1. LABADAN VS.

FOREST HILLS

SECOND DIVISION

LILIA P. LABADAN

Lilian L. Labadan (petitioner) was hired

by private respondent Forest
Hills Mission Academy (Forest Hills) in
July 1989 as an elementary school
teacher. From 1990 up to 2002,
petitioner was registrar and secondary
G.R. No.school teacher.

Petitioner,

On August 18, 2003, petitioner filed a

complaint[1] against respondent Forest
Present: Hills and its administrator respondent
Naomi Cabaluna for illegal dismissal,
non-payment of overtime pay, holiday
pay, allowances, 13th month pay,
QUISUMBING,
service incentive leave, illegal
CARPIO MORALES,
deductions, and damages.

- versus -

TINGA,

FOREST HILLS
ACADEMY/NAOMI CABALUNA
and PRESIDING COMISSIONER
SALIC B. DUMARPA,
COMMISSIONER PROCULO T.
SARMEN, COMMISSIONER
NOVITO C. CAGAYAN,

VELASCO,
In JR.,
herand
Position Paper,[2] petitioner
BRION, alleged that she was allowed to go on
leave from Forest Hills, and albeit she
had exceeded her approved leave
period, its extension was impliedly
approved by the school principal
Promulgated:
because she received no warning or
reprimand and was in fact retained in
December 23, 2008
the payroll up to 2002.[3]

Respondents.
x------------------------------------------x

Petitioner further alleged that since

1990, tithes to the Seventh Day
Adventist church have been illegally
deducted from her salary; and she was
not paid overtime pay for overtime
service, 13th month pay, five days
service incentive leave pay, and
holiday pay; and that her SSS
contributions have not been remitted.

DECISION

CARPIO MORALES, J.:

Claiming that strained relations

between her and Forest Hill have
rendered reinstatement not feasible,
petitioner prayed for separation pay in
lieu of reinstatement.

In its Position Paper,[4] Forest

Hills claimed as follows: In July 2001,
petitioner was permitted to go on
leave for two weeks but did not return
for work after the expiration of the
period. Despite petitioners
undertaking to report soon, she never
did even until the end of School Year
2001-2002. It thus hired a temporary
employee to accomplish the needed
reports. When she finally returned for
work, classes for the School Year 20022003 were already on-going.

To belie petitioners claim that she was

dismissed, Forest Hills submitted a list
of faculty members and staff from
School Year 1998-1999 up to School
Year 2001 to 2002 which included her
name.[5]

WHEREFORE, judgment is hereby

rendered:

1.
Finding respondents Forest
Hills Academy and/or Naomi Cabaluna
guilty of illegally dismissing the
complainant;

2.
Directing respondent to pay
complainant Lilia P. Labadan the total
amount of P152,501.02 representing
her monetary award x x x.

Complainants other claim[s] are

hereby dismissed for lack of merit
and/or failure to substantiate.

SO ORDERED.[6]
With regard to the charge for illegal
deduction, Forest Hills claimed that
the Seventh Day Adventist Church req
uires its members to pay tithes
equivalent to 10% of their salaries,
and petitioner was hired on account of
her being a member thereof, and
petitioner never questioned the
deduction of the tithe from her salary.

With regard to the charge for nonpayment of overtime pay, holiday pay,
and allowances, Forest Hills noted that
petitioner proffered no evidence to
support the same.

The Labor Arbiter decided in favor of

petitioner, disposing as follows:

The National Labor Relations

Commission (NLRC), finding the Labor
Arbiter to have misappreciated the
facts of the case, reversed and set
aside his decision and dismissed
petitioners complaint by Resolution of
June 30, 2005.[7]

On petitioners Petition for Certiorari,

[8]
the Court of Appeals, by
Resolution[9] of December 15, 2005,
dismissed the petition for deficient
amount of appellate docket fee, nonattachment of Affidavit of Service,
absence of written explanation why
the petition was filed through

registered mail instead of through

personal service, and non-attachment
of copies of the Complaint and the
Answer filed before the Labor
Arbiter. Petitioners Motion for
Reconsideration having been denied,
[10]
she filed the present Petition for
Review on Certiorari,[11] faulting the
Court of Appeals

C.
THAT THE
DECISION/RESOLUTION RENDERED
BY THE HONORABLE
COMMISSIONERS OF THE
5TH DIVISION WAS TAINTED WITH
GRAVE ABUSE OF DISCRETION AS
IT WAS INCOMPLETE AND
UNLAWFUL[.][12] (Italics and
emphasis in the original)

x x x IN DISMISSING THE PETITION

ON THE GROUND OF
TECHNICALITIES[;]

Non-payment of docket fee at the time

of the filing of a petition does not
automatically call for its dismissal as
long as the fee is paid within the
applicable prescriptive or
reglementary period.[13] While
petitioner paid the P30 deficient
amount of the docket fee on February
7, 2006,[14] it was beyond the 60-day
period for filing the petition for
certiorari. Nevertheless, the Court, in
the interest of substantial justice,
brushes aside this and the other
technicalities cited by the Court of
Appeals in its Resolution of December
15, 2005[15] and, instead of remanding
the case to the appellate court, now
hereby decides the case on the merits.

x x x IN NOT DECIDING ON THE

MERITS WHETHER OR NOT
HONORABLE COMMISSIONERS OF
THE 5TH DIVISION HAVE
COMMITTED AN ACT OF GRAVE
ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS
OF JURISDICTION:

A.
IN REVERSING THE
FINDINGS OF THE EXECUTIVE
LABOR ARBITER THAT HEREIN
PETITIONER-COMPLAINANT WAS
NOT DISMISSED FROM HER WORK
AS A TEACHER and AT THE SAME
TIME THE REGISTRAR;

B.
IN FINDING THAT BY A
PROLONGED ABSENCE OF ONE
YEAR MORE OR LESS, PETITIONER
WAIVED HER 13TH MONTH PAY AND
SERVICE INCENTIVE LEAVES AS
SHE FAILED TO STATE SUCH
CLAIMS IN HER AFFIDAVIT THAT
WAS ATTACHED [TO] HER
POSITION PAPER, and;

While in cases of illegal dismissal, the

employer bears the burden of proving
that the dismissal is for a valid or
authorized cause, the employee must
first establish by substantial evidence
the fact of dismissal.[16]

The records do not show that

petitioner was dismissed from the
service. They in fact show that despite
petitioners absence from July 2001 to
March 2002 which, by her own

admission, exceeded her approved

leave,[17] she was still considered a
member of the Forest
Hills faculty[18] which retained her in its
payroll.[19]

Petitioner argues, however, that she

was constructively dismissed
when Forest Hills merged her class
with another so much that when she
reported back to work, she has no
more claims to hold and no more work
to do.[20]

Petitioner, however, failed to

refute Forest Hills claim that when she
expressed her intention to resume
teaching, classes were already
ongoing for School Year 2002-2003.It
bears noting that petitioner
simultaneously held the positions of
secondary school
teacher and registrar and, as the NLRC
noted, she could have

her job without valid cause, but gave

no particulars on when and how she
was dismissed.

There being no substantial proof that

petitioner was dismissed, she is not
entitled to separation pay or
backwages.

Respecting petitioners claim for

holiday pay, Forest Hills contends that
petitioner failed to prove that she
actually worked during specific
holidays. Article 94 of the Labor Code
provides, however, that

(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;

(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[.]

resumed her work as registrar had she

really wanted to continue working
with Forest Hills.[21]

Petitioners affidavit and those of her

former colleagues,[22] which she
attached to her Position Paper, merely
attested that she was dismissed from

The provision that a worker is entitled

to twice his regular rate if he is
required to work on a holiday implies
that the provision entitling a worker to
his regular rate on holidays applies
even if he does not work.

The petitioner is likewise entitled to

service incentive leave under Article
95 of the Labor Code which provides
that

(a)
Every employee
who has rendered at least one year of
service shall be entitled to a yearly
service incentive leave of five days
with pay.

(b)
This provision shall
not apply to those who are already
enjoying the benefit herein provided,
those enjoying vacation leave with pay
of at least five days and those
employed in establishments regularly
employing less than ten employees or
in establishment exempted from
granting this benefit by the Secretary
of Labor after considering the viability
or financial condition of such
establishment.
x x x x,

and to 13th month pay under

Presidential Decree No. 851.[23]

As for petitioners claims for overtime

pay, it must be denied, for other than
the uncorroborated affidavits of her
colleagues, there is no concrete proof
that she is entitled thereto.[24] And so
must her claim for allowances, no
proof to her entitlement thereto
having been presented.

On the deduction of 10% tithe, Article

113 of the Labor Code instructs:

ART. 113. No employer, in his own

behalf or in behalf of any person, shall
make any deduction from the wages of
his employees, except:

(a)
In cases where the worker
is insured with his consent by the
employer, and the deduction is to
recompense the employer for the
amount paid by him as premium on
the insurance;

(b)
For union dues, in cases
where the right of the worker or his
union to check-off has been
recognized by the employer or
authorized in writing by the individual
worker concerned; and

(c)
In cases where the
employer is authorized by law or
regulations issued by the Secretary of
Labor,

as does Rule VIII, Section 10 of the

Rules Implementing Book III of the
Labor Code reading:

SEC. 10. Deductions from the wages of

the employees may be made by the
employer in any of the following cases:

(a)
When the deductions are
authorized by law, including
deductions for the insurance
premiums advanced by the employer

in behalf of the employee as well as

union dues where the right to checkoff has been recognized by the
employer or authorized in writing by
the individual employee himself;

(b)
When the deductions are with
the written authorization of the
employees for payment to a third
person and the employer agrees to do
so, provided that the latter does not
receive any pecuniary benefit, directly
or indirectly, from the
transaction. (Emphasis and
underscoring supplied)

In the absence then of petitioners

written conformity to the deduction of
the 10% tithe from her salary, the
deduction made by Forest Hills was
illegal.

Finally, on petitioners claim that Forest

Hills did not remit her SSS
contributions, Villar v. National Labor
Relations Commission[25] enlightens:

x x x [T]he burden of proving payment

of monetary claims rests on the
employer. x x x

xxxx

The reason for the rule is that the

pertinent personnel files, payrolls,
records, remittances and other similar

documents which will show that

overtime, differentials, service
incentive leave and other claims of
workers have been paid are not in the
possession of the worker but in the
custody and absolute control of the
employer.[26] (Underscoring supplied)

Forest Hills having glossed over this

claim, the same must be granted.

Finally, insofar as petitioner was

compelled to litigate her money
claims, an award of attorneys fees
equivalent to 10% of the final
judgment award is in order.[27]

WHEREFORE, the Court of Appeals

Resolution of December 15,
2005 is SET ASIDE. The petition
is GRANTED insofar as petitioners
claims for illegal deductions, holiday
pay, service incentive leave pay,
13th month pay, and non-remittance of
SSS contributions are
concerned. Respondents are
accordingly ORDERED to refund to
petitioner the amount of the illegal
deductions from her salary; to pay her
holiday pay, service incentive leave
pay, and 13th month pay; to remit her
contributions to the SSS; and to pay
her attorneys fees equivalent to 10%
of the final judgment award. The case
is accordingly REMANDED to the
Labor Arbiter for computation of the
amount of such money claims.
_______________________________________
_______________________________________
_______________________________________
_______________________________________

_______________________________________
_______________________________________
_______________________________________
SECOND DIVISION
[G.R. No. 114734. March 31, 2000]
VIVIAN Y. IMBUIDO, petitioner, vs.
NATIONAL LABOR RELATIONS
COMMISSION, INTERNATIONAL
INFORMATION SERVICES, INC. and
GABRIEL LIBRANDO, respondents.
DECISION
BUENA, J.:
This special civil action
for certiorari seeks to set aside the
Decision[1] of the National Labor
Relations Commission (NLRC)
promulgated on September 27, 1993
and its Order dated January 11, 1994,
which denied petitioners motion for
reconsideration. Scslx
Petitioner was employed as a data
encoder by private respondent
International Information Services,
Inc., a domestic corporation engaged
in the business of data encoding and
keypunching, from August 26, 1988
until October 18, 1991 when her
services were terminated. From August
26, 1988 until October 18, 1991,
petitioner entered into thirteen (13)
separate employment contracts with
private respondent, each contract
lasting only for a period of three (3)
months. Aside from the basic hourly
rate, specific job contract number and
period of employment, each contract
contains the following terms and
conditions: Slxsc
"a. This Contract is for a specific
project/job contract only and shall be
effective for the period covered as
above-mentioned unless sooner

terminated when the job contract is

completed earlier or withdrawn by
client, or when employee is dismissed
for just and lawful causes provided by
law. The happening of any of these
events will automatically terminate
this contract of employment. Slxmis
"b. Subject shall abide with the
Companys rules and regulations for its
employees attached herein to form an
integral part hereof.
"c. The nature of your job may require
you to render overtime work with pay
so as not to disrupt the Companys
commitment of scheduled delivery
dates made on said job contract."[2]
In September 1991, petitioner and
twelve (12) other employees of private
respondent allegedly agreed to the
filing of a petition for certification
election involving the rank-and-file
employees of private respondent.
[3]
Thus, on October 8, 1991, Lakas
Manggagawa sa Pilipinas (LAKAS) filed
a petition for certification election with
the Bureau of Labor Relations (BLR),
docketed as NCR-OD-M-9110-128.[4]
Subsequently, on October 18, 1991,
petitioner received a termination letter
from Edna Kasilag, Administrative
Officer of private respondent, allegedly
"due to low volume of work."[5]
Thus, on May 25, 1992, petitioner filed
a complaint for illegal dismissal with
prayer for service incentive leave pay
and 13th month differential pay, with
the National Labor Relations
Commission, National Capital Region,
Arbitration Branch, docketed as NLRCNCR Case No. 05-02912-92.[6]
In her position paper dated August 3,
1992 and filed before labor arbiter
Raul T. Aquino, petitioner alleged that

her employment was terminated not

due to the alleged low volume of work
but because she "signed a petition for
certification election among the rank
and file employees of respondents,"
thus charging private respondent with
committing unfair labor practices.
Petitioner further complained of nonpayment of service incentive leave
benefits and underpayment of 13th
month pay.[7]
On the other hand, private
respondent, in its position paper filed
on July 16, 1992, maintained that it
had valid reasons to terminate
petitioners employment and
disclaimed any knowledge of the
existence or formation of a union
among its rank-and-file employees at
the time petitioners services were
terminated.[8] Private respondent
stressed that its business "relies
heavily on companies availing of its
services. Its retention by client
companies with particular emphasis
on data encoding is on a project to
project basis,"[9] usually lasting for a
period of "two (2) to five (5) months."
Private respondent further argued that
petitioners employment was for a
"specific project with a specified
period of engagement." According to
private respondent, "the certainty of
the expiration of complainants
engagement has been determined at
the time of their (sic) engagement
(until 27 November 1991) or when the
project is earlier completed or when
the client withdraws," as provided in
the contract.[10] "The happening of the
second event [completion of the
project] has materialized, thus, her
contract of employment is deemed
terminated per the Brent School
ruling."[11] Finally, private respondent
averred that petitioners "claims for

non-payment of overtime time (sic)

and service incentive leave [pay] are
without factual and legal basis."[12]
In a decision dated August 25, 1992,
labor arbiter Raul T. Aquino, ruled in
favor of petitioner, and accordingly
ordered her reinstatement without loss
of seniority rights and privileges, and
the payment of backwages and
service incentive leave pay. The
dispositive part of the said decision
reads: Missdaa
"WHEREFORE, responsive to the
foregoing, judgment is hereby
rendered ordering respondents to
immediately reinstate complainant
[petitioner herein] as a regular
employee to her former position
without loss of seniority rights and
privileges and to pay backwages from
the time of dismissal up to the date of
this decision, the same to continue
until complainant [s] [petitioner
herein] actual reinstatement from (sic)
the service. Respondents are likewise
ordered to pay complainant [petitioner
herein] service incentive leave pay
computed as follows: Sdaadsc
Backwages:
10/18/91 8/25/92 = 10.23 mos.
P118.00 x 26 x 10.23 mos. = P31,
385.64
Service Incentive Leave Pay
1989 = P89.00 x 5 days = P445.00
1990 = 106 x 5 days = P530.00
1991 = 118 x 5 days = P590.00
P 1, 565.00
Total P32, 950.64
SO ORDERED."[13]

In his decision, the labor arbiter found

petitioner to be a regular employee,
ruling that "[e]ven if herein
complainant [petitioner herein] had
been obstensively (sic) hired for a
fixed period or for a specific
undertaking, she should be considered
as [a] regular employee of the
respondents in conformity with the
provisions (sic) laid down under Article
280 of the Labor Code,"[14]after finding
that "[i]t is crystal clear that herein
complainant [petitioner herein]
performed a job which are (sic) usually
necessary or desirable in the usual
business of respondent [s]."[15] The
labor arbiter further denounced "the
purpose behind the series of contracts
which respondents required
complainant to execute as a condition
of employment was to evade the true
intent and spirit of the labor laws for
the workingmen."[16] Furthermore, the
labor arbiter concluded that petitioner
was illegally dismissed because the
alleged reason for her termination,
that is, low volume of work, is "not
among the just causes for termination
recognized by law,"[17] hence, he
ordered her immediate reinstatement
without loss of seniority rights and
with full backwages. With regard to
the service incentive leave pay, the
labor arbiter decided "to grant the
same for failure of the respondents to
fully controvert said claims."[18] Lastly,
the labor arbiter rejected petitioners
claim for 13th month pay "since
complainant [petitioner herein] failed
to fully substantiate and argued (sic)
the same."[19]
On appeal, the NLRC reversed the
decision of the labor arbiter in a
decision[20] promulgated on September
27, 1993, the dispositive part of which
reads:

"WHEREFORE, the appealed decision

is hereby set aside. The complaint for
illegal dismissal is hereby dismissed
for being without merit. Complainants
[petitioner herein] claim for service
incentive leave pay is hereby
remanded for further arbitration.
SO ORDERED."[21]
The NLRC ruled that "[t]here is no
question that the complainant
[petitioner herein], viewed in relation
to said Article 280 of the [Labor] Code,
is a regular employee judging from the
function and/or work for which she
was hired. xxx xxx. But this does not
necessarily mean that the complainant
[petitioner herein] has to be
guaranteed a tenurial security beyond
the period for which she was
hired."[22] The NLRC held that the
complainant [petitioner herein], while
hired as a regular worker, is statutorily
guaranteed, in her tenurial security,
only up to the time the specific project
for which she was hired is
completed."[23] Hence, the NLRC
concluded that "[w]ith the specific
project "at RCBC 014" admittedly
completed, the complainant
[petitioner herein] has therefore no
valid basis in charging illegal dismissal
for her concomittant (sic)
dislocation."[24]
In an Order dated January 11, 1994,
the NLRC denied petitioners motion for
reconsideration.[25]
In this petition for certiorari, petitioner,
for and in her behalf, argues that (1)
the public respondent "committed
grave abuse of discretion when it
ignored the findings of Labor Arbiter
Raul Aquino based on the evidence
presented directly before him, and
when it made findings of fact that are

contrary to or not supported by

evidence,"[26] (2) "[p]etitioner was a
"regular employee," NOT a "project
employee" as found by public
respondent NLRC,"[27] (3) "[t]he
termination of petition (sic) was
tainted with unfair labor
practice,"[28] and (4) the public
respondent "committed grave abuse
of discretion in remanding the
awarded service incentive leave pay
for further arbitration."[29]
The petition is impressed with
merit. Sdaadsc
We agree with the findings of the NLRC
that petitioner is a project employee.
The principal test for determining
whether an employee is a project
employee or a regular employee is
whether the project employee was
assigned to carry out a specific project
or undertaking, the duration and scope
of which were specified at the time the
employee was engaged for that
project.[30] A project employee is one
whose employment has been fixed for
a specific project or undertaking, the
completion or termination of which has
been determined at the time of the
engagement of the employee or where
the work or service to be performed is
seasonal in nature and the
employment is for the duration of the
season.[31] In the instant case,
petitioner was engaged to perform
activities which were usually
necessary or desirable in the usual
business or trade of the employer, as
admittedly, petitioner worked as a
data encoder for private respondent, a
corporation engaged in the business of
data encoding and keypunching, and
her employment was fixed for a
specific project or undertaking the
completion or termination of which

had been determined at the time of

her engagement, as may be observed
from the series of employment
contracts[32] between petitioner and
private respondent, all of which
contained a designation of the specific
job contract and a specific period of
employment.
However, even as we concur with the
NLRCs findings that petitioner is a
project employee, we have reached a
different conclusion. In the recent case
of Maraguinot, Jr. vs. NLRC,[33] we held
that "[a] project employee or a
member of a work pool may acquire
the status of a regular employee when
the following concur: Rtcspped
1) There is a continuous rehiring of
project employees even after [the]
cessation of a project;[34] and
2) The tasks performed by the alleged
"project employee" are vital,
necessary and indispensable to the
usual business or trade of the
employer.[35]"
The evidence on record reveals that
petitioner was employed by private
respondent as a data encoder,
performing activities which are usually
necessary or desirable in the usual
business or trade of her employer,
continuously for a period of more than
three (3) years, from August 26, 1988
to October 18, 1991[36] and contracted
for a total of thirteen (13) successive
projects. We have previously ruled that
"[h]owever, the length of time during
which the employee was continuously
re-hired is not controlling, but merely
serves as a badge of regular
employment."[37]Based on the
foregoing, we conclude that petitioner
has attained the status of a regular
employee of private respondent.

At this point, we reiterate with

emphasis that: Korte
"xxx xxx
"At this time, we wish to allay any
fears that this decision unduly burdens
an employer by imposing a duty to rehire a project employee even after
completion of the project for which he
was hired. The import of this decision
is not to impose a positive and
sweeping obligation upon the
employer to re-hire project
employees. What this decision
merely accomplishes is a judicial
recognition of the employment
status of a project or work pool
employee in accordance with what
is fait accompli, i.e., the
continuous re-hiring by the
employer of project or work pool
employees who perform tasks
necessary or desirable to the
employer's usual business or
trade. Let it not be said that this
decision "coddles" labor, for
as Lao[38] has ruled, project or work
pool employees who have gained
the status of regular employees
are subject to the "no work-no
pay" principle, to repeat:
"A work pool may exist although the
workers in the pool do not receive
salaries and are free to seek other
employment during temporary breaks
in the business, provided that the
worker shall be available when called
to report for a project. Although
primarily applicable to regular
seasonal workers, this set-up can
likewise be applied to project workers
insofar as the effect of temporary
cessation of work is concerned. This is
beneficial to both the employer and
employee for it prevents the unjust
situation of "coddling labor at the

expense of capital" and at the same

time enables the workers to attain the
status of regular employees. Sclaw
"The Court's ruling here is meant
precisely to give life to the
constitutional policy of strengthening
the labor sector, but, we stress, not at
the expense of management. Lest it
be misunderstood, this ruling does not
mean that simply because an
employee is a project or work pool
employee even outside the
construction industry, he is
deemed, ipso jure, a regular
employee. All that we hold today is
that once a project or work pool
employee has been: (1)
continuously, as opposed to
intermittently, re-hired by the
same employer for the same tasks
or nature of tasks; and (2) these
tasks are vital, necessary and
indispensable to the usual
business or trade of the employer,
then the employee must be
deemed a regular employee,
pursuant to Article 280 of the
Labor Code and jurisprudence. To
rule otherwise would allow
circumvention of labor laws in
industries not falling within the
ambit of Policy Instruction No.
20/Department Order No. 19,
hence allowing the prevention of
acquisition of tenurial security by
project or work pool employees
who have already gained the
status of regular employees by
the employer's conduct."[39]
(emphasis supplied)
Being a regular employee, petitioner is
entitled to security of tenure and could
only be dismissed for a just or
authorized cause, as provided in

Article 279 of the Labor Code, as

amended: Sclex
"Art. 279. Security of Tenure In cases
of regular employment, the employer
shall not terminate the services of an
employee except for a just cause or
when authorized by this Title. An
employee who is unjustly dismissed
from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his
full backwages, inclusive of
allowances, and to his other benefits
or their monetary equivalent
computed from the time his
compensation was withheld from him
up to the time of his actual
reinstatement."
The alleged causes of petitioners
dismissal (low volume of work and
belatedly, completion of project) are
not valid causes for dismissal under
Articles 282 and 283 of the Labor
Code. Thus, petitioner is entitled to
reinstatement without loss of seniority
rights and other privileges, and to her
full backwages, inclusive of
allowances, and to her other benefits
or their monetary equivalent
computed from the time her
compensation was withheld from her
up to the time of her actual
reinstatement. However, complying
with the principles of "suspension of
work" and "no work, no pay" between
the end of one project and the start of
a new one, in computing petitioners
backwages, the amounts
corresponding to what could have
been earned during the periods from
the date petitioner was dismissed until
her reinstatement when private
respondent was not undertaking any
project, should be deducted. Xlaw

With regard to petitioners claim for

service incentive leave pay, we agree
with the labor arbiter that petitioner is
entitled to service incentive leave pay,
as provided in Article 95 of the Labor
Code, which reads:
"Article 95 Right to service incentive
leave
(a) Every employee who has rendered
at least one year of service shall be
entitled to a yearly service incentive
leave of five days with pay.
xxx xxx xxx."
Having already worked for more than
three (3) years at the time of her
unwarranted dismissal, petitioner is
undoubtedly entitled to service
incentive leave benefits, computed
from 1989 until the date of her actual
reinstatement. As we ruled in the
recent case of Fernandez vs. NLRC,
[40]
"[s]ince a service incentive leave is
clearly demandable after one year of
service whether continuous or broken
or its equivalent period, and it is one
of the "benefits" which would have
accrued if an employee was not
otherwise illegally dismissed, it is fair
and legal that its computation should
be up to the date of reinstatement as
provided under Section [Article] 279 of
the Labor Code, as amended, which
reads: Xsc
"ART. 279. Security of Tenure. An
employee who is unjustly dismissed
from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his
full backwages, inclusive of
allowances, and to his other benefits
or their monetary
equivalent computed from the time
his compensation is withheld from him

up to the time of his actual

reinstatement." (emphasis supplied).

MANSION PRINTING CENTER and

CLEMENT CHENG,

WHEREFORE, the instant petition is

GRANTED. The assailed decision of the
National Labor Relations Commission
in NLRC NCR CA No. 003845-92 dated
September 27, 1993, as well as its
Order dated January 11, 1994, are
hereby ANNULLED and SET ASIDE for
having been rendered with grave
abuse of discretion, and the decision
of the Labor Arbiter in NLRC NCR Case
No. 05-02912-92 is REINSTATED with
MODIFICATION as above-stated, with
regard to the computation of back
wages and service incentive leave
pay. Sc

Petitioners,

_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________

G.R. No. 16

Present:

CARPIO, J.
Chairperson
-versus-

PEREZ,
SERENO,
REYES, and

PERLAS-BER

DIOSDADO BITARA, JR.

Promulgated

Respondent.

January 25, 2

1. SECOND
DIVISION
x----------------------------------------------------------------------------------------x

2. D E C I S I O N

PEREZ, J.:

Before us is a petition for review

on certiorari seeking to reverse and
set aside the issuances of the Court of
Appeals in CA-GR. SP No. 70965, to
wit: (a) the Decision1 dated 18 March
2004 granting the petition
for certiorari under Rule 65 of herein
respondent Diosdado Bitara, Jr.; and

(b) the Resolution2 dated 10 May 2005

denying the petitioners Motion for
Reconsideration of the Decision. The
assailed decision of the Court of
Appeals reversed the findings of the
National Labor Relations
Commission3 and the Labor
Arbiter4 that respondent was validly
dismissed from the service.

submit a written explanation why no

administrative sanction should be
imposed on him for his habitual
tardiness.

The Antecedents

29 NOV. 1999

Petitioner Mansion Printing Center is a

single proprietorship registered under
the name of its president and copetitioner Clement Cheng. It is
engaged in the printing of quality selfadhesive labels, brochures, posters,
stickers, packaging and the like.5

MR. CLEMENT CHENG

Sometime in August 1998, petitioners

engaged the services of respondent as
a helper (kargador). Respondent was
later promoted as the companys sole
driver tasked to pick-up raw materials
for the printing business, collect
account receivables and deliver the
products to the clients within the
delivery schedules.6

Petitioners aver that the timely

delivery of the products to the clients
is one of the foremost considerations
material to the operation of the
business.7 It being so, they closely
monitored the attendance of
respondent. They noted his habitual
tardiness and absenteeism.
Thus, as early as 23 June 1999,
petitioners issued a
Memorandum8 requiring respondent to

Several months after, respondents

attention on the matter was again
called to which he replied:

SIR:

I UNDERSTAND MY TARDINESS
WHATEVER REASON I HAVE AFFECTS
SOMEHOW THE DELIVERY SCHEDULE
OF THE COMPANY, THUS DISCIPLINARY
ACTION WERE IMPOSED TO ME BY THE
MANAGEMENT. AND ON THIS END,
ACCEPT MY APOLOGIES AND REST
ASSURED THAT I WILL COME ON TIME
(ON OR BEFORE 8:30 AM) AND
WILLINGNESS TO EXTEND MY SERVICE
AS A COMPANY DRIVER. WHATEVER
HELP NEEDED. (sic)

RESPECTFULLY YOURS,
(SGD.) DIOSDADO BITARA, JR.9

Despite respondents undertaking to

report on time, however, he continued
to disregard attendance policies. His
weekly time record for the first quarter
of the year 200010 revealed that he
came late nineteen (19) times out of
the forty-seven (47) times he reported

for work. He also incurred nineteen

(19) absences out of the sixty-six (66)
working days during the quarter. His
absences without prior notice and
approval from March 11-16, 2000 were
considered to be the most serious
infraction of all11 because of its
adverse effect on business operations.

Consequently, Davis Cheng, General

Manager of the company and son of
petitioner Cheng, issued on 17 March
2000 another Memorandum12 (Notice
to Explain) requiring respondent to
explain why his services should not be
terminated. He personally handed the
Notice to Explain to respondent but
the latter, after reading the directive,
refused to acknowledge receipt
thereof.13 He did not submit any
explanation and, thereafter, never
reported for work.

On 21 March 2000, Davis Cheng

personally served another
Memorandum14 (Notice of Termination)
upon him informing him that the
company found him grossly negligent
of his duties, for which reason, his
services were terminated effective 1
April 2000.

On even date, respondent met with

the management requesting for
reconsideration of his termination from
the service. However, after hearing his
position, the management decided to
implement the 21 March 2000
Memorandum. Nevertheless, the
management, out of generosity,
offered respondent financial
assistance in the amount of P6,110.00
equivalent to his one month salary.

Respondent demanded that he be

given the amount equivalent to two
(2) months salary but the
management declined as it believed it
would, in effect, reward respondent for
being negligent of his duties.15

On 27 April 2000, respondent filed a

complaint16 for illegal dismissal against
the petitioners before the Labor
Arbiter. He prayed for his
reinstatement and for the payment of
full backwages, legal holiday pay,
service incentive leave pay, damages
and attorneys fees.17

In his Position Paper18 filed with the

Labor Arbiter, respondent claimed that
he took a leave of absence from March
17-23, 200019 due to an urgent family
problem. He returned to work on 24
March 200020 but Davis Cheng
allegedly refused him admission
because of his unauthorized
absences.21 On 1 April 2000,
respondent was summoned by Davis
Cheng who introduced him to a
lawyer, who, in turn, informed him that
he will no longer be admitted to work
because of his 5-day unauthorized
absences. Respondent explained that
he was compelled to immediately
leave for the province on 17 March
200022 due to the urgency of the
matter and his wife informed the office
that he will be absent for a week. The
management found his explanation
unacceptable and offered him an
amount equivalent to his one (1)
month salary as separation pay but
respondent refused the offer because
he wanted to keep the job.23 In
his Reply to Respondents Position
Paper,24 however, respondent averred

that he rejected the offer because he

wanted an amount equivalent to one
and a half months pay.

It likewise denied respondents Motion

for Reconsideration of the Resolution
on 21 February 2002.27

On 21 December 2000, the Labor

Arbiter dismissed the complaint for
lack of merit.25

Before the Court of Appeals,

respondent sought the annulment of
the Commissions Resolution dated 29
June 2001 and Order dated 21
February 2002 on the ground that they
were rendered with grave abuse of
discretion and/or without or in excess
of jurisdiction.28

On appeal to the National Labor

Relations Commission (hereinafter
referred to as the Commission), the
findings of the Labor Arbiter was
AFFIRMED en toto. Thus, in its
Resolution of 29 June 2001 in NLRC
NCR CA No. 027871-01, the
Commission declared:

Upon Our review of the record of the

case, We perceive no abuse of
discretion as to compel a reversal.
Appellant failed to adduce convincing
evidence to show that the Labor
Arbiter in rendering the assailed
decision has acted in a manner
inconsistent with the criteria set forth
in the foregoing pronouncement.

Neither are we persuaded to disturb

the factual findings of the Labor
Arbiter a quo. The material facts as
found are all in accordance with the
evidence presented during the hearing
as shown by the record.

WHEREFORE, finding no cogent reason

to modify, alter, much less reverse the
decision appealed from, the same is
AFFIRMED en toto and the instant
appeal DISMISSED for lack of merit. 26

The Court of Appeals found for the

respondent and reversed the findings
of the Commission. The dispositive
portion of its Decision dated 18 March
2004 reads:

WHEREFORE, the petition is GRANTED.

In lieu of the assailed Resolution and
Order of the respondent NLRC, a NEW
DECISION is hereby rendered declaring
petitioner Diosdado Bitara, Jr. to have
been Illegally Dismissed and, thus,
entitled to the following:

1. Reinstatement or if no longer
feasible, Separation Pay to be
computed from the
commencement of his
employment in August 1988 up
to the time of his termination on
April 1, 2000, including his
imputed service from April 1,
2000 until the finality of this
decision, based on the salary
rate prevailing at the said
finality;

2. Backwages, inclusive of
allowances and other benefits,
computed from April 1, 2000 up
to the finality of this decision,
without qualification or
deduction; and

3. 5-day Service Incentive Leave

Pay for every year of service
from the commencement of his
employment in August 1988 up
to its termination on April 1,
2000.29

On 10 May 2005, the Court of Appeals

denied respondents Motion for
Reconsideration of the decision for
lack of merit. 30
Hence, the instant petition.31
Issue

The core issue in this case is whether

or not the Court of Appeals correctly
found that the Commission acted
without and/or in excess of jurisdiction
and with grave abuse of discretion
amounting to lack or excess of
jurisdiction (a) in upholding the
termination of respondents
employment and (b) in affirming the
denial of his claim for non-payment of
holiday pay, service incentive leave
pay, moral and exemplary damages.

Our Ruling

The petition is meritorious.

The special civil action

for certiorari seeks to correct errors of
jurisdiction and not errors of
judgment.32

xxx The raison detre for the rule

is when a court exercises its
jurisdiction, an error committed
while so engaged does not
deprive it of the jurisdiction being
exercised when the error is
committed. If it did, every error
committed by a court would deprive it
of its jurisdiction and every erroneous
judgment would be a void judgment.
xxx Hence, where the issue or
question involved affects the
wisdom or legal soundness of the
decision not the jurisdiction of
the court to render said decision
the same is beyond the province
of a special civil action for
certiorari. xxx33

xxx [J]udicial review does not go as far

as to evaluate the sufficiency of
evidence upon which the Labor Arbiter
and NLRC based their determinations,
the inquiry being limited essentially to
whether or not said public respondents
had acted without or in excess of its
jurisdiction or with grave abuse of
discretion.34 The said rule directs us to
merely determine whether there is
basis established on record to support
the findings of a tribunal and such
findings meet the required quantum of
proof, which in this case, is substantial
evidence. Our deference to the
expertise acquired by quasi-judicial
agencies and the limited scope
granted to us in the exercise of
certiorari jurisdiction restrain us from
going so far as to probe into the

correctness of a tribunals evaluation

of evidence, unless there is palpable
mistake and complete disregard
thereof in which case certiorari would
be proper.35

It is on the alleged lack of substantial

evidence that the Court of Appeals
found for the respondents, thereby
reversing the decision of the
Commission.

We hold otherwise.

Upon examination of the documents

presented by the parties, we are
convinced that the finding of facts on
which the conclusions of the
Commission and the Labor Arbiter
were based was actually supported
by substantial evidence that
amount of relevant evidence as a
reasonable mind might accept as
adequate to support a
conclusion, even if other minds,
equally reasonable, might
conceivably opine
otherwise.36 (Emphasis supplied.)

In order to validly dismiss an

employee, the employer is required to
observe both substantive and
procedural aspects the termination
of employment must be based on a
just or authorized cause of dismissal
and the dismissal must be effected
after due notice and hearing.37

Substantive Due Process

We cannot agree with the Court of

Appeals that the sole basis of the
termination of respondents
employment was his absences from
March 11-16, 2000.
Indeed, the Notice to Explain38 clearly
stated:

We are seriously considering your

termination from service, and for
this reason you are directed to
submit a written explanation,
within seventy-two hours from your
receipt of this notice, why you
should not be terminated from
service for failure to report for work
without verbal or written notice or
permission on March 11, 13, 14, 15
and 16, 2000. xxx (Emphasis
supplied.)

To give full meaning and substance to

the Notice to Explain, however, the
paragraph should be read together
with its preceding paragraph, to wit:

We have time and again, verbally

and formally, called your attention
to your negligence from your
tardiness and your frequent
absences without any notice but
still, you remain to ignore our
reminder. As you know, we are in
need of a regular driver and your
action greatly affected the operation
of our company. (Emphasis supplied.)

Necessarily, he was considered for

termination of employment because of
his previous infractions capped by his
recent unauthorized absences from
March 11-16, 2000.

company rules and regulations. On the

basis of the facts presented, this Court
honored the questioned medical
certificate justifying the absences he
incurred. It further ratiocinated:

That the recent absences were

unauthorized were satisfactorily
established by petitioners. Two (2)
employees of the company belied the
claim of respondents wife Mary Ann
Bitara that she called the office on 11
March 2000, and, through a certain
Delia, as allegedly later identified by
respondent, informed petitioners that
her husband would take a leave of
absence for a week because he went
to the province.39

xxx [P]rivate respondents absences,

as already discussed, were incurred
with due notice and compliance with
company rules and he had not thereby
committed a similar offense as those
he had committed in the past [to wit:
gambling, for which he was
preventively suspended; habitual
tardiness for which he received
several warnings; and violation of
company rules for carrying three sacks
of rice, for which he was required to
explain.] xxx To refer to those earlier
violations as added grounds for
dismissing him is doubly unfair to
private respondent.43 (Emphasis
supplied.)

Delia Abalos, a binder/finisher of the

company, stated in her Affidavit that
she never received a call from
respondent nor his wife regarding his
absences from March 11-16 and 17-23
during the month of March 2000.40 On
the other hand, Ritchie Distor, a
messenger of the company, narrated
in his Affidavit that, upon instruction of
the Management, he went to
respondents house on 13 March 2000
to require him to report for work.
Instead of relaying the message to
him, as respondent would have it, the
wife informed him that respondent had
already left the house but that she did
not know where he was going.41

The Court of Appeals relied heavily on

our ruling in Stellar Industrial Services,
Inc. vs. NLRC,42 which is not on all
fours with the present case. In that
case, the employer dismissed
respondent for non-observance of

In the present case, however,

petitioners have repeatedly called the
attention of respondent concerning his
habitual tardiness. The Memorandum
dated 23 June 1999 of petitioner
Cheng required him to explain his
tardiness. Also in connection with a
similar infraction, respondent even
wrote petitioner Cheng a letter dated
29 November 1999 where he admitted
that his tardiness has affected the
delivery schedules of the company,
offered an apology, and undertook to
henceforth report for duty on time.
Despite this undertaking, he continued
to either absent himself from work or
report late during the first quarter of
2000.

We, therefore, agree with the Labor

Arbiters findings, to wit:

The imputed absence and tardiness of

the complainant are documented. He
faltered on his attendance 38 times of
the 66 working days. His last absences
on 11, 13, 14, 15 and 16 March 2000
were undertaken without even
notice/permission from management.
These attendance delinquencies may
be characterized as habitual and are
sufficient justifications to terminate
the complainants employment.44

On this score, Valiao v. Court of

Appeals45 is instructive:

xxx It bears stressing that petitioners

absences and tardiness were not
isolated incidents but manifested a
pattern of habituality. xxx The totality
of infractions or the number of
violations committed during the period
of employment shall be considered in
determining the penalty to be imposed
upon an erring employee. The
offenses committed by him should not
be taken singly and separately but in
their totality. Fitness for continued
employment cannot be
compartmentalized into tight little
cubicles of aspects of character,
conduct, and ability separate and
independent of each other.46

There is likewise no merit in the

observation of the Court of Appeals
that the petitioners themselves are not
certain of the official time of their
employees after pointing out the
seeming inconsistencies between the

statement of the petitioners that

there is no need for written rules
since even the [respondent] is aware
that his job starts from 8 am to 5
pm47 and its Memorandum of 23 June
1999, where it was mentioned that
respondents official time was from
8:30 a.m. to 5:30 p.m. On the
contrary, it was clearly stated in the
Memorandum that the Management
adjusted his official time from 8:00
a.m. to 5:00 p.m. to 8:30 a.m. to 5:30
p.m. to hopefully solve the problem on
his tardiness.48

Neither is there basis to hold that the

company tolerates the offsetting of
undertime with overtime services. The
Weekly Time Record relied upon by
respondent does not conclusively
confirm the alleged practice.

In Valiao,49 we defined gross

negligence as want of care in the
performance of ones
duties50 and habitual neglect as
repeated failure to perform ones
duties for a period of time, depending
upon the circumstances.51 These are
not overly technical terms, which, in
the first place, are expressly
sanctioned by the Labor Code of the
Philippines, to wit:

ART. 282. Termination by employer. An employer may terminate an

employment for any of the following
causes:
(a) xxx
(b) Gross and habitual neglect by
the employee of his duties;

xxx

Clearly, even in the absence of a

written company rule defining gross
and habitual neglect of duties,
respondents omissions qualify as such
warranting his dismissal from the
service.

We cannot simply tolerate injustice to

employers if only to protect the
welfare of undeserving employees. As
aptly put by then Associate Justice
Leonardo A. Quisumbing:

Needless to say, so irresponsible an

employee like petitioner does not
deserve a place in the workplace, and
it is within the managements
prerogative xxx to terminate his
employment. Even as the law is
solicitous of the welfare of employees,
it must also protect the rights of an
employer to exercise what are clearly
management prerogatives. As long as
the companys exercise of those rights
and prerogative is in good faith to
advance its interest and not for the
purpose of defeating or circumventing
the rights of employees under the laws
or valid agreements, such exercise will
be upheld.52

And, in the words of then Associate

Justice Ma. Alicia Austria-Martinez
in Philippine Long Distance and
Telephone Company, Inc. v.
Balbastro:53

While it is true that compassion and

human consideration should guide the

disposition of cases involving

termination of employment since it
affects one's source or means of
livelihood, it should not be overlooked
that the benefits accorded to labor do
not include compelling an employer to
retain the services of an employee
who has been shown to be a gross
liability to the employer. The law in
protecting the rights of the employees
authorizes neither oppression nor selfdestruction of the employer.54 It should
be made clear that when the law tilts
the scale of justice in favor of labor, it
is but a recognition of the inherent
economic inequality between labor
and management. The intent is to
balance the scale of justice; to put the
two parties on relatively equal
positions. There may be cases where
the circumstances warrant favoring
labor over the interests of
management but never should the
scale be so tilted if the result is an
injustice to the employer.Justitia
nemini neganda est (Justice is to be
denied to none).55

Procedural Due Process

Procedural due process entails
compliance with the two-notice rule in
dismissing an employee, to wit: (1) the
employer must inform the employee of
the specific acts or omissions for
which his dismissal is sought; and (2)
after the employee has been given the
opportunity to be heard, the employer
must inform him of the decision to
terminate his employment.56
Respondent claimed that he was
denied due process because the
company did not observe the twonotice rule. He maintained that the
Notice of Explanation and the Notice

of Termination, both of which he

allegedly refused to sign, were never
served upon him.57

The Court of Appeals favored

respondent and ruled in this wise:

Furthermore, We believe that private

respondents failed to afford petitioner
due process. The allegation of private
respondents that petitioner refused to
sign the memoranda dated March 17
and 21, 2000 despite receipt thereof is
not only lame but also
implausible. First, the said allegation is
self-serving and
unsubstantiated. Second, a prudent
employer would simply not accept
such mere refusal, but would exert
effort to observe the mandatory
requirement of due process. We
cannot accept the self-serving claim of
respondents that petitioner refused to
sign both memoranda. Otherwise, We
would be allowing employers to do
away with the mandatory twin-notice
rule in the termination of employees.
We find more credible the claim of
petitioner that he was illegally
dismissed on April 1, 2000 when the
lawyer of the company informed him,
without prior notice and in derogation
of his right to due process, of his
termination by offering him a 1-month
salary as separation pay. The
petitioners immediate filing of a
complaint for illegal dismissal on April
27, 2000 reinforced Our belief that
petitioner was illegally dismissed and
was denied due process.58 (Emphasis
in the original.)

We rule otherwise.

In Bughaw v. Treasure Island Industrial

Corporation,59 this Court, in verifying
the veracity of the allegation that
respondent refused to receive the
Notice of Termination, essentially
looked for the following: (1) affidavit of
service stating the reason for failure to
serve the notice upon the recipient;
and (2) a notation to that effect, which
shall be written on the notice
itself.60 Thus:

xxx Bare and vague allegations as to

the manner of service and the
circumstances surrounding the same
would not suffice. A mere copy of the
notice of termination allegedly sent by
respondent to petitioner, without proof
of receipt, or in the very least, actual
service thereof upon petitioner, does
not constitute substantial evidence. It
was unilaterally prepared by the
petitioner and, thus, evidently selfserving and insufficient to convince
even an unreasonable mind.61

Davis Cheng, on the other hand, did

both. First, he indicated in the notices
the notation that respondent refused
to sign together with the
corresponding dates of
service. Second, he executed an
Affidavit dated 29 July 2000 stating
that: (1) he is the General Manager of
the company; (2) he personally served
each notice upon respondent, when
respondent went to the office/factory
on 17 March 2000 and 21 March 2000,
respectively; and (3) on both
occasions, after reading the contents
of the memoranda, respondent
refused to acknowledge receipt

thereof. We are, thus, convinced that

the notices have been validly served.
Premises considered, we find that
respondent was accorded both
substantive and procedural due
process.

II

As to respondents monetary claims,

petitioners did not deny respondents
entitlement to service incentive leave
pay as, indeed, it is indisputable that
he is entitled thereto. In Fernandez v.
NLRC,62 this Court elucidated:

The clear policy of the Labor Code is to

grant service incentive leave pay to
workers in all establishments, subject
to a few exceptions. Section 2, Rule V,
Book III of the Implementing Rules and
Regulations63 provides that [e]very
employee who has rendered at least
one year of service shall be entitled to
a yearly service incentive leave of five
days with pay. Service incentive leave
is a right which accrues to every
employee who has served within 12
months, whether continuous or broken
reckoned from the date the employee
started working, including authorized
absences and paid regular holidays
unless the working days in the
establishment as a matter of practice
or policy, or that provided in the
employment contracts, is less than 12
months, in which case said period
shall be considered as one year. 64 It is
also commutable to its money
equivalent if not used or exhausted at
the end of the year.65 In other words,
an employee who has served for one

year is entitled to it. He may use it

as leave days or he may collect its
monetary value. xxx66 (Emphasis
supplied.)

Be that as it may, petitioners failed to

establish by evidence that respondent
had already used the service incentive
leave when he incurred numerous
absences notwithstanding that
employers have complete control over
the records of the company so much
so that they could easily show
payment of monetary claims against
them by merely presenting vouchers
or payrolls,67 or any document showing
the off-setting of the payment of
service incentive leave with the
absences, as acknowledged by the
absentee, if such is the company
policy. Petitioners presented none.

We thus quote with approval the

findings of the Court of Appeals on the
following:

[P]rivate respondents bear the burden

to prove that employees have
received these benefits in accordance
with law. It is incumbent upon the
employer to present the necessary
documents to prove such claim.
Although private respondents labored
to show that they paid petitioner his
holiday pay, no similar effort was
shown with regard to his service
incentive leave pay. We do not agree
with the Labor Arbiters conclusion
that petitioners service incentive
leave pay has been used up by his
numerous absences, there being no
proof to that effect.68

FIRST DIVISION
As to the payment of holiday pay, we
are convinced that respondent had
already received the same based on
the cash vouchers on record.

Accordingly, we affirm the ruling of the

National Labor Relations Commission
that the dismissal was valid. However,
respondent shall be entitled to the
money equivalent of the five-day
service incentive leave pay for every
year of service from the
commencement of his employment in
August 1988 up to its termination on 1
April 2000. The Labor Arbiter shall
compute the corresponding amount.

WHEREFORE, the Resolution dated

29 June 2001 and the Order dated 21
February 2002 of the National Labor
Relations Commission in NLRC NCR
CASE No. 027871-01are
hereby REINSTATED with
the MODIFICATION that petitioners
are ORDERED to pay respondent the
money equivalent of the five-day
service incentive leave for every year
of service covering his employment
period from August 1988 to 1 April
2000. This case is
hereby REMANDED to the Labor
Arbiter for the computation of
respondents service incentive leave
pay.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________

[G.R. No. 152427. August 9, 2005]

INTEGRATED CONTRACTOR AND
PLUMBING WORKS,
INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION
and GLEN SOLON, respondents.
DECISION
QUISUMBING, J.:
This petition for review assails
the Decision[1] dated October 30,
2001 of the Court of Appeals and
its Resolution[2] dated February 28,
2002 in CA-G.R. SP No. 60136, denying
the petitioners motion for
reconsideration for lack of merit. The
decision affirmed the National Labor
Relations Commission (NLRC) which
declared private respondent Glen
Solon a regular employee of the
petitioner and awarded him 13th month
pay, service incentive leave pay,
reinstatement to his former position
with full backwages from the time his
salary was withheld until his
reinstatement.
Petitioner is a plumbing contractor. Its
business depends on the number and
frequency of the projects it is able to
contract with its clients.[3]
Private respondent Solon worked for
petitioner. His employment records is
as follows:
December 14, 1994 up to January 14,
1995 St. Charbel Warehouse
February 1, 1995 up to April 30, 1995
St. Charbel Warehouse
May 23, 1995 up to June 23, 1995 St.
Charbel Warehouse

August 15, 1995 up to October 31,

1995 St. Charbel Warehouse
November 2, 1995 up to January 31,
1996 St. Charbel Warehouse
May 13, 1996 up to June 15, 1996
Ayala Triangle
August 27, 1996 up to November 30,
1996 St. Charbel Warehouse[4]
July 14, 1997 up to November 1997
ICPWI Warehouse
November 1997 up to January 5, 1998
Cathedral Heights
January 6, 1998 Rockwell Center[5]
On February 23, 1998, while private
respondent was about to log out from
work, he was informed by the
warehouseman that the main office
had instructed them to tell him it was
his last day of work as he had been
terminated. When private respondent
went to the petitioners office on
February 24, 1998 to verify his status,
he found out that indeed, he had been
terminated. He went back to
petitioners office on February 27, 1998
to sign a clearance so he could claim
his 13th month pay and tax refunds.
However, he had second thoughts and
refused to sign the clearance when he
read the clearance indicating he had
resigned. On March 6, 1998, he filed a
complaint alleging that he was illegally
dismissed without just cause and
without due process.[6]
In a Decision dated February 26,
1999, the Labor Arbiter ruled that
private respondent was a regular
employee and could only be removed
for cause. Petitioner was ordered to
reinstate private respondent to his
former position with full backwages
from the time his salary was withheld

until his actual reinstatement, and pay

him service incentive leave pay, and
13thmonth pay for three years in the
amount of P2,880 and P14,976,
respectively.
Petitioner appealed to the National
Labor Relations Commission (NLRC),
which ruled:
WHEREFORE, prescinding from the
foregoing and in the interest of justice,
the decision of the Labor Arbiter is
hereby AFFIRMED with a
MODIFICATION that the 13th month pay
should be given only for the year 1997
and portion of 1998. Backwages shall
be computed from the time he was
illegally dismissed up to the time of his
actual reinstatement. Likewise, service
incentive leave pay for three (3) years
is also awarded to appellee in the
amount of P2,880.00.
SO ORDERED.[7]
Petitioners Motion for Reconsideration
was denied.[8]
Petitioner appealed to the Court of
Appeals, alleging that the NLRC
committed grave abuse of discretion
in finding that the private respondent
was a regular employee and in
awarding 13th month pay, service
incentive leave pay, and holiday pay
to the private respondent despite
evidence of payment. The said petition
was dismissed for lack of merit.[9]
Before us now, petitioner raises the
following issues: (1) Whether the
respondent is a project employee of
the petitioner or a regular employee;
and (2) Whether the Court of Appeals
erred seriously in awarding 13th month
pay for the entire year of 1997 and
service incentive leave pay to the
respondent and without taking

cognizance of the evidence presented

by petitioner.[10]
The petitioner asserts that the private
respondent was a project employee.
Thus, when the project was completed
and private respondent was not reassigned to another project, petitioner
did not violate any law since it was
petitioners discretion to re-assign the
private respondent to other projects.[11]
Article 280 of the Labor Code states:
The provisions of written agreement of
the contrary notwithstanding and
regardless of the oral agreement of
the parties, an employment shall be
deemed to be regular where the
employee has been engaged to
perform activities which are usually
necessary or desirable in the usual
business or trade of the
employer, except where the
employment has been fixed for a
specific project or undertaking the
completion or termination of which
has been determined at the time of
the engagement of the employee or
where the work or services to be
performed is seasonal in nature and
the employment is for the duration of
the season (Italics supplied.)
We held in Tomas Lao Construction v.
NLRC[12] that the principal test in
determining whether an employee is a
project employee or regular employee,
is, whether he is assigned to carry out
a specific project or undertaking, the
duration (and scope) of which are
specified at the time the employee is
engaged in the project.[13] Project
refers to a particular job or
undertaking that is within the regular
or usual business of the employer, but
which is distinct and separate and
identifiable from the undertakings of

the company. Such job or undertaking

begins and ends at determined or
determinable times.[14]
In our review of the employment
contracts of private respondent, we
are convinced he was initially a project
employee. The services he rendered,
the duration and scope of each project
are clear indications that he was hired
as a project employee.
We concur with the NLRC that while
there were several employment
contracts between private respondent
and petitioner, in all of them, private
respondent performed tasks which
were usually necessary or desirable in
the usual business or trade of
petitioner. A review of private
respondents work assignments
patently showed he belonged to a
work pool tapped from where workers
are and assigned whenever their
services were needed. In a work pool,
the workers do not receive salaries
and are free to seek other
employment during temporary breaks
in the business. They are like regular
seasonal workers insofar as the effect
of temporary cessation of work is
concerned. This arrangement is
beneficial to both the employer and
employee for it prevents the unjust
situation of coddling labor at the
expense of capital and at the same
time enables the workers to attain the
status of regular employees.
[15]
Nonetheless, the pattern of rehiring and the recurring need for his
services are sufficient evidence of the
necessity and indispensability of such
services to petitioners business or
trade.[16]
In Maraguinot, Jr. v. NLRC[17] we ruled
that once a project or work pool
employee has been: (1) continuously,

as opposed to intermittently, re-hired

by the same employer for the same
tasks or nature of tasks; and (2) these
tasks are vital, necessary and
indispensable to the usual business or
trade of the employer, then the
employee must be deemed a regular
employee.

demands of petitioners business.

[20]
Where from the circumstances it is
apparent that periods have been
imposed to preclude the acquisition of
tenurial security by the employee,
they should be struck down as
contrary to public policy, morals, good
customs or public order.[21]

In this case, did the private

respondent become a regular
employee then?

Further, Policy Instructions No. 20

requires employers to submit a report
of an employees termination to the
nearest public employment office
every time his employment was
terminated due to a completion of a
project. The failure of the employer to
file termination reports is an indication
that the employee is not a project
employee.[22] Department Order No. 19
superseding Policy Instructions No. 20
also expressly provides that the report
of termination is one of the indications
of project employment.[23] In the case
at bar, there was only one list of
terminated workers submitted to the
Department of Labor and Employment.
[24]
If private respondent was a project
employee, petitioner should have
submitted a termination report for
every completion of a project to which
the former was assigned.

The test to determine whether

employment is regular or not is the
reasonable connection between the
particular activity performed by the
employee in relation to the usual
business or trade of the employer.
Also, if the employee has been
performing the job for at least one
year, even if the performance is not
continuous or merely intermittent, the
law deems the repeated and
continuing need for its performance as
sufficient evidence of the necessity, if
not indispensability of that activity to
the business.[18] Thus, we held that
where the employment of project
employees is extended long after the
supposed project has been finished,
the employees are removed from the
scope of project employees and are
considered regular employees.[19]
While length of time may not be the
controlling test for project
employment, it is vital in determining
if the employee was hired for a
specific undertaking or tasked to
perform functions vital, necessary and
indispensable to the usual business or
trade of the employer. Here, private
respondent had been a project
employee several times over. His
employment ceased to be coterminous
with specific projects when he was
repeatedly re-hired due to the

Juxtaposing private respondents

employment history, vis the
requirements in the test to determine
if he is a regular worker, we are
constrained to say he is.
As a regular worker, private
respondent is entitled to security of
tenure under Article 279 of the Labor
Code[25] and can only be removed for
cause. We found no valid cause
attending to private respondents
dismissal and found also that his
dismissal was without due process.

Additionally, Article 277(b) of the

Labor Code provides that
... Subject to the constitutional right of
workers to security of tenure and their
right to be protected against dismissal
except for a just and authorized cause
and without prejudice to the
requirement of notice under Article
283 of this Code, the employer shall
furnish the worker whose employment
is sought to be terminated a written
notice containing a statement of the
causes for termination and shall afford
the latter ample opportunity to be
heard and to defend himself with the
assistance of his representative if he
so desires in accordance with
company rules and regulations
promulgated pursuant to guidelines
set by the Department of Labor and
Employment
The failure of the petitioner to comply
with these procedural guidelines
renders its dismissal of private
respondent, illegal. An illegally
dismissed employee is entitled to
reinstatement with full backwages,
inclusive of allowances, and to his
other benefits computed from the time
his compensation was withheld from
him up to the time of his actual
reinstatement, pursuant to Article 279
of the Labor Code.
However, we note that the private
respondent had been paid his
13th month pay for the year 1997. The
Court of Appeals erred in granting the
same to him.
Article 95(a) of the Labor Code
governs the award of service incentive
leave. It provides that every employee
who has rendered at least one year of
service shall be entitled to a yearly
service incentive leave of five days

with pay, and Section 3, Rule V, Book

III of the Implementing Rules and
Regulations, defines the term at least
one year of service to mean service
within 12 months, whether continuous
or broken reckoned from the date the
employee started working, including
authorized absences and paid regular
holidays, unless the working days in
the establishment as a matter of
practice or policy, or that provided in
the employment contract is less than
12 months, in which case said period
shall be considered as one year.
Accordingly, private respondents
service incentive leave credits of five
days for every year of service, based
on the actual service rendered to the
petitioner, in accordance with each
contract of employment should be
computed up to the date of
reinstatement pursuant to Article 279
of the Labor Code.[26]
WHEREFORE, the assailed Decision
dated October 30, 2001 and the
Resolution dated February 28, 2002 of
the Court of Appeals in CA-G.R. SP No.
60136, are AFFIRMED with
MODIFICATION. The petitioner is
hereby ORDERED to (1) reinstate the
respondent with no loss of seniority
rights and other privileges; and (2) pay
respondent his backwages, 13th month
pay for the year 1998 and Service
Incentive Leave Pay computed from
the date of his illegal dismissal up to
the date of his actual reinstatement.
Costs against petitioner.
SO ORDERED.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________

_______________________________________
_______________________________________
SECOND DIVISION

JPL MARKETING G.R. No. 151966

PROMOTIONS,
Petitioner, Present:

PUNO, J.,

This is a petition for review of

the Decision[1] of the Court of Appeals
in CA-G.R. SP No. 62631 dated 03
October 2001 and
its Resolution[2] dated 25 January 2002
denying petitioners Motion for
Reconsideration, affirming
the Resolution of the National Labor
Relations Commission (NLRC), Second
Division, dated 27 July 2000, awarding
separation pay, service incentive leave
pay, and 13th month pay to private
respondents.

Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
COURT OF APPEALS, NATIONAL CHICONAZARIO, JJ.
LABOR RELATIONS COMMISSION,
NOEL GONZALES, RAMON ABESA
III and FAUSTINO ANINIPOT,
Respondents. Promulgated:

July 8, 2005

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

DECISION

Tinga, J.:

JPL Marketing and Promotions

(hereinafter referred to as JPL) is a
domestic corporation engaged in the
business of recruitment and
placement of workers. On the other
hand, private respondents Noel
Gonzales, Ramon Abesa III and
Faustino Aninipot were employed by
JPL as merchandisers on separate
dates and assigned at different
establishments in Naga City and Daet,
Camarines Norte as attendants to the
display of California Marketing
Corporation (CMC), one of petitioners
clients.

On 13 August 1996, JPL notified

private respondents that CMC would
stop its direct merchandising activity
in the Bicol Region, Isabela, and
Cagayan Valley effective 15 August
1996.[3] They were advised to wait for
further notice as they would be
transferred to other clients. However,
on 17 October 1996,[4] private
respondents Abesa and Gonzales filed
before the National Labor Relations
Commission Regional Arbitration
Branch (NLRC) Sub V complaints for

illegal dismissal, praying for

separation pay, 13th month pay,
service incentive leave pay and
payment for moral damages.
[5]
Aninipot filed a similar case
thereafter.

After the submission of pertinent

pleadings by all of the parties and
after some clarificatory hearings, the
complaints were consolidated and
submitted for resolution. Executive
Labor Arbiter Gelacio L. Rivera, Jr.
dismissed the complaints for lack of
merit.[6] The Labor Arbiter found that
Gonzales and Abesa applied with and
were employed by the store where
they were originally assigned by JPL
even before the lapse of the six (6)month period given by law to JPL to
provide private respondents a new
assignment. Thus, they may be
considered to have unilaterally
severed their relation with JPL, and
cannot charge JPL with illegal
dismissal.[7] The Labor Arbiter held that
it was incumbent upon private
respondents to wait until they were
reassigned by JPL, and if after six
months they were not reassigned,
they can file an action for separation
pay but not for illegal dismissal.[8] The
claims for 13th month pay and service
incentive leave pay was also denied
since private respondents were paid
way above the applicable minimum
wage during their employment.[9]

Private respondents appealed to the

NLRC. In its Resolution,[10] the Second
Division of the NLRC agreed with the
Labor Arbiters finding that when
private respondents filed their
complaints, the six-month period had

not yet expired, and that CMCs

decision to stop its operations in the
areas was beyond the control of JPL,
thus, they were not illegally dismissed.
However, it found that despite JPLs
effort to look for clients to which
private respondents may be
reassigned it was unable to do so, and
hence they are entitled to separation
pay.[11] Setting aside the Labor Arbiters
decision, the NLRC ordered the
payment of:
1. Separation pay, based on their last
salary rate and counted from the first
day of their employment with the
respondent JPL up to the finality of this
judgment;

2. Service Incentive Leave pay, and

13th month pay, computed as in No.1
hereof.[12]

Aggrieved, JPL filed a petition for

certiorari under Rule 65 of the Rules of
Court with the Court of Appeals,
imputing grave abuse of discretion on
the part of the NLRC. It claimed that
private respondents are not by law
entitled to separation pay, service
incentive leave pay and 13th month
pay.

The Court of Appeals dismissed the

petition and affirmed in toto the NLRC
resolution. While conceding that there
was no illegal dismissal, it justified the
award of separation pay on the
grounds of equity and social justice.
[13]
The Court of Appeals rejected JPLs
argument that the difference in the
amounts of private respondents

salaries and the minimum wage in the

region should be considered as
payment for their service incentive
leave and 13th month pay.
[14]
Notwithstanding the absence of a
contractual agreement on the grant of
13th month pay, compliance with the
same is mandatory under the law.
Moreover, JPL failed to show that it
was exempt from paying service
incentive leave pay. JPL filed a motion
for reconsideration of the said
resolution, but the same was denied
on 25 January 2002.[15]

In the instant petition for review, JPL

claims that the Court of Appeals
committed reversible error in
rendering the
assailed Decision and Resolution.[16] Th
e instant case does not fall under any
of the instances where separation pay
is due, to wit: installation of laborsaving devices, redundancy,
retrenchment or closing or cessation
of business operation,[17] or disease of
an employee whose continued
employment is prejudicial to him or
co-employees,[18] or illegal dismissal of
an employee but reinstatement is no
longer feasible.[19] Meanwhile, an
employee who voluntarily resigns is
not entitled to separation unless
stipulated in the employment contract,
or the collective bargaining
agreement, or is sanctioned by
established practice or policy of the
employer.[20] It argues that private
respondents good record and length of
service, as well as the social justice
precept, are not enough to warrant the
award of separation pay. Gonzales and
Aninipot were employed by JPL for
more than four (4) years, while Abesa
rendered his services for more than

two (2) years, hence, JPL claims that

such short period could not have
shown their worth to JPL so as to
reward them with payment of
separation pay.[21]
In addition, even
assuming arguendo that private
respondents are entitled to the
benefits awarded, the computation
thereof should only be from their first
day of employment with JPL up to 15
August 1996, the date of termination
of CMCs contract, and not up to the
finality of the 27 July 2000 resolution
of the NLRC.[22] To compute separation
pay, 13th month pay, and service
incentive leave pay up to 27 July 2000
would negate the findings of both the
Court of Appeals and the NLRC that
private respondents were not
unlawfully terminated.[23] Additionally,
it would be erroneous to compute
service incentive leave pay from the
first day of their employment up to the
finality of the NLRC resolution since an
employee has to render at least one
(1) year of service before he is entitled
to the same. Thus, service incentive
leave pay should be counted from the
second year of service.[24]

On the other hand, private

respondents maintain that they are
entitled to the benefits being claimed
as per the ruling of this Court
in Serrano v. NLRC, et al.[25] They claim
that their dismissal, while not illegal,
was tainted with bad faith.[26] They
allege that they were deprived of due
process because the notice of
termination was sent to them only two
(2) days before the actual termination.
[27]
Likewise, the most that JPL offered
to them by way of settlement was the

payment of separation pay of seven

(7) days for every year of service.[28]

Replying to private respondents

allegations, JPL disagrees that the
notice it sent to them was a notice of
actual termination. The said memo
merely notified them of the end of
merchandising for CMC, and that they
will be transferred to other clients.
[29]
Moreover, JPL is not bound to
observe the thirty (30)-day notice rule
as there was no dismissal to speak of.
JPL counters that it was private
respondents who acted in bad faith
when they sought employment with
another establishment, without even
the courtesy of informing JPL that they
were leaving for good, much less
tender their resignation.[30] In addition,
the offer of seven (7) days per year of
service as separation pay was merely
an act of magnanimity on its part,
even if private respondents are not
entitled to a single centavo of
separation pay.[31]

The case thus presents two major

issues, to wit: whether or not private
respondents are entitled to separation
pay, 13th month pay and service
incentive leave pay, and granting that
they are so entitled, what should be
the reckoning point for computing said
awards.

Under Arts. 283 and 284 of the Labor

Code, separation pay is authorized
only in cases of dismissals due to any
of these reasons: (a) installation of
labor saving devices; (b) redundancy;
(c) retrenchment; (d) cessation of the
employer's business; and (e) when the

employee is suffering from a disease

and his continued employment is
prohibited by law or is prejudicial to
his health and to the health of his coemployees. However, separation pay
shall be allowed as a measure of social
justice in those cases where the
employee is validly dismissed for
causes other than serious misconduct
or those reflecting on his moral
character, but only when he was
illegally dismissed.[32] In addition, Sec.
4(b), Rule I, Book VI of the
Implementing Rules to Implement the
Labor Code provides for the payment
of separation pay to an employee
entitled to reinstatement but the
establishment where he is to be
reinstated has closed or has ceased
operations or his present position no
longer exists at the time of
reinstatement for reasons not
attributable to the employer.

The common denominator of the

instances where payment of
separation pay is warranted is that the
employee was dismissed by the
employer.[33] In the instant case, there
was no dismissal to speak of. Private
respondents were simply not
dismissed at all, whether legally or
illegally. What they received from JPL
was not a notice of termination of
employment, but a memo informing
them of the termination of CMCs
contract with JPL. More importantly,
they were advised that they were to
be reassigned. At that time, there was
no severance of employment to speak
of.

Furthermore, Art. 286 of the Labor

Code allows the bona fide suspension

of the operation of a business or

undertaking for a period not exceeding
six (6) months, wherein an
employee/employees are placed on
the so-called floating status. When
that floating status of an employee
lasts for more than six months, he
may be considered to have been
illegally dismissed from the service.
Thus, he is entitled to the
corresponding benefits for his
separation, and this would apply to
suspension either of the entire
business or of a specific component
thereof.[34]

As clearly borne out by the records of

this case, private respondents sought
employment from other
establishments even before the
expiration of the six (6)-month period
provided by law. As they admitted in
their comment, all three of them
applied for and were employed by
another establishment after they
received the notice from JPL.[35] JPL did
not terminate their employment; they
themselves severed their relations
with JPL. Thus, they are not entitled to
separation pay.
The Court is not inclined in this case to
award separation pay even on the
ground of compassionate justice. The
Court of Appeals relied on the
cases[36] wherein the Court awarded
separation pay to legally dismissed
employees on the grounds of equity
and social consideration. Said cases
involved employees who were actually
dismissed by their employers, whether
for cause or not. Clearly, the principle
applies only when the employee is
dismissed by the employer, which is
not the case in this instance. In
seeking and obtaining employment

elsewhere, private respondents

effectively terminated their
employment with JPL.

In addition, the doctrine enunciated in

the case of Serrano[37] cited by private
respondents has already been
abandoned by our ruling in Agabon v.
National Labor Relations Commission.
[38]
There we ruled that an employer is
liable to pay indemnity in the form of
nominal damages to a dismissed
employee if, in effecting such
dismissal, the employer failed to
comply with the requirements of due
process. However, private respondents
are not entitled to the payment of
damages considering that there was
no violation of due process in this
case. JPLs memo dated 13 August
1996 to private respondents is not a
notice of termination, but a mere note
informing private respondents of the
termination of CMCs contract and their
re-assignment to other clients. The
thirty (30)-day notice rule does not
apply.

Nonetheless, JPL cannot escape the

payment of 13th month pay and
service incentive leave pay to private
respondents. Said benefits are
mandated by law and should be given
to employees as a matter of right.

Presidential Decree No. 851, as

amended, requires an employer to pay
its rank and file employees a
13th month pay not later than 24
December of every year. However,
employers not paying their employees

a 13th month pay or its equivalent are

not covered by said law.[39] The term
its equivalent was defined by the laws
implementing guidelines as including
Christmas bonus, mid-year bonus,
cash bonuses and other payment
amounting to not less than 1/12 of the
basic salary but shall not include cash
and stock dividends, cost-of-livingallowances and all other allowances
regularly enjoyed by the employee, as
well as non-monetary benefits.[40]

On the other hand, service incentive

leave, as provided in Art. 95 of the
Labor Code, is a yearly leave benefit of
five (5) days with pay, enjoyed by an
employee who has rendered at least
one year of service. Unless specifically
excepted, all establishments are
required to grant service incentive
leave to their employees. The term at
least one year of service shall mean
service within twelve (12) months,
whether continuous or broken
reckoned from the date the employee
started working.[41] The Court has held
in several instances that service
incentive leave is clearly demandable
after one year of service.[42]

Admittedly, private respondents were

not given their 13th month pay and
service incentive leave pay while they
were under the employ of JPL. Instead,
JPL provided salaries which were over
and above the minimum wage. The
Court rules that the difference
between the minimum wage and the
actual salary received by private
respondents cannot be deemed as
their 13th month pay and service
incentive leave pay as such difference
is not equivalent to or of the same

import as the said benefits

contemplated by law. Thus, as
properly held by the Court of Appeals
and by the NLRC, private respondents
are entitled to the 13th month pay and
service incentive leave pay.

However, the Court disagrees with the

Court of Appeals ruling that the
13th month pay and service incentive
leave pay should be computed from
the start of employment up to the
finality of the NLRC resolution. While
computation for the 13th month pay
should properly begin from the first
day of employment, the service
incentive leave pay should start a year
after commencement of service, for it
is only then that the employee is
entitled to said benefit. On the other
hand, the computation for both
benefits should only be up to 15
August 1996, or the last day that
private respondents worked for JPL. To
extend the period to the date of
finality of the NLRC resolution would
negate the absence of illegal
dismissal, or to be more precise, the
want of dismissal in this case. Besides,
it would be unfair to require JPL to pay
private respondents the said benefits
beyond 15 August 1996 when they did
not render any service to JPL beyond
that date. These benefits are given by
law on the basis of the service actually
rendered by the employee, and in the
particular case of the service incentive
leave, is granted as a motivation for
the employee to stay longer with the
employer. There is no cause for
granting said incentive to one who has
already terminated his relationship
with the employer.

The law in protecting the rights of the

employees authorizes neither
oppression nor self-destruction of the
employer. It should be made clear that
when the law tilts the scale of justice
in favor of labor, it is but recognition of
the inherent economic inequality
between labor and management. The
intent is to balance the scale of
justice; to put the two parties on
relatively equal positions. There may
be cases where the circumstances
warrant favoring labor over the
interests of management but never
should the scale be so tilted if the
result is an injustice to the
employer. Justitia nemini neganda
est (Justice is to be denied to none).[43]

THIRD DIVISION

G.R. No. 171231

PNCC SKYWAY TRAFFIC
MANAGEMENT AND
SECURITY DIVISION
WORKERS ORGANIZATION
(PSTMSDWO), represented
by its President, RENE
SORIANO,
Petitioner,

Present:

CORONA, J., Chairp

VELASCO, JR.,
NACHURA,
PERALTA, and

WHEREFORE, the petition is GRANTED

IN PART.
The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No.
62631 are hereby MODIFIED. The
award of separation pay is deleted.
Petitioner is ordered to pay private
respondents their 13th month pay
commencing from the date of
employment up to 15 August 1996, as
well as service incentive leave pay
from the second year of employment
up to 15 August 1996. No
pronouncement as to costs.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________

- versus -

PNCC SKYWAY
CORPORATION,
Respondent.

MENDOZA, JJ.

Promulgated:

February 17, 2010

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

DECISION

PERALTA, J.:

Republic of the Philippines

Supreme Court
Manila

Before this Court is a Petition for

Review on Certiorari under Rule 45 of
the Rules of Court seeking to set aside

the Decision[1] and the Resolution[2] of

the Court of Appeals (CA) in CA-G.R.
SP. No. 87069, which annulled and set
aside the Decision and Order of the
Voluntary Arbitrator dated July 12,
2004 and August 11, 2004,
respectively.

service shall be entitled to vacation

leave with pay depending on the
length of service as follows:

The factual antecedents are as follows:

16-20 years of service - 17 working

days

Petitioner PNCC Skyway Corporation

Traffic Management and Security
Division Workers' Organization
(PSTMSDWO) is a labor union duly
registered with the Department of
Labor and Employment (DOLE).
Respondent PNCC Skyway Corporation
is a corporation duly organized and
operating under and by virtue of the
laws of the Philippines.

On November 15, 2002, petitioner and

respondent entered into a Collective
Bargaining Agreement (CBA)
incorporating the terms and conditions
of their agreement which included
vacation leave and expenses for
security license provisions.

The pertinent provisions of the CBA

relative to vacation leave and sick
leave are as follows:
ARTICLE VIII
VACATION LEAVE AND SICK LEAVE

Section 1. Vacation Leave.

[a] Regular Employees covered by the

bargaining unit who have completed
at least one [1] year of continuous

1-9 years of service - 15 working days

10-15 years of service - 16 working
days

21-25 years of service - 18 working

days
26 and above years of service - 19
working days.

[b] The company shall schedule

the vacation leave of employees
during the year taking into
consideration the request of
preference of the employees.
(emphasis supplied)

[c] Any unused vacation leave shall be

converted to cash and shall be paid to
the employees on the first week of
December each year.
ARTICLE XXI

Section 6. Security License All covered

employees must possess a valid
License [Security Guard License]
issued by the Chief, Philippine National
Police or his duly authorized
representative, to perform his duties
as security guard. All expenses of
security guard in securing/renewing
their licenses shall be for their
personal account. Guards,
securing/renewing their license must
apply for a leave of absence and/or a

change of schedule. Any guard who

fails to renew his security guard
license should be placed on forced
leave until such time that he can
present a renewed security license.

In a Memorandum dated December

29, 2003,[3] respondent's Head of the
Traffic Management and Security
Department (TMSD) published the
scheduled vacation leave of its TMSD
personnel for the year 2004.
Thereafter, the Head of the TMSD
issued a Memorandum[4] dated January
9, 2004 to all TMSD personnel. In the
said memorandum, it was provided
that:
SCHEDULED VACATION LEAVE WITH
PAY.

Petitioner objected to the

implementation of the said
memorandum. It insisted that the
individual members of the union have
the right to schedule their vacation
leave. It opined that the unilateral
scheduling of the employees' vacation
leave was done to avoid the
monetization of their vacation leave in
December 2004. This was allegedly
apparent in the memorandum issued
by the Head HRD,[5] addressed to all
department heads, which provides:
FOR : All Dept. Heads
FROM : Head, HRD
SUBJECT : Leave Balances as of
January 01, 2004
DATE : January 9, 2004

The 17 days (15 days SVL plus 2-dayoff) scheduled vacation leave (SVL)
with pay for the year 2004 had been
published for everyone to take
a vacation with pay which will be our
opportunity to enjoy quality time with
our families and perform our other
activities requiring our personal
attention and supervision. Swapping of
SVL schedule is allowed on a one-onone basis by submitting a written
request at least 30 days before the
actual schedule of SVL duly signed by
the concerned parties. However, the
undersigned may consider the rescheduling of the SVL upon the written
request of concerned TMSD personnel
at least 30 days before the scheduled
SVL. Re-scheduling will be evaluated
taking into consideration the TMSDs
operational requirement.

We are furnishing all the departments

the leave balances of their respective
staff as of January 01, 2004, so as to
have them monitor and program the
schedule of such leave.

Please consider the leave credit they

earned each month [1-2-0], one day
and two hours in anticipation of the
later schedule. As we are targeting the
zero conversion comes December
2004, it is suggested that the leave
balances as of to date be given
preferential scheduling.

x x x.

Petitioner also demanded that the

expenses for the required in-service

training of its member security guards,

as a requirement for the renewal of
their license, be shouldered by the
respondent. However, the respondent
did not accede to petitioner's demands
and stood firm on its decision to
schedule all the vacation leave of
petitioner's members.

Due to the disagreement between the

parties, petitioner elevated the matter
to the DOLE-NCMB for preventive
mediation. For failure to settle the
issue amicably, the parties agreed to
submit the issue before the voluntary
arbitrator.

The voluntary arbitrator issued a

Decision dated July 12, 2004, the
dispositive portion of which reads:

WHEREFORE, premises all considered,

declaring that:

a) The scheduling of all vacation

leaves under Article VIII, Section 6,
thereof, shall be under the discretion
of the union members entitled thereto,
and the management to convert them
into cash all the leaves which the
management compelled them to use.

All other claims are dismissed for lack

of merit.

SO ORDERED.[6]

Respondent filed a motion for

reconsideration, which the voluntary
arbitrator denied in the Order[7] dated
August 11, 2004.

Aggrieved, on October 22, 2004,

respondent filed a Petition
for Certiorari with Prayer for
Temporary Restraining Order and/or
Writ of Preliminary Injunction with the
CA, and the CA rendered a Decision
dated October 4, 2005,[8] annulling and
setting aside the decision and order of
the voluntary arbitrator. The CA ruled
that since the provisions of the CBA
were clear, the voluntary arbitrator
has no authority to interpret the same
beyond what was expressly written.

Petitioner filed a motion for

reconsideration, which the CA denied
through a Resolution dated January 23,
2006.[9] Hence, the instant petition
assigning the following errors:

I
b) To pay the expenses for the inservice-training of the company
security guards, as a requirement for
renewal of licenses, shall not be their
personal account but that of the
company.

WITH ALL DUE RESPECT, THE

HONORABLE PUBLIC RESPONDENT
COURT OF APPEALS [THIRTEENTH
DIVISION] ERRED IN HOLDING THAT:
A) THE MANAGEMENT HAS THE SOLE
DISCRETION TO SCHEDULE THE
VACATION LEAVE OF HEREIN
PETITIONER.

B) THE MANAGEMENT IS NOT LIABLE

FOR THE IN-SERVICE-TRAINING OF THE
SECURITY GUARDS.

II
THE HONORABLE PUBLIC
RESPONDENT ERRED IN OVERSEEING
THE CONVERSION ASPECT OF THE
UNUSED LEAVE.

Before considering the merits of the

petition, We shall first address the
objection based on technicality raised
by respondent.
Respondent alleged that the petition
was fatally defective due to the lack of
authority of its union president, Rene
Soriano, to sign the certification and
verification against forum shopping on
petitioner's behalf. It alleged that the
authority of Rene Soriano to represent
the union was only conferred on June
30, 2006 by virtue of a board
resolution,[10] while the Petition for
Review had long been filed on
February 27, 2006. Thus, Rene Soriano
did not possess the required authority
at the time the petition was filed on
February 27, 2006.

The petitioner countered that the

Board Resolution[11] dated June 30,
2006 merely reiterated the authority
given to the union president to
represent the union, which was
conferred as early as October
2005. The resolution provides in part
that:

WHEREAS, in a meeting duly called for

October 2005, the Union decided to
file a Motion for Reconsideration and if
the said motion be denied, to file a
petition before the Supreme Court.
(Emphasis supplied)

Thus, the union president,

representing the union, was clothed
with authority to file the petition on
February 27, 2006.
The purpose of requiring verification
is to secure an assurance that the
allegations in the petition have been
made in good faith; or are true and
correct, not merely speculative. This
requirement is simply a condition
affecting the form of pleadings, and
non-compliance therewith does not
necessarily render it fatally
defective. Truly, verification is only a
formal, not a jurisdictional,
requirement.
With respect to the certification of
non-forum shopping, it has been held
that the certification requirement is
rooted in the principle that a partylitigant shall not be allowed to pursue
simultaneous remedies in
different fora, as this practice is
detrimental to an orderly judicial
procedure. However, this Court has
relaxed, under justifiable
circumstances, the rule requiring the
submission of such certification
considering that, although it is
obligatory, it is not jurisdictional. Not
being jurisdictional, it can be relaxed
under the rule of substantial
compliance.[12]

In Cagayan Valley Drug Corporation v.

Commissioner of Internal Revenue,
[13]
We said that:

In a slew of cases, however, we have

recognized the authority of some
corporate officers to sign
the verification and certification
against forum shopping. In MactanCebu International Airport Authority v.
CA, we recognized the authority of a
general manager or acting general
manager to sign the verification and
certificate against forum shopping;
in Pfizer v. Galan, we upheld the
validity of a verification signed by an
employment specialist who had not
even presented any proof of
her authority to represent the
company; in Novelty Philippines, Inc.,
v. CA, we ruled that a personnel officer
who signed the petition but did not
attach the authority from the company
is authorized to sign the verification
and non-forum shopping certificate;
and in Lepanto Consolidated Mining
Company v. WMC Resources
International Pty. Ltd. (Lepanto), we
ruled that the Chairperson of the
Board and President of the Company
can sign the verification and certificate
against non-forum shopping even
without the submission of the boards
authorization.

In sum, we have held that the

following officials or employees of the
company can sign the verification
and certification without need of a
board resolution: (1) the Chairperson
of the Board of Directors, (2) the
President of a corporation, (3) the
General Manager or Acting General
Manager, (4) Personnel Officer, and (5)

an Employment Specialist in a labor

case.

While the above cases do not provide

a complete listing of authorized
signatories to the verification and
certification required by the rules, the
determination of the sufficiency of the
authority was done on a case to case
basis. The rationale applied in the
foregoing cases is to justify the
authority of corporate officers or
representatives of the corporation to
sign the verification or certificate
against forum shopping, being in a
position to verify the truthfulness and
correctness of the allegations in the
petition.
In the case at bar, We rule that Rene
Soriano has sufficient authority to sign
the verification and certification
against forum shopping for the
following reasons: First, the resolution
dated June 30, 2006 was merely a
reiteration of the authority given to
the Union President to file a case
before this Court assailing the CBA
violations committed by the
management, which was previously
conferred during a meeting held on
October 5, 2005. Thus, it can be
inferred that even prior to the filing of
the petition before Us on February 27,
2006, the president of the union was
duly authorized to represent the union
and to file a case on its
behalf. Second, being the president of
the union, Rene Soriano is in a position
to verify the truthfulness and
correctness of the allegations in the
petition. Third, assuming that Mr.
Soriano has no authority to file the
petition on February 27, 2006, the
passing on June 30, 2006 of a Board
Resolution authorizing him to

represent the union is deemed a

ratification of his prior execution, on
February 27, 2006, of the verification
and certificate of non-forum shopping,
thus curing any defects thereof.
Ratification in agency is the adoption
or confirmation by one person of an
act performed on his behalf by another
without authority.[14]

We now go to the merits of the case.

Petitioner insisted that their union

members have the preference
in scheduling their vacation leave. On
the other hand, respondent argued
that Article VIII, Section 1 (b) gives the
management the final say regarding
the vacation leave schedule of its
employees. Respondent may take into
consideration the employees'
preferred schedule, but the same
is not controlling.
Petitioner also requested the
respondent to provide and/or shoulder
the expenses for the in-service
training of their members as a
requirement for the renewal of the
security guards' license. Respondent
did not accede to the union's request
invoking the CBA provision which
states that all expenses of security
guards in securing /renewing their
license shall be for their personal
account. The petitioner further argued
that any doubts or ambiguity in the
interpretation of the CBA should be
resolved in favor of the laborer.

As to the issue on vacation leaves, the

same has no merit.

The rule is that where the language of

a contract is plain and unambiguous,
its meaning should be determined
without reference to extrinsic facts or
aids. The intention of the parties must
be gathered from that language, and
from that language alone. Stated
differently, where the language of a
written contract is clear and
unambiguous, the contract must be
taken to mean that which, on its face,
it purports to mean, unless some good
reason can be assigned to show that
the words used should be understood
in a different sense.[15]

In the case at bar, the contested

provision of the CBA is clear and
unequivocal. Article VIII, Section 1 (b)
of the CBA categorically provides that
the scheduling of vacation
leaveshall be under the option of the
employer. The preference requested
by the employees is not controlling
because respondent retains its power
and prerogative to consider or to
ignore said request.
Thus, if the terms of a CBA are clear
and leave no doubt upon the intention
of the contracting parties, the literal
meaning of its stipulation shall prevail.
[16]
In fine, the CBA must be strictly
adhered to and respected if its ends
have to be achieved, being the law
between the parties. In Faculty
Association of Mapua Institute of
Technology (FAMIT) v. Court of
Appeals,[17] this Court held that the
CBA during its lifetime binds all the
parties. The provisions of the CBA
must be respected since its terms and
conditions constitute the law between
the parties. The parties cannot be
allowed to change the terms they

agreed upon on the ground that the

same are not favorable to them.

As correctly found by the CA:

The words of the CBA were

unequivocal when it provided that The
company shall schedule the vacation
leave of employees during the year
taking into consideration the request
of preference of the employees. The
word shall in this instance connotes an
imperative command, there being
nothing to show a different intention.
The only concession given under the
subject clause was that the company
should take into consideration the
preferences of the employees in
scheduling the vacations; but
certainly, the concession never
diminished the positive right of
management to schedule the vacation
leaves in accordance with what had
been agreed and stipulated upon in
the CBA.
There is, thus, no basis for the
Voluntary Arbitrator to interpret the
subject provision relating to the
schedule of vacation leaves as being
subject to the discretion of the union
members. There is simply nothing in
the CBA which grants the union
members this right.
It must be noted the grant to
management of the right to schedule
vacation leaves is not without good
reason. Indeed, if union members were
given the unilateral discretion to
schedule their vacation leaves, the
same may result in significantly
crippling the number of key employees
of the petitioner manning the toll ways
on holidays and other peak seasons,

where union members may wittingly

or unwittingly choose to have a
vacation. Put another way, the grant
to management of the right to
schedule vacation leaves ensures that
there would always be enough people
manning and servicing the toll ways,
which in turn assures the public plying
the same orderly and efficient toll way
service.
Indeed, the multitude or scarcity of
personnel manning the tollways
should not rest upon the option of the
employees, as the public using the
skyway system should be assured of
its safety, security and convenience.
Although the preferred vacation leave
schedule of petitioner's members
should be given priority, they cannot
demand, as a matter of right, that
their request be automatically granted
by the respondent. If the petitioners
were given the exclusive right to
schedule their vacation leave then
said right should have been
incorporated in the CBA. In the
absence of such right and in view of
the mandatory provision in the CBA
giving respondent the right to
schedule the vacation leave of its
employees, compliance therewith is
mandated by law.
In the grant of vacation leave
privileges to an employee, the
employer is given the leeway to
impose conditions on the entitlement
to and commutation of the same, as
the grant ofvacation leave is not a
standard of law, but a prerogative of
management.[18] It is a mere
concession or act of grace of the
employer and not a matter of right on
the part of the employee.[19] Thus, it is
well within the power and authority of
an employer to impose certain

conditions, as it deems fit, on the

grant of vacation leaves, such as
having the option to schedule the
same.

worn-out energy and acquire a new

vitality to enable him to efficiently
perform his duties, and not merely to
give him additional salary and bounty.

Along that line, since the grant of

vacation leave is a prerogative of the
employer, the latter can compel its
employees to exhaust all their
vacation leave credits. Of course, any
vacation leave credits left unscheduled
by the employer, or any scheduled
vacation leave that was not enjoyed
by the employee upon the employer's
directive, due to exigencies of the
service, must be converted to cash, as
provided in the CBA. However, it is
incorrect to award payment of the
cash equivalent of vacation leaves
that were already used and enjoyed by
the employees. By directing the
conversion to cash of all utilized and
paid vacation leaves, the voluntary
arbitrator has
licensed unjust enrichment in favor of
the petitioner and caused undue
financial burden on the
respondent. Evidently, the Court
cannot tolerate this.

This purpose is manifest in the

Memorandum dated January 9,
2004[21] addressed to all TMSD
Personnel which provides that:

It would seem that petitioner's goal in

relentlessly arguing that its members
preferred vacation leave schedule
should be given preference is not
allowed to them to avail themselves of
their respective vacation leave credits
at all but, instead, to convert these
into cash.

In Cuajo v. Chua Lo Tan,[20] We said

that the purpose of a vacation leave is
to afford a laborer a chance to get a
much-needed rest to replenish his

SCHEDULED VACATION LEAVE WITH

PAY

The 17 days (15 days SVL plus 2-DayOff) scheduled vacation leave (SVL)
with pay for the year 2004 had been
published for everyone to take a
vacation with pay which will be our
opportunity to enjoy quality time
with our families and perform our
other activities requiring our
personal attention and
supervision.(Emphasis ours.)

Accordingly, the vacation leave

privilege was not intended to serve as
additional salary, but as a nonmonetary benefit. To give the
employees the option not to consume
it with the aim of converting it to cash
at the end of the year would defeat
the very purpose of vacation leave.
Petitioner's contention that labor
contracts should be construed in favor
of the laborer is without basis and,
therefore, inapplicable to the present
case. This rule of construction does
not benefit petitioners because, as

stated, there is here no room for

interpretation. Since the CBA is clear
and unambiguous, its terms should be
implemented as they are written.

This brings Us to the issue of who is

accountable for the in-service training
of the security guards. On this point,
We find the petition meritorious.

Although it is a rule that a contract

freely entered into between the
parties should be respected, since a
contract is the law between the
parties, there are, however, certain
exceptions to the rule,
specifically Article 1306 of the Civil
Code, which provides:

The contracting parties may establish

such stipulations, clauses, terms and
conditions as they may deem
convenient, provided they are not
contrary to law, morals, good customs,
public order, or public policy.

Moreover, the relations between

capital and labor are not merely
contractual. They are so impressed
with public interest that
labor contracts must yield to the
common good x x x.[22] The supremacy
of the law over contracts is explained
by the fact that labor contracts are not
ordinary contracts; they are imbued
with public interest and therefore are
subject to the police power of the
state.[23] However, it should not be
taken to mean that provisions agreed

upon in the CBA are absolutely beyond

the ambit of judicial review and
nullification. If the provisions in the
CBA run contrary to law, public morals,
or public policy, such provisions may
very well be voided.
In the present case, Article XXI,
Section 6 of the CBA provides that All
expenses of security guards in
securing /renewing their licenses shall
be for their personal account. A
reading of the provision would reveal
that it encompasses all possible
expenses a security guard would pay
or incur in order to secure or renew his
license. In-service training is a
requirement for the renewal of a
security guards license.[24] Hence,
following the aforementioned CBA
provision, the expenses for the same
must be on the personal account of
the employee. However, the 1994
Revised Rules and Regulations
Implementing Republic Act No. 5487
provides the following:

Section 17. Responsibility for Training

and Progressive Development. It is the
primary responsibility of all operators
private security agency and company
security forces to maintain and
upgrade the standards of efficiency,
discipline, performance and
competence of their personnel. To
attain this end, each duly licensed
private security agency and company
security force shall establish a staff
position for training and appoint a
training officer whose primary
functions are to determine the training
needs of the agency/guards in relation
to the needs of the client/ market/
industry, and to supervise and conduct
appropriate training requirements. All

private security personnel shall be retrained at least once very two years.

Section 12. In service training. - a. To

maintain and/or upgrade the
standard of efficiency, discipline and
competence of security guards and
detectives, company security force
and private security agencies upon
prior authority shall conduct-in-service
training at least two (2) weeks
duration for their organic members by
increments of at least two percent
(2%) of their total strength. Where
the quality of training is better
served by centralization, the CSFD
Directors may activate a training
staff from local talents to assist.
The cost of training shall be prorated among the participating
agencies/private companies. All
security officer must undergo inservice training at least once every
two (2) years preferably two months
before his or her birth month.

Since it is the primary responsibility of

operators of company security forces
to maintain and upgrade the
standards of efficiency, discipline,
performance and competence of their
personnel, it follows that the expenses
to be incurred therein shall be for the
personal account of the company.
Further, the intent of the law to
impose upon the employer the
obligation to pay for the cost of its
employees training is manifested in
the aforementioned laws provision
that Where the quality of training is
better served by centralization, the
CFSD Directors may activate a training
staff from local talents to assist. The

cost of training shall be pro-rated

among the participating
agencies/private companies. It can be
gleaned from the said provision that
cost of training shall be pro-rated
among participating agencies and
companies if the training is best
served by centralization. The law
mandates pro-rating of expenses
because it would be impracticable and
unfair to impose the burden of
expenses suffered by all participants
on only one participating agency or
company. Thus, it follows that if there
is no centralization, there can be no
pro-rating, and the company that has
its own security forces shall shoulder
the entire cost for such training. If the
intent of the law were to impose upon
individual employees the cost of
training, the provision on the prorating of expenses would not have
found print in the law.

Further, petitioner alleged that prior to

the inking of the CBA, it was the
respondent company providing for the
in-service training of the guards.
[25]
Respondent never controverted the
said allegation and is thus deemed to
have admitted the same.[26] Implicit
from respondent's actuations was its
acknowledgment of its legally
mandated responsibility to shoulder
the expenses for in-service training.

WHEREFORE, the petition

is PARTIALLY GRANTED. The
Decision and Resolution of the Court of
Appeals, dated October 4, 2005 and
January 23, 2006, respectively, in CAG.R. SP. No. 87069 is MODIFIED. The
cost of in-service training of the
respondent company's security guards

shall be at the expense of the

respondent company. This case is
remanded to the voluntary arbitrator
for the computation of the expenses
incurred by the security guards for
their in-service training, and
respondent company is directed to

reimburse its security guards for the

expenses incurred.