a private employment
agency to an employee it had recruited and deployed for work overseas. It must be emphasized again that petitioner assumed the
obligations and liabilities of a private employment agency by contract. Thus, whether or not the omnibus rules are effective in
accordance with Tanada v. Tuvera is an issue the resolution of which does not at all render nugatory the binding effect upon petitioner
of its own contractual undertakings.
The Court, consequently, finds it unnecessary to pass upon both the implications of Tanada v. Tuvera on the omnibus rules
implementing the Labor Code as well as the applicability of the 1985 POEA Rules and Regulations.
Petitioner further argues that it cannot be held solidarily liable with ZAMEL since public respondent had not acquired jurisdiction over
ZAMEL through extra-territorial service of summons as mandated by Section 17, Rule 14 of the Rules of Court.
This argument is untenable. It is well-settled that service upon any agent of a foreign corporation, whether or not engaged in business
in the Philippines, constitutes personal service upon that corporation, and accordingly, judgment may be rendered against said foreign
corporation [Facilities Management Corporation v. De la Osa, G.R. No. L-38649, March 26, 1979, 89 SCRA 131]. In the case at bar, it
cannot be denied that petitioner is an agent of ZAMEL. The service agreement was executed in the Philippines between private
respondent and Milagros G. Fausto, the General Manager of petitioner, for and in behalf of ZAMEL [Annex "D" of Petition, p. 3;
Rollo, p. 37]. Moreover, one of the documents presented by petitioner as evidence, i.e., the counter-affidavit of its General Manager
Ms. Fausto, contains an admission that it is the representative and agent of ZAMEL [See Paragraph No. 1 of Annex "H" of Petition;
Rollo. p. 43].
Considering the foregoing, the Court holds that the NLRC committed no grave abuse of discretion amounting to lack or excess of
jurisdiction in declaring petitioner jointly and severally liable with its foreign principal ZAMEL for all claims which have arisen in
connection with the implementation of private respondent's employment contract.
II.
Petitioner asserts that the NLRC failed to consider the overwhelming evidence it had presented before the POEA which establishes the
fact that private respondent was terminated for just and valid cause in accordance with his service agreement with ZAMEL.
This assertion is without merit. The NLRC upheld the POEA finding that petitioner's evidence was insufficient to prove termination
from employment for just and valid cause. And a careful study of the evidence thus far presented by petitioner reveals to this Court
that there is legal basis for public respondent's conclusion.
It must be borne in mind that the basic principle in termination cases is that the burden of proof rests upon the employer to show that
the dismissal is for just and valid cause, and failure to do so would necessarily mean that the dismissal was not justified and, therefore,
was illegal [Polymedic General Hospital v. NLRC, G.R. No. 64190, January 31, 1985,134 SCRA 420; and also Article 277 of the
Labor Code]. And where the termination cases involve a Filipino worker recruited and deployed for overseas employment, the burden
naturally devolves upon both the foreign-based employer and the employment agency or recruitment entity which recruited the
worker, for the latter is not only the agent of the former, but is also solidarily liable with its foreign principal for any claims or
liabilities arising from the dismissal of the worker.
In the case at bar, petitioner had indeed failed to discharge the burden of proving that private respondent was terminated from
employment for just and valid cause. Petitioner's evidence consisted only of the following documents:
(1) A letter dated May l5, 1984 allegedly written by an official of ZAMEL, stating that a periodic evaluation of the
entire staff was conducted; that the personnel concerned were given a chance to improve; that complainant's

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performance was found below par; and that on February 13,1984, at about 8:30 AM, complainant was caught on the
way out of the office to look for another job during office hours without the permission of his supervisor;
(2) A telex message allegedly sent by employees of ZAMEL, stating that they have not experienced maltreatment,
and that the working conditions (in ZAMEL) are good;
(3) The signatures of fifteen (15) persons who allegedly sent the telex message;
(4) A receipt dated February 16, 1984 signed by complainant, stating that he was paid SR915 representing his salary
and SR558, representing vacation pay for the month of February 1984;
(5) The counter-affidavit of Milagros G. Fausto, the General Manager of Royal Crown, stating that complainant was
dismissed because of poor performance, acts of dishonesty and misconduct, and denying complainant's claim that
his salary and leave pay were not paid, and that he was maltreated [See POEA Decision, p. 3; Rollo, p. 32, See also
Annexes "E", "F", "F-1 ", "G" and "H" of Petition; Rollo, pp. 38-43].
Certainly, the telex message supposedly sent by the employees of ZAMEL is not relevant in the determination of the legality of private
respondent's dismissal. On the other hand, the receipt signed by private respondent does not prove payment to him of the salary and
vacation pay corresponding to the unexpired portion of his contract.
More importantly, except for its allegation that private respondent was caught on February 13,1984 on his way out of the office
compound without permission, petitioner had failed to allege and to prove with particularity its charges against private respondent.
The letter dated May 15, 1984 allegedly written by the Actg. Project Architect and the counter-affidavit of petitoner's General Manager
merely stated that the grounds for the employee's dismissal were his unsatisfactory performance and various acts of dishonesty,
insubordination and misconduct. But the particular acts which would indicate private respondent's incompetence or constitute the
above infractions were neither specified nor described therein. In the absence of any other evidence to substantiate the general charges
hurled against private respondent, these documents, which comprise petitioner's evidence in chief, contain empty and self-serving
statements insufficient to establish just and valid cause for the dismissal of private respondent [See Euro-Lines, Phils., Inc. v. NLRC,
G.R. No. 75782, December 1, 1987,156 SCRA 78; Ambraque International Placement and Services v. NLRC, supra].
The Court is aware of the document attached in petitioner's manifestation and joint reply which is purportedly a xerox copy of a
statement executed on December 13, 1987 in Saudi Arabia by private respondent claiming that the latter had settled the case with
ZAMEL and had "received all [his] benefits that is salary, vacation pay, severance pay and all other bonuses before [he] left the
kingdom of Saudi Arabia on 13 Feb. 1984 and hereby indemnify [ZAMEL] from any claims or liabilities, [he] raised in the Philippine
Courts" [Annex "A" of petitioner's Manifestation with Motion to hold in Abeyance; Rollo, p. 82. And also Annex "A" of petitioner's
Joint Reply; Rollo, p. 111].
But the veracity of the contents of the document is precisely disputed by private respondent. He claims that he was made to sign the
above statement against his will and under threat of deportation [See Telex of private respondent received by the Supreme Court of the
Philippines on January 14,1988; Rollo, p. 83. And also private respondent's Rejoinder, pp. 1-3; Rollo, pp. 139-141].
Petitioner finally contends that inasmuch as clause no. 13 of the service agreement provided that the law under which the agreement
shall be regulated was the laws of Saudi Arabia [Annex "D" of Petition, p. 2; Rollo, p. 36], public respondent should have taken into
account the laws of Saudi Arabia and the stricter concept of morality availing in that jurisdiction for the determination of the legality
of private respondent's dismissal.
This contention is patently erroneous. The provisions of the Labor Code of the Philippines, its implementing rules and regulations, and
doctrines laid down in jurisprudence dealing with the principle of due process and the basic right of all Filipino workers to security of
tenure, provide the standard by which the legality of the exercise by management of its prerogative to dismiss incompetent, dishonest
or recalcitrant employees, is to be determined. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle
of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with
the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless
of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to
self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the
Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative

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by Article 17 of the Civil Code which states that laws "which have for their object public order, public policy and good customs shall
not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country."
Needless to say, the laws of Saudi Arabia which were, incidentally, neither pleaded nor proved by petitioner, have absolutely no
bearing whatsoever to the case at bar.
The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction in
upholding the POEA's finding of insufficiency of evidence to prove termination for just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.
SO ORDERED.

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