G.R. No.

183952
September 9, 2013
CZARINA T. MALVAR, Petitioner,
vs.
KRAFT FOOD PHILS., INC. and/or
BIENVENIDO BAUTISTA, KRAFT
FOODS
INTERNATIONAL, Respondents.
DECISION
BERSAMIN, J.:
Although the practice of law is not a
business, an attorney is entitled to be
properly
compensated
for
the
professional services rendered for
the client, who is bound by her
express
agreement
to
duly
compensate the attorney. The client

may not deny her attorney such just

compensation.
The Case
The case initially concerned the
execution of a final decision of the
Court of Appeals (CA) in a labor
litigation, but has mutated into a
dispute over attorney's fees between
the winning employee and her
attorney after she entered into a
compromise agreement with her
employer under circumstances that
the attorney has bewailed as
designed to prevent the recovery of
just professional fees.
Antecedents
On August 1, 1988, Kraft Foods
(Phils.), Inc. (KFPI) hired Czarina

Malvar (Malvar) as its Corporate

Planning Manager. From then on,
she gradually rose from the ranks,
becoming in 1996 the Vice President
for Finance in the Southeast Asia
Region of Kraft Foods International
(KFI),KFPIs mother company. On
November 29, 1999, respondent
Bienvenido S. Bautista, as Chairman
of the Board of KFPI and
concurrently the Vice President and
Area Director for Southeast Asia of
KFI, sent Malvar a memo directing
her to explain why no administrative
sanctions should be imposed on her
for possible breach of trust and
confidence and for willful violation of
company rules and regulations.
Following the submission of her
written explanation, an investigating

body was formed. In due time, she

was
placed
under
preventive
suspension with pay. Ultimately, on
March 16, 2000, she was served a
notice of termination.
Obviously aggrieved, Malvar filed a
complaint for illegal suspension and
illegal dismissal against KFPI and
Bautista in the National Labor
Relations Commission (NLRC). In a
decision dated April 30, 2001,1 the
Labor Arbiter found and declared her
suspension and dismissal illegal, and
ordered her reinstatement, and the
payment of her full backwages,
inclusive of allowances and other
benefits, plus attorneys fees.
On October 22, 2001, the NLRC
affirmed the decision of the Labor

Arbiter but additionally ruled that

Malvar was entitled to "any and all
stock options and bonuses she was
entitled to or would have been
entitled to had she not been illegally
dismissed from her employment," as
well as to moral and exemplary
damages.2
KFPI and Bautista sought the
reconsideration of the NLRCs
decision, but the NLRC denied their
motion to that effect.3
Undaunted, KFPI and Bautista
assailed the adverse outcome before
the CA on certiorari (CA-G.R. SP No.
69660), contending that the NLRC
thereby committed grave abuse of
discretion. However, the petition for
certiorari was dismissed by the CA on

December 22, 2004, but with the CA

reversing the order of reinstatement
and instead directing the payment of
separation pay to Malvar, and also
reducing the amounts awarded as
moral and exemplary damages.4
After the judgment in her favor
became final and executory on
March14, 2006, Malvar moved for the
issuance of a writ of execution.5 The
Executive Labor Arbiter then referred
the case to the Research and
Computation Unit (RCU) of the NLRC
for the computation of the monetary
awards under the judgment. The
RCUs computation ultimately arrived
at the total sum of P41,627,593.75.6
On November 9, 2006, however,
Labor Arbiter Jaime M. Reyno issued

an order,7 finding that the RCUs

computation lacked legal basis for
including the salary increases that
the decision promulgated in CA-G.R.
SP No. 69660 did not include. Hence,
Labor
Arbiter
Reyno
reduced
Malvars total monetary award
to P27,786,378.11, viz:
WHEREFORE, premises considered,
in so far as the computation of
complainants other benefits and
allowances are concerned, the same
are in order. However, insofar as the
computation of her backwages and
other monetary benefits (separation
pay, unpaid salary for January 1 to
26, 2005,holiday pay, sick leave pay,
vacation leave pay, 13th month pay),

the same are hereby recomputed as

follows:
1. Separation Pay
8/1/88-1/26/05 = 16 yrs
P344,575.83 x 16
5,513,213.28
=
2. Unpaid Salary
1/1-26/05 = 87 mos.
P344,575.83 x 87
299,780.97
=
3. Holiday Pay
4/1/00-1/26/05 = 55 holidays
P4,134,910/12
mos/20.83 days x 909,825.77
55 days
4. Unpaid 13th month
344,575.83
pay for Dec 2000

5. Sick Leave Pay

Year 1999 to 2004 = 6 yrs
P344,575.88/20.83 x 15 days x 6
= 1,488,805.79
Year 2005
P344,575.83/20.83
x 15/12 x 1 1,509,483.65
20,677.86
6. Vacation Leave Pay
Year 1999 to 2004 = 6 years
P344,575.88/20.83 x 22 days x 6
= 2,183,581.83
Year 2005
P344,575.83/20.83
x
22/12
x 2,213,909.36
1 30,327.55
10,790,788.86

Backwages
(from
3/7/00-4/30/01,
4,651,773.75
award in LA Sytians
Decision
Allowances & Other Benefits:
Management
7,355,166.58
Incentive Plan
Cash Dividend on
2,711,646.00
Philip Morris Shares
Car Maintenance
381,702.92
Gas Allowance
198,000.00
Entitlement
to
a
438,650.00
Company Driver
Rice Subsidy
58,650.00
Moral Damages
500,000.00
Exemplary Damages 200,000.00
Attorneys Fees
500,000.00

Entitlement to Philip
Subject to
Sch G
"Share Option Grant" Market Price
27,786,378.11
SO ORDERED.
Both
parties
appealed
the
computation to the NLRC, which, on
April19, 2007, rendered its decision
setting aside Labor Arbiter Reynos
November 9, 2006 order, and
adopting the computation by the
RCU.8
In its resolution dated May 31,
2007,9 the
NLRC
denied
the
respondents
motion
for
reconsideration.

Malvar filed a second motion for the

issuance of a writ of execution to
enforce the decision of the NLRC
rendered on April 19, 2007. After the
writ of execution was issued, a partial
enforcement
as
effected
by
garnishing the respondents funds
deposited
with
Citibank
worth
37,391,696.06.10
On July 27, 2007, the respondents
went to the CA on certiorari (with
prayer for the issuance of a
temporary restraining order (TRO) or
writ
of
preliminary
injunction),
assailing the NLRCs setting aside of
the computation by Labor Arbiter
Reyno (CA-G.R. SP No. 99865). The
petition mainly argued that the NLRC
had gravely abused its discretion in

ruling that: (a) the inclusion of the

salary increases and other monetary
benefits in the award to Malvar was
final and executory; and (b) the
finality of the ruling in CA-G.R. SP
No.
69660
precluded
the
respondents from challenging the
inclusion of the salary increases and
other monetary benefits. The CA
issued a TRO, enjoining the NLRC
and Malvar from implementing the
NLRCs decision.11
On April 17, 2008, the CA rendered
its decision in CA-G.R. SP No.
99865,12 disposing thusly:
WHEREFORE, premises considered,
the herein Petition is GRANTED and
the 19 April 2007 Decision of the
NLRC and the 31May 2007

Resolution in NLRC NCR 30-0702316-00 are hereby REVERSED

and SET ASIDE.
The matter of computation of
monetary
awards
for
private
respondent is hereby REMANDED to
the Labor Arbiter and he is
DIRECTED
to
recompute
the
monetary award due to private
respondent based on her salary at
the time of her termination, without
including projected salary increases.
In computing the said benefits, the
Labor Arbiter is further directed to
DISREGARD
monetary
awards
arising from: (a) the management
incentive plan and (b) the share
option grant, including cash dividends
arising therefrom without prejudice to

the filing of the appropriate remedy

by the private respondent in the
proper forum. Private respondents
allowances for car maintenance and
gasoline are likewise DELETED
unless private respondent proves, by
appropriate receipts, her entitlement
thereto.
With respect to the Motion to Exclude
the
Undisputed
Amount
of P14,252,192.12 from the coverage
of the Writ of Preliminary Injunction
and to order its immediate release,
the same is hereby GRANTED for
reasons stated therefor, which
amount shall be deducted from the
amount to be given to private
respondent after proper computation.

As
regards
the
Motions
for
Reconsideration of the Resolution
denying the Motion for Voluntary
Inhibition and the Omnibus Motion
dated 30 October 2007, both motions
are hereby DENIED for lack of merit.
SO ORDERED.13
Malvar sought reconsideration, but
the CA denied her motion on July30,
2008.14
Aggrieved, Malvar appealed to the
Court, assailing the CAs decision.
On December 9, 2010, while her
appeal was pending in this Court,
Malvar and the respondents entered
into a compromise agreement, the
pertinent dispositive portion of which
is quoted as follows:

NOW, THEREFORE, for and in

consideration of the covenants and
understanding between the parties
herein, the parties hereto have
entered into this Agreement on the
following terms and conditions:
1. Simultaneously upon execution of
this Agreement in the presence of
Ms. Malvars attorney, KFPI shall pay
Ms. Malvar the amount of Philippine
Pesos
Forty
Million
(Php
40,000,000.00), which is in addition
to the Philippine Pesos Fourteen
Million Two Hundred Fifty-Two
Thousand One Hundred Ninety-Two
and
Twelve
Centavos
(Php14,252,192.12) already paid to
and received by Ms. Malvar from
KFPI in August2008 (both amounts

constituting
Payment").

the

"Compromise

The Compromise Payment includes

full and complete payment and
settlement of Ms. Malvars salaries
and wages up to the last day of her
employment, allowances, 13th and
14th month pay, cash conversion of
her accrued vacation, sick and
emergency leaves, separation pay,
retirement pay and such other
benefits, entitlements, claims for
stock, stock options or other forms of
equity compensation whether vested
or otherwise and claims of any and
all kinds against KFPI and KFI and
Altria Group, Inc., their predecessorsin-interest,
their
stockholders,
officers,
directors,
agents
or

successors-in-interest, affiliates and

subsidiaries, up to the last day of the
aforesaid
cessation
of
her
employment.
2.
In
consideration
of
the
Compromise Payment, Ms. Malvar
hereby freely and voluntarily releases
and forever discharges KFPI and KFI
and Altria Group, Inc., their
predecessors
or
successors-ininterest,
stockholders,
officers,
including Mr. Bautista who was
impleaded in the Labor Case as a
party respondent, directors, agents or
successors-in-interest, affiliates and
subsidiaries from any and all manner
of action, cause of action, sum of
money,
damages,
claims
and
demands whatsoever in law or in

equity which Ms. Malvar or her heirs,

successors and assigns had, or now
have against KFPI and/or KFI and/or
Altria Group, Inc., including but not
limited to, unpaid wages, salaries,
separation pay, retirement pay,
holiday pay, allowances, 13th and
14th month pay, claims for stock,
stock options or other forms of equity
compensation whether vested or
otherwise whether arising from her
employment
contract,
company
grant, present and future contractual
commitments, company policies or
practices, or otherwise, in connection
with Ms. Malvars employment with
KFPI.15
xxxx

Thereafter, Malvar filed an undated

Motion
to
Dismiss/Withdraw
Case,16 praying that the appeal be
immediately dismissed/withdrawn in
view of the compromise agreement,
and that the case be considered
closed and terminated.
Intervention
Before the Court could act on
Malvars Motion to Dismiss/Withdraw
Case, the Court received on
February 15, 2011 a so-called Motion
for Intervention to Protect Attorneys
Rights17 from The Law Firm of Dasal,
Llasos and Associates, through its Of
Counsel Retired Supreme Court
Associate
Justice
Josue
N.
Bellosillo18 (Intervenor), whereby the
Intervenor sought, among others, that

both Malvar and KFPI be held and

ordered to pay jointly and severally
the Intervenors contingent fees.
The Motion for Intervention relevantly
averred:
xxxx
Lawyers, oftentimes, are caricatured
as alligators or some other specie of
voracious carnivore; perceived also
as leeches sucking dry the blood of
their adversaries, and even their own
clients they are sworn to serve and
protect! As we lay down the facts in
this case, this popular, rather
unpopular, perception will be shown
wrong. This case is a reversal of this
perception.
xxxx

Here, it is the lawyer who is eaten up

alive by the warring but conspiring
litigants who finally settled their
differences without the knowledge,
much
less,
participation,
of
Petitioners counsel that labored hard
and did everything to champion her
cause.
xxxx
This Motion for Intervention will
illustrate an aberration from the norm
where the lawyer ends up seeking
protection from his clients and
Respondents indecent and cunning
maneuverings. x x x.
xxxx
On 18 March 2008 Petitioner
engaged the professional services of

Intervenor x x x on a contingency
basis whereby the former agreed in
writing to pay the latter contingency
fees
amounting
to
almostP19,600,000.00 (10% of her
total
claim
of
almost P196,000,000.00
in
connection with her labor case
against Respondents. x x x.
xxxx
According to their agreement (Annex
"A"), Petitioner bound herself to pay
Intervenor contingency fees as
follows (a) 10% of P14,252, 192.12
upon its collection; (b) 10% of the
remaining balance ofP41,627,593.75;
and (c)10% of the value of the stock
options Petitioner claims to be
entitled
to,
or

roughly P154,000,000.00 as of April

2008.
xxxx
Intervenors efforts resulted in the
award and partial release of
Petitioners
claim
amounting
toP14,252,192.12 out of which
Petitioner paid Intervenor 10%
or P1,425,219.21 as contingency
fees pursuant to their engagement
agreement (Annex "A"). Copy of the
check payment of Petitioner payable
to Intervenors Of Counsel is
attached as Annex "C".
xxxx
On 12 September 2008 Intervenor
filed an exhaustive Petition for
Review with the Supreme Court

containing 70 pages, including its

Annexes "A" to "R", or a total of 419
pages against Respondents to collect
on the balance of Petitioners claims
amounting to at least P27,000,000.00
andP154,000,000.00
the
latter
representing the estimated value of
Petitioners stock options as of April
2008.
xxxx
On 15 January 2009 Respondents
filed their Comment to the Petition for
Review.
xxxx
On 13 April 2009 Intervenor, in behalf
of Petitioner, filed its Reply to the
Comment.

xxxx
All the pleadings in this Petition have
already been submitted on time with
nothing more to be done except to
await the Resolution of this
Honorable Court which, should the
petition be decided in her favor,
Petitioner
would
stand
to
gain P182,000,000.00, more or less,
which victory would be largely
through
the
efforts
of
Intervenor.19 (Bold
emphasis
supplied).
xxxx
It appears that in July 2009, to the
Intervenors
surprise,
Malvar
unceremoniously and without any
justifiable reason terminated its legal

service and required it to withdraw

from the case.20 Hence, on October
5,2009, the Intervenor reluctantly
filed a Manifestation (With Motion to
Withdraw
as
Counsel
for
Petitioner),21 in which it spelled out:
(a) the terms of and conditions of the
Intervenors engagement as counsel;
(b) the type of legal services already
rendered by the Intervenor for
Malvar; (c) the absence of any
legitimate reason for the termination
of their attorney-client relationship;
(d) the reluctance of the Intervenor to
withdraw as Malvars counsel; and
(e) the desire of the Intervenor to
assert and claim its contingent fee
notwithstanding its withdrawal as
counsel. The Intervenor prayed that
the Court furnish it with copies of

resolutions, decisions and other legal

papers issued or to be issued after its
withdrawal as counsel of Malvar in
the interest of protecting its interest
as her attorney.
The
Intervenor
indicated
that
Malvars precipitate action had
baffled,
shocked
and
even
embarrassed the Intervenor, because
it had done everything legally
possible to serve and protect her
interest. It added that it could not
recall any instance of conflict or
misunderstanding with her, for, on the
contrary, she had even commended it
for its dedication and devotion to her
case through her following letter to
Justice Bellosillo, to wit:
July 16, 2008

Justice Josue Belocillo (sic)

Dear Justice,
It is almost morning of July 17 as I
write this letter to you. Let me first
thank you for your continued and
unrelenting lead, help and support in
the case. You have been our "rock"
as far as this case is concerned. Jun
and I are forever grateful to you for all
your help. I just thought Id express to
you what is in the innermost of my
heart as we proceed in the case. It
has been around four months now
since we met mid-March early this
year.
The most important and immediate
aspect of the case at this time for me
is the collection of the undisputed

amount of Pesos 14million which the

Court has clearly directed and
ordered the NLRC to execute. The
only impending constraint for NLRC
to execute and collect this amount
from the already garnished amount of
Pesos 41 million at Citibank is the
MR of Kraft on the Order of the Court
(CA) to execute collection. We need
to get a denial of this motion for
NLRC to execute immediately. We
already obtained commitment from
NLRC that all it needed to execute
collection is the denial of the MR. Jun
and I applaud your initiative and
efforts to mediate with Romulo on
potential settlement. However, as I
expressed to you in several
instances,
I
have
serious
reservations on the willingness of

Romulo to settle within reasonable

amounts specifically as it relates to
the stock options. Let us continue to
pursue this route vigorously while not
setting aside our efforts to influence
the CA to DENY their Motion on the
Undisputed
amount
of
Pesos
14million.
At this point, I cannot overemphasize
to you our need for funds. We have
made financial commitments that
require us to raise some amount. But
we can barely meet our day to day
business and personal requirements
given our current situation right now.
Thank you po for your understanding
and support.22

According to the Intervenor, it was

certain
that
the
compromise
agreement was authored by the
respondents to evade a possible loss
of P182,000,000.00 or more as a
result of the labor litigation, but
considering the Intervenors interest
in the case as well as its resolve in
pursuing Malvars interest, they saw
the Intervenor as a major stumbling
block to the compromise agreement
that it was then brewing with her.
Obviously, the only way to remove
the Intervenor was to have her
terminate its services as her legal
counsel.
This
prompted
the
Intervenor to bring the matter to the
attention of the Court to enable it to
recover in full its compensation

based on its written agreement with

her, averring thus:
xxxx
28.
Upon
execution
of
the
Compromise
Agreement
and
pursuant
thereto,
Petitioner
immediately received (supposedly)
from RespondentsP40,000,000.00.
But despite the settlement between
the parties, Petitioner did not pay
Intervenor its just compensation as
set forth in their engagement
agreement; instead, she immediately
moved to Dismiss/Withdraw the
Present Petition.
29. To parties minds, with the
dismissal by Petitioner of Intervenor
as her counsel, both Petitioner and

Respondents probably thought they

would be able to settle the case
without any cost to them, with
Petitioner saving on Intervenors
contingent fees while Respondents
able to take advantage of the
absence of Intervenor in determining
the settlement price.
30. The parties cannot be any more
mistaken. Pursuant to the Second
Paragraph of Section 26, Rule 138,
of the Revised Rules of Court quoted
in paragraph 3 hereof, Intervenor is
still entitled to recover from Petitioner
the full compensation it deserves as
stipulated in its contract.
31. All the elements for the full
recovery
of
Intervenors
compensation are present. First, the

contract between the Intervenor and

Petitioner is reduced into writing.
Second, Intervenor is dismissed
without justifiable cause and at the
stage of proceedings where there is
nothing more to be done but to await
the Decision or Resolution of the
Present Petition.23
xxxx
In support of the Motion for
Intervention, the Intervenor cites the
rulings in Aro v. Naawa24 and Law
Firm of Raymundo A. Armovit v. Court
of Appeals,25 particularly the following
passage:
x x x. While We here reaffirm the rule
that "the client has an undoubted
right to compromise a suit without the

intervention of his lawyer," We hold

that when such compromise is
entered into in fraud of the lawyer,
with intent to deprive him of the fees
justly due him, the compromise must
be subject to the said fees and that
when it is evident that the said fraud
is committed in confabulation with the
adverse party who had knowledge of
the lawyers contingent interest or
such interest appears of record and
who would benefit under such
compromise, the better practice is to
settle the matter of the attorneys
fees in the same proceeding, after
hearing all the affected parties and
without prejudice to the finality of the
compromise agreement in so far as it
does not adversely affect the right of
the lawyer.26 x x x.

The Intervenor prays for the following

reliefs:
a) Granting the Motion for
Intervention to Protect Attorneys
Rights in favor of the Intervenor;
b) Directing both Petitioner and
Respondents jointly and severally
to pay Intervenor its contingent
fees;
c) Granting a lien upon all
judgments for the payment of
money and executions issued in
pursuance of such judgments; and
d) Holding in Abeyance in the
meantime the Resolution of the
Motion to Dismiss/Withdraw Case
filed by Petitioner and granting the
Motion only after Intervenor has

been
fully
paid
compensation; and
e)
Other
equitable.27

reliefs

its

just

just

and

Opposing
the
Motion
for
Intervention,28 Malvar stresses that
there was no truth to the Intervenors
claim to defraud it of its professional
fees; that the Intervenor lacked the
legal capacity to intervene because it
had ceased to exist after Atty. Marwil
N. Llasos resigned from the
Intervenor and Atty. Richard B. Dasal
became barred from private practice
upon his appointment as head of the
Legal Department of the Small
Business Guarantee and Finance
Corporation,
a
government
subsidiary; and that Atty. Llasos and

Atty. Dasal had personally handled

her case.
Malvar adds that even assuming,
arguendo, that the Intervenor still
existed as a law firm, it was still not
entitled to intervene for the following
reasons, namely: firstly, it failed to
attend to her multiple pleas and
inquiries regarding the case, as when
communications to the Intervenor
through text messages were left
unanswered; secondly, maintaining
that this was a justifiable cause to
dismiss its services, the Intervenor
only heeded her repeated demands
to withdraw from the case when Atty.
Dasal was confronted about his
appointment to the government
subsidiary; thirdly, it was misleading

and grossly erroneous for the

Intervenor to claim that it had
rendered to her full and satisfactory
services when the truth was that its
participation was strictly limited to the
preparation,
finalization
and
submission of the petition for review
with the Supreme Court; and finally,
while the Intervenor withdrew its
services on October 5, 2009, the
compromise
agreement
was
executed with the respondents on
December 9,2010 and notarized on
December 14, 2010, after more than
a year and two months, dispelling
any badge of bad faith on their end.
On June 21, 2011, the respondents
filed
their
comment
to
the
Intervenors Motion for Intervention.

On November 18, 2011, the

Intervenor submitted its position on
the respondents comment dated
June 21, 2011,29 and thereafter the
respondents sent in their reply.30
Issues
The issues for our consideration and
determination are two fold, namely:
(a) whether or not Malvars motion to
dismiss the petition on the ground of
the execution of the compromise
agreement was proper; and (b)
whether or not the Motion for
Intervention to protect attorneys
rights can prosper, and, if so, how
much could it recover as attorneys
fees.
Ruling of the Court

We shall
accordingly.

decide

the

issues

1.
Clients right to settle litigation
by compromise agreement, and
to terminate counsel; limitations
A compromise agreement is a
contract,
whereby
the
parties
undertake reciprocal obligations to
avoid litigation, or put an end to one
already commenced.31 The client may
enter into a compromise agreement
with the adverse party to terminate
the litigation before a judgment is
rendered therein.32 If the compromise
agreement is found to be in order and
not contrary to law, morals, good
customs and public policy, its judicial

approval is in order.33 A compromise

agreement, once approved by final
order of the court, has the force of
res judicata between the parties and
will not be disturbed except for vices
of consent or forgery.34
A client has an undoubted right to
settle her litigation without the
intervention of the attorney, for the
former is generally conceded to have
exclusive control over the subject
matter of the litigation and may at
anytime, if acting in good faith, settle
and adjust the cause of action out of
court before judgment, even without
the attorneys intervention.35 It is
important for the client to show,
however, that the compromise
agreement does not adversely affect

third persons who are not parties to

the agreement.36
By the same token, a client has the
absolute right to terminate the
attorney-client relationship at any
time with or without cause.37 But this
right of the client is not unlimited
because good faith is required in
terminating the relationship. The
limitation is based on Article 19 of the
Civil Code, which mandates that
"every person must, in the exercise of
his rights and in the performance of
his duties, act with justice, give
everyone his due, and observe
honesty and good faith." The right is
also subject to the right of the
attorney to be compensated. This is

clear from Section 26, Rule 138 of

the Rules of Court, which provides:
Section 26. Change of attorneys. - An
attorney may retire at anytime from
any action or special proceeding, by
the written consent of his client filed
in court. He may also retire at any
time from an action or special
proceeding, without the consent of
his client, should the court, on notice
to the client and attorney, and on
hearing, determine that he ought to
be allowed to retire. In case of
substitution, the name of the attorney
newly employed shall be entered on
the docket of the court in place of the
former one, and written notice of the
change shall be given to the adverse
party.

A client may at any time dismiss his

attorney or substitute another in his
place, but if the contract between
client and attorney has been reduced
to writing and the dismissal of the
attorney was without justifiable
cause, he shall be entitled to recover
from the client the full compensation
stipulated in the contract. However,
the attorney may, in the discretion of
the court, intervene in the case to
protect his rights. For the payment of
his compensation the attorney shall
have a lien upon all judgments for the
payment of money, and executions
issued in pursuance of such
judgment, rendered in the case
wherein his services had been
retained by the client. (Bold emphasis
supplied)

In fine, it is basic that an attorney is

entitled to have and to receive a just
and reasonable compensation for
services performed at the special
instance and request of his client.
The attorney who has acted in good
faith and honesty in representing and
serving the interests of the client
should be reasonably compensated
for his service.38
2.
Compromise agreement is to be
approved
despite favorable action on the
Intervenors Motion for Intervention
On considerations of equity and
fairness, the Court disapproves of the
tendencies of clients compromising

their cases behind the backs of their

attorneys for the purpose of
unreasonably reducing or completely
setting to naught the stipulated
contingent fees.39 Thus, the Court
grants the Intervenors Motion for
Intervention to Protect Attorneys
Rights as a measure of protecting the
Intervenors right to its stipulated
professional fees that would be
denied under the compromise
agreement. The Court does so in the
interest of protecting the rights of the
practicing Bar rendering professional
services on contingent fee basis.
Nonetheless, the claim for attorneys
fees does not void or nullify the
compromise agreement between
Malvar and the respondents. There

being no obstacles to its approval,

the Court approves the compromise
agreement.
The
Court
adds,
however, that the Intervenor is not left
without a remedy, for the payment of
its
adequate
and
reasonable
compensation could not be annulled
by the settlement of the litigation
without
its
participation
and
conformity. It remains entitled to the
compensation, and its right is
safeguarded by the Court because its
members are officers of the Court
who are as entitled to judicial
protection
against
injustice
or
imposition of fraud committed by the
client as much as the client is against
their abuses as her counsel. In other
words, the duty of the Court is not
only to ensure that the attorney acts

in a proper and lawful manner, but

also to see to it that the attorney is
paid his just fees. Even if the
compensation of the attorney is
dependent only on winning the
litigation, the subsequent withdrawal
of the case upon the clients initiative
would not deprive the attorney of the
legitimate
compensation
for
professional services rendered.40
The basis of the intervention is the
written agreement on contingent fees
contained
in
the
engagement
executed on March 19, 2008
between
Malvar
and
the
Intervenor,41 the pertinent portion of
which stipulated that the Intervenor
would "collect ten percent (10%) of
the amount of PhP14,252,192.12

upon its collection and another ten

percent (10%) of the remaining
balance of PhP41,627,593.75 upon
collection thereof, and also ten
percent (10%) of whatever is the
value of the stock option you are
entitled to under the Decision." There
is no question that such arrangement
was a contingent fee agreement that
was valid in this jurisdiction, provided
the
fees
therein
fixed
were
reasonable.42
We hold that the contingent fee of
10% of P41,627,593.75 and 10% of
the value of the stock option was
reasonable. The P41,627,593.75 was
already awarded to Malvar by the
NLRC but the award became the
subject of the appeal in this Court

because the CA reversed the NLRC.

Be that as it may, her subsequent
change of mind on the amount
sought from the respondents as
reflected
in
the
compromise
agreement should not negate or bar
the Intervenors recovery of the
agreed attorneys fees.
Considering that in the event of a
dispute between the attorney and the
client as to the amount of fees, and
the intervention of the courts is
sought, the determination requires
that there be evidence to prove the
amount of fees and the extent and
value of the services rendered, taking
into account the facts determinative
thereof,43 the
history
of
the
Intervenors legal representation of

Malvar can provide a helpful

predicate for resolving the dispute
between her and the Intervenor.
The records reveal that on March 18,
2008,
Malvar
engaged
the
professional
services
of
the
Intervenor to represent her in the
case of illegal dismissal. At that time,
the case was pending in the CA at
the respondents instance after the
NLRC had set aside the RCUs
computation of Malvars backwages
and monetary benefits, and had
upheld the computation arrived at by
the NLRC Computation Unit. On April
17, 2008, the CA set aside the
assailed resolution of the NLRC, and
remanded the case to the Labor
Arbiter for the computation of her

monetary awards. It was at this

juncture
that
the
Intervenor
commenced its legal service, which
included the following incidents,
namely:
a) Upon the assumption of its
professional duties as Malvars
counsel,
a
Motion
for
Reconsideration of the Decision of
the Court of Appeals dated April
17, 2008 consisting of thirty-eight
pages was filed before the Court
of Appeals on May 6, 2008.
b) On June 2, 2009, Intervenors
filed a Comment to Respondents
Motion for Partial Reconsideration,
said Comment consisted 8 pages.

c) In the execution proceedings

before Labor Arbiter Jaime Reyno,
Intervenor prepared and filed on
Malvars behalf an "Ex-Parte
Motion to Release to Complainant
the
Undisputed
amount
of P14,252,192.12" in NLRC NCR
Case No. 30-07-02716-00.
d) On July 29, 2000, Intervenor
prepared and filed before theLabor
Arbiter
a
Comment
to
Respondents Opposition to the
"Ex-Parte Motion to Release" and
a "Motion Reiterating Immediate
Implementation of the Writ of
Execution"
e) On August 6, 2008, Intervenor
prepared and filed before the
Labor Arbiter Malvars Motion

Reiterating Motion to Release the

Amount of P14,252,192.12.44
The decision promulgated on April
17,
200845 and
the
resolution
promulgated on July 30, 200846 by
the CA prompted Malvar to appeal on
August 15, 2008 to this Court with the
assistance of the Intervenor. All the
subsequent pleadings, including the
reply of April 13, 2009,47 were
prepared and filed in Malvars behalf
by the Intervenor.
Malvar should accept that the
practice of law was not limited to the
conduct of cases or litigations in court
but embraced also the preparation of
pleadings and other papers incidental
to the cases or litigations as well as
the management of such actions and

proceedings on behalf of the

clients.48 Consequently, fairness and
justice demand that the Intervenor be
accorded full recognition as her
counsel
who
discharged
its
responsibility for Malvars cause to its
successful end.
But, as earlier pointed out, although a
client may dismiss her lawyer at any
time, the dismissal must be for a
justifiable cause if a written contract
between the lawyer and the client
exists.49
Considering the undisputed existence
of the written agreement on
contingent fees, the question begging
to be answered is: Was the
Intervenor dismissed for a justifiable
cause?

We do not think so.

In the absence of the lawyers fault,
consent or waiver, a client cannot
deprive the lawyer of his just fees
already earned in the guise of a
justifiable reason. Here, Malvar not
only downplayed the worth of the
Intervenors legal service to her but
also attempted to camouflage her
intent to defraud her lawyer by
offering excuses that were not only
inconsistent with her actions but,
most importantly, fell short of being
justifiable.
The letter Malvar addressed to
Retired Justice Bellosillo, who
represented the Intervenor, debunked
her allegations of unsatisfactory legal
service because she thereby lavishly

lauded the Intervenor for its

dedication and devotion to the
prosecution of her case and to the
protection of her interests. Also
significant was that the attorney-client
relationship between her and the
Intervenor was not severed upon
Atty. Dasals appointment to public
office and Atty. Llasos resignation
from the law firm. In other words, the
Intervenor remained as her counsel
of record, for, as we held in Rilloraza,
Africa, De Ocampo and Africa v.
Eastern
Telecommunication
Philippines, Inc.,50 a client who
employs a law firm engages the
entire
law
firm;
hence,
the
resignation, retirement or separation
from the law firm of the handling
lawyer does not terminate the

relationship, because the law firm is

bound to provide a replacement.
The stipulations of the written
agreement between Malvar and the
Intervenors, not being contrary to law,
morals, public policy, public order or
good customs, were valid and
binding on her. They expressly gave
rise to the right of the Intervenor to
demand compensation. In a word,
she could not simply walk away from
her contractual obligations towards
the Intervenor, for Article 1159 of the
Civil Code provides that obligations
arising from contracts have the force
of law between the parties and
should be complied with in good faith.
To be sure, the Intervenors
withdrawal from the case neither

cancelled nor terminated the written

agreement
on
the
contingent
attorneys fees. Nor did the
withdrawal constitute a waiver of the
agreement. On the contrary, the
agreement continued between them
because
the
Intervenors
Manifestation
(with
Motion
to
Withdraw
as
Counsel
for
Petitioner)explicitly called upon the
Court to safeguard its rights under
the written agreement, to wit:
WHEREFORE, premises considered,
undersigned counsel respectfully
pray that instant Motion to Withdraw
as Counsel for Petitioner be granted
and their attorneys lien pursuant to
the written agreement be reflected in
the judgment or decision that may be

rendered hereafter conformably with

par. 2, Sec. 26, Rule 138 of the Rules
of Court.
Undersigned counsel further requests
that they be furnished copy of the
decision, resolutions and other legal
processes of this Honorable Court to
enable them to protect their
interests.51
Were the respondents also liable?
The respondents would be liable if
they were shown to have connived
with Malvar in the execution of the
compromise agreement, with the
intention of depriving the Intervenor
of its attorneys fees. Thereby, they
would be solidarily liable with her for
the attorneys fees as stipulated in

the written agreement under the

theory that they unfairly and unjustly
interfered with the Intervenors
professional relationship with Malvar.
The respondents insist that they were
not bound by the written agreement,
and should not be held liable under
it.1wphi1
We disagree with the respondents
insistence. The respondents were
complicit in Malvars move to deprive
the Intervenor of its duly earned
contingent fees.
First of all, the unusual timing of
Malvars letter terminating the
Intervenors legal representation of
her,
of
her
Motion
to
Dismiss/Withdraw Case, and of the

execution of compromise agreement

manifested her desire to evade her
legal obligation to pay to the
Intervenor its attorneys fees for the
legal
services
rendered.
The
objective of her withdrawal of the
case was to release the respondents
from all her claims and causes of
action in consideration of the
settlement in the stated amount
of P40,000.000.00, a sum that was
measly compared to what she was
legally entitled to, which, to begin
with,
already
included
the P41,627,593.75 and the value of
the stock option already awarded to
her. In other words, she thereby
waived more than what she was
lawfully expected to receive from the
respondents.

Secondly, the respondents suddenly

turned around from their strong
stance of berating her demand as
offensive to all precepts of justice and
fair play and as a form of unjust
enrichment for her to a surprisingly
generous surrender to her demand,
allowing to her through their
compromise
agreement
the
additional amount ofP40,000,000.00
on top of theP14,252,192.12 already
received by her in August 2008. The
softening unavoidably gives the
impression that they were now
categorically conceding that Malvar
deserved much more. Under those
circumstances, it is plausible to
conclude that her termination of the
Intervenors services was instigated
by their prodding in order to remove

the Intervenor from the picture for

being a solid obstruction to the
settlement for a much lower liability,
and thereby save for themselves and
for her some more amount.
Thirdly, the compromise agreement
was silent on the Intervenors
contingent fee, indicating that the
objective
of
the
compromise
agreement was to secure a huge
discount from its liability towards
Malvar.
Finally, contrary to the stipulation in
the compromise agreement, only
Malvar, minus the respondents, filed
the Motion to Dismiss/Withdraw
Case.

At this juncture, the Court notes that

the compromise agreement would
have Malvar waive even the
substantial stock options already
awarded
by
the
NLRCs
decision,52 which
ordered
the
respondents to pay to her, among
others, the value of the stock options
and all other bonuses she was
entitled to or would have been
entitled to had she not been illegally
dismissed from her employment. This
ruling was affirmed by the CA.53 But
the waiver could not negate the
Intervenors right to 10% of the value
of the stock options she was legally
entitled to under the decisions of the
NLRC and the CA, for that right was
expressly stated in the written
agreement between her and the

Intervenor. Thus, the Intervenor

should be declared entitled to recover
full compensation in accordance with
the written agreement because it did
not assent to the waiver of the stock
options, and did not waive its right to
that part of its compensation.
These circumstances show that
Malvar and the respondents needed
an escape from greater liability
towards the Intervenor, and from the
possible obstacle to their plan to
settle to pay. It cannot be simply
assumed that only Malvar would be
liable towards the Intervenor at that
point, considering that the Intervenor,
had it joined the negotiations as her
lawyer, would have tenaciously
fought all the way for her to receive

literally everything that she was

entitled to, especially the benefits
from the stock option. Her rush to
settle because of her financial
concerns could have led her to
accept the respondents offer, which
offer could be further reduced by the
Intervenors expected demand for
compensation. Thereby, she and the
respondents became joint tortfeasors who acted adversely against
the interests of the Intervenor. Joint
tort-feasors are those who command,
instigate,
promote,
encourage,
advise, countenance, cooperate in,
aid or abet the commission of a tort,
or who approve of it after it is done, if
done for their benefit.54

They are also referred to as those

who act together in committing wrong
or whose acts, if independent of each
other, unite in causing a single
injury.55 Under Article 2194 of the Civil
Code, joint tort-feasors are solidarily
liable for the resulting damage. As
regards the extent of their respective
liabilities, the Court said in Far
Eastern Shipping Company v. Court
of Appeals:56
x x x. Where several causes
producing an injury are concurrent
and each is an efficient cause without
which the injury would not have
happened, the injury may be
attributed to all or any of the causes
and recovery may be had against any
or all of the responsible persons

although under the circumstances of

the case, it may appear that one of
them was more culpable, and that the
duty owed by them to the injured
person was not same. No actors
negligence ceases to be a proximate
cause merely because it does not
exceed the negligence of other acts.
Each wrongdoer is responsible for
the entire result and is liable as
though his acts were the sole cause
of the injury.
There is no contribution between joint
tort-feasors whose liability is solidary
since both of them are liable for the
total damage. Where the concurrent
or successive negligent acts or
omissions of two or more persons,
although acting independently, are in

combination the direct and proximate

cause of a single injury to a third
person, it is impossible to determine
in what proportion each contributed
to the injury and either of them is
responsible for the whole injury. x x x
Joint tort-feasors are each liable as
principals, to the same extent and in
the same manner as if they had
performed
the
wrongful
act
themselves. It is likewise not an
excuse for any of the joint tortfeasors that individual participation in
the tort was insignificant as
compared to that of the other.57 To
stress, joint tort-feasors are not liable
pro rata. The damages cannot be
apportioned among them, except by
themselves. They cannot insist upon

an apportionment, for the purpose of

each paying an aliquot part. They are
jointly and severally liable for the
whole amount.58 Thus, as joint tortfeasors, Malvar and the respondents
should be held solidarily liable to the
Intervenor. There is no way of
appreciating these circumstances
except in this light.
That the value of the stock options
that Malvar waived under the
compromise agreement has not been
fixed as yet is no hindrance to the
implementation of this decision in
favor of the Intervenor. The valuation
could be reliably made at a
subsequent time from the finality of
this adjudication. It is enough for the
Court to hold the respondents and

Malvar solidarily liable for the 10% of

that value of the stock options.
As a final word, it is necessary to
state that no court can shirk from
enforcing the contractual stipulations
in the manner they have agreed upon
and written. As a rule, the courts,
whether trial or appellate, have no
power to make or modify contracts
between the parties. Nor can the
courts save the parties from
disadvantageous
provisions.59 The
same precepts hold sway when it
comes to enforcing fee arrangements
entered into in writing between clients
and attorneys. In the exercise of their
supervisory authority over attorneys
as officers of the Court, the courts
are bound to respect and protect the

attorneys lien as a necessary means

to preserve the decorum and
respectability
of
the
Law
Profession.60 Hence, the Court must
thwart any and every effort of clients
already served by their attorneys
worthy services to deprive them of
their hard-earned compensation.
Truly, the duty of the courts is not
only to see to it that attorneys act in a
proper and lawful manner, but also to
see to it that attorneys are paid their
just and lawful fees.61
WHEREFORE,
the
Court
APPROVES
the
compromise
agreement; GRANTS the Motion for
Intervention to Protect Attorney's
Rights; and ORDERS Czarina T.
Malvar and respondents Kraft Food

Philippines Inc. and Kraft Foods

International to jointly and severally
pay to Intervenor Law Firm,
represented by Retired Associate
Justice Josue N. Bellosillo, its
stipulated contingent fees of 10%
of P41,627,593.75, and the further
sum equivalent to 10% of the value of
the stock option. No pronouncement
on costs of suit.
G.R. No. 169940
September 14, 2009
UNIVERSITY
OF
SANTO
TOMAS, Petitioner,
vs.
SAMAHANG MANGGAGAWA NG
UST (SM-UST), Respondent.
DECISION

YNARES-SANTIAGO, J.:
Assailed in this petition for review on
certiorari is the January 31, 2005
Decision1 of the Court of Appeals in
CA-G.R. SP No. 72965, which
affirmed the May 31, 2002 Order of
the Secretary of the Department of
Labor and Employment (DOLE)
directing the parties to execute a
Collective Bargaining Agreement
incorporating the terms in said Order
with modification that the signing
bonus is increased to P18,000.00.
Also assailed is the September 23,
2005 Resolution2 denying the motion
for reconsideration.
Respondent
Samahang
Manggagawa ng U.S.T. (SM-UST)
was the authorized bargaining agent

of the non-academic/non-teaching
rank-and-file daily- and monthly-paid
employees (numbering about 619) of
petitioner, the Pontifical and Royal
University of Santo Tomas, The
Catholic University of the Philippines
(or UST), a private university in the
City of Manila run by the Order of
Preachers. In October 2001, during
formal negotiations for a new
collective
bargaining
agreement
(CBA) for the academic year 2001
through 2006, petitioner submitted its
"2001-2006 CBA Proposals" which,
among
others,
contained
the
following economic provisions:
A. ACADEMIC YEAR 2001-2002
1. Salary increase of P800.00
per month

2. Signing bonus of P10,000.00

3. Additional Christmas bonus
of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,500.00
per month
2. Additional Christmas bonus
of P2,000.00
3. P6,000,000.00 for salary
restructuring
C. ACADEMIC YEAR 2003-2004
1. Salary increase of P1,700.00
per month
2. Additional Christmas bonus
of P2,000.00

In November 2001, the parties

agreed in principle on all noneconomic provisions of the proposed
CBA, except those pertaining to
Agency Contract or contractualization
(Art. III, Sec. 3 of the proposed CBA),
Union Leave of the SM-UST
President (No. 4 of the Addendum to
the proposed CBA), and hiring
preference.
In
December
2001,
petitioner
submitted its final offer on the
economic provisions, thus:
A. ACADEMIC YEAR 2001-2002
1. Salary increase of P1,000.00
per month
2. Signing bonus of P10,000.00

3. Additional Christmas bonus

of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,700.00
per month
2. Additional Christmas bonus
of P2,000.00
3.
P6,190,000.00
to
be
distributed in the form of salary
restructuring
C. ACADEMIC YEAR 2003-2004
1. Salary increase of P2,000.00
per month
2. Additional Christmas bonus
of P2,000.00

On the other hand, respondent

reduced its demands for the first year
from P8,000.00 monthly salary
increase per employee to P7,000.00,
and from P75,000.00 signing bonus
to P60,000.00 for each employee, but
petitioner insisted on its final offer. As
a result, respondent declared a
deadlock and filed a notice of strike
with the National Conciliation and
Mediation Board -National Capital
Region (NCMB-NCR).
Conciliation and mediation proved to
be futile, such that in January 2002,
majority of respondents members
voted to stage a strike. However, the
DOLE Secretary timely assumed
jurisdiction over the dispute, and the
parties were summoned and heard

on their respective claims, and were

required to submit their respective
position papers.
On May 31, 2002, the DOLE
Secretary issued an Order,3 the
pertinent portions of which read, as
follows:
x x x In arguing on the
reasonableness of its demands, it
cites the income of the school from
tuition fee increases and the
allocation of this amount to the
faculty and non-teaching employees
of the School x x x. According to the
Union, the Schools estimate of the
tuition fee increase for the school
year 2003-2004 at P76,410,000.00 is
erroneous. The Union argues that the
total income of the School from

tuition fee increases for school year

2003-2004 is P101,000,000.00 more
or less, or a net of P98,252,187.36,
after deducting adjustments for
additional charges, allowances and
discounts. This is based on the
computation of the Schools Assistant
Chief Accountant x x x.
xxxx
The Union feels that the members of
the bargaining unit are the least
favored. On the wage increases
alone, the Union points out that a
comparison of the average monthly
salary of the non-academic personnel
from school year 1995-1996 up to
school year 1999-2000 shows a
declining relative percentage. For this
period, the bargaining unit enjoyed

an average monthly salary increase

of 14.234%, the lowest being 8.9% in
school year 1998-1999 and the
highest being 15.38% in school year
1995-1996. The Schools offer for this
CBA cycle translates to an increase
of only 8.23%, specified as follows:
(1) 5.69% increase in school year
2000-2001 (P1,000.00); (2) 9.15%
increase in school year 2001-2002
(P1,700.00); and (3) 9.86% increase
in 2002-2003 (P2,000.00).
The
Union
also
submits
a
comparative chart of the allocation to
non-academic personnel of the 70%
increase in tuition fees from school
year 1996-1997 to 1999-2000 x x x.
The average percentage allocation to
non-academic personnel during this

period is 32.8% of the total 70% of

total tuition fee increases, the lowest
being 20.83% for the school year
1999-2000 and the highest being
43.11% of the total allocation in 19971998. Using P101,036,330.37 as the
estimated increase in tuition fee, 70%
of this amount, net of adjustment, is
P68,775,831.15 x x x. The Union
argues that it is entitled to at least the
average percentage of allocation to it
for the past four (4) school years
which
is
at
32.85%,
or
P22,592,860.53 of the total allocation
of P68,775,831.15.
It maintains, however, that it is
entitled to more than the average
percentage of its allocation of the
total 70% because it is School

practice to allocate more than 70% of

the total tuition fee increases for the
salaries and benefits of School
employees.
Comparing
the
employees share in the tuition fee
increases from school year 19961997 to 1999-2000, the School
allocated an average percentage of
76.75% for the benefits and salaries
of its personnel, or from a low of 72%
in 1998-1999 to a high of 84.4% in
1996-1997 x x x. If the average is
applied this year, the Union argues
that the available amount is
P75,407,786.29. Because of this
practice, the Union maintains that the
School is already estopped from
arguing that the allocation for
employee wages and benefits should

not exceed
increases.

70%

of

tuition

fee

Aside from this amount, the Union

maintains that it is entitled to an
additional P15,475,000.00, sourced
from other income, for the signing
bonus
or
one-time
grant
of
P25,000.00 per member x x x. The
Union alleges that it is school
practice to appropriate other funds for
the wages and benefits of its
employees. For the school year
1996-1997, the School used funds
from other sources to fund the
P2,000,000.00 hospitalization fund
and 50% of the signing bonus for the
academic personnel; in 1997-1998
and 1998-1999, it used additional
funds
for
the
P1,000,000.00

hospitalization fund of the academic

personnel; and in 1999-2000, it used
other funds to finance the one-time
grant of P10,000.00 each to the nonacademic personnel and additional
P4,000,000.00 for the hospitalization
fund of the academic employees or a
total of P17,592,500.00 for the past
four (4) academic years x x x.
The School cannot claim that the
funds are insufficient to cover the
expenses for the CBA because for
the fiscal year 2000-2001 alone, the
accumulated excess of revenues
over expenses at the end of the year
totaled P148,881,678.00 x x x. The
Statement
of
Revenues
and
Expenses from School Operations
collated from the audited Financial

Statements of the School for the

school years 1996-1997 up to 20002001 shows that except for school
years 1996-1997 and 2000-2001, the
School posted a net income from
school operations. Its average annual
net income from school operations
alone is P7,956,187.00 and the net
loss in 2000-2001 was a result of the
revaluation of the Main Building as
part of the assets from its fully
depreciated value so that a new
depreciation cost was reported and
charged to general expenses.
From the foregoing arguments, the
Union demands that an amount
should be allocated to it annually to
finance its demands as follows:

1st Year P38,067,860.00

distributed
as
follows:
P22,592,860.53 (share from tuition
fee increases) for the economic
benefits with sliding effect on the
succeeding
years;
plus
P15,475,000.00 for the one-time
signing bonus of P25,000.00 for
each employee sourced from
other funds.
2nd Year P33,568,970.00 to
apply to its demand for salary
increase, Christmas bonus, rice
subsidy
and
clothing/uniform
allowance.
3rd Year P46,653,295.37 to
apply to its demand for salary
increase,
Christmas
bonus,
medicine allowance, mid-year

bonus allowance
allowance.

and

meal

Based on the Unions computation,

its demands will cost the School a
total of P133,765,125.37 for the
entire three (3) year period.
xxxx
Given all the foregoing, we cannot
follow the Unions formula and in
effect disregard the Schools two
other bargaining units; to do so is a
distortion of economic reality that will
not bring about long term industrial
peace. We cannot simply adopt the
Schools proposal in light of the
parties bargaining history, particularly
the pattern of increases in the last
cycle. Considering all these, we

believe the following to be a fair and

reasonable resolution of the wage
issue.
1st Year P1,000.00/month
2nd Year P2,000.00/month
3rd Year P2,200.00/month
These increases, at a three-year total
of P68,337,600, are less than the
three (3)-year increases in the last
CBA cycle to accommodate the
Schools proven lack of capacity to
afford a higher increase, but are still
substantial enough to accommodate
the workers needs while taking into
account the symmetry that must be
maintained with the wages of the
other bargaining units. On a straight
line aggregate of P5,200.00, the non-

academic personnel will receive

P498.48 less than an Instructor I
(member of the faculty union) who
received an aggregate of P5,698.48,
thus maintaining the gap between the
teaching
and
non-teaching
personnel. The salary difference will
as well be maintained over the three
(3)-year period of the CBA. An RFI
employee (member of the unions
bargaining unit) will receive a monthly
salary of P21,695.95 while an
Instructor I (faculty union member)
will have a salary of P22,948.00;
while an RF5-5/A (member of the
unions bargaining unit) will receive a
salary of P23,462.97 compared to an
Asst. Prof. 1 (faculty) who will receive
P29,250.96. From a total cost of
salary increases for the first year at

P7,428,000, these costs will escalate

to P22,284,000 in the second year,
and to P38,625,000 at the third year.
Given these figures, the amounts
available for distribution and the
member of groups sharing these
amounts, these increases are by no
means minimal.
Signing Bonus
A review of the past bargaining
history of the parties shows that the
School as a matter of course grants a
signing bonus. This ranged from
P8,000.00 during the first three (3)
years of the last CBA to P10,000.00
during the remaining two (2) years of
the re-negotiated term. In this
instance, the Schools offer of
P10,000.00 signing bonus is already

reasonable considering that the

School could have taken the position
that no signing bonus is due on
compulsory arbitration in line with the
ruling in Meralco v. Quisumbing et al.,
G.R. No. 127598, 27 January 1999.
Christmas Bonus
We note that the members of the
bargaining unit receive a P6,500.00
Christmas bonus. Considering this
current level, we believe that the
Schools offer of P2,000.00 for each
of the next three (3) years of the CBA
is already reasonable. Under this
grant, the workers Christmas bonus
will stand at a total of P12,500 at the
end of the third year.
Hospitalization Benefit

We believe that the current practice is

already reasonable and should be
maintained.
Meal Allowance
The Union failed to show any
justification for its demand on this
item, hence its demand on the
increase of meal allowance is denied.
Rice Allowance
We believe an additional 2 sacks of
rice on top of the existing 6 sacks of
rice is reasonable and is hereby
granted, effective on the second year.
Medical Allowance
In the absence of any clear
justification for an improvement of
this benefit, we find the existing

practice to be already reasonable

and should be maintained.
Uniform/Clothing
The Union has not established why
the School should grant the benefit;
hence this demand is denied.
Mid-year Bonus
The P3,000.00 bonus is already fair
and should be maintained.
Hazard Pay
There is no basis to increase this
benefit, the current level being fair
and reasonable.
Educational Benefit
The existing provision is already
generous and should be maintained.

Retirement Plan
We are convinced that the 100% of
basic salary per year of service is
already reasonable and should be
maintained.
Hiring Preference
Based on the Minutes of Meeting on
18 October 2001 and 8 November
2001, the parties agreed to retain the
existing provision; hence, our ruling
on this matter is no longer called for.
Contractualization
The Unions proposed amendments
are legal prohibitions which need not
be incorporated in the CBA. The
Union has alternative remedies if it

desires to assail the

contracts with agencies.
Full-time Union
President

Leave

Schools
of

Union

The Union failed to provide

convincing reasons why this demand
should be favorably granted; hence,
the same is denied.
Other Demands
All other demands not included in the
defined deadlock issues are deemed
abandoned, except for existing
benefits which the School shall
continue to grant at their current
levels consistent with the principle of
non-diminution of benefits.

WHEREFORE, premises considered,

the parties are hereby directed to
execute within ten (10) days from
receipt of this Order a Collective
Bargaining Agreement incorporating
the terms and conditions of this Order
as well as other agreements made in
the course of negotiations and on
conciliation.4
Respondent filed a motion for
reconsideration but it was denied by
the Secretary of Labor. Thus,
respondent filed an original petition
for certiorari with the Court of
Appeals, claiming that the awards
made by the DOLE Secretary are not
supported by the evidence on record
and are contrary to law and
jurisprudence.

On January 31, 2005, the appellate

court rendered the assailed Decision,
the dispositive portion of which reads,
as follows:
WHEREFORE, premises considered,
the petition is partially GRANTED.
The assailed Order of May 31, 2002
of Secretary Patricia Sto. Tomas is
hereby
AFFIRMED
with
the
modification that the P10,000.00
signing bonus awarded is increased
to P18,000.00.
SO ORDERED.5
In
arriving
at
the
foregoing
disposition, the appellate court noted
that:
Based on UST Chief Accountant
Antonio J. Dayags Certification, the

tuition fee increment for the SY 20012002 amounted to P101,036,330.37.

From this amount, the tuition fee
adjustment
amounting
to
P2,785,143.00 was deducted leaving
a net tuition fee increment of
P98,251,189.36.
Pursuant to Section 5 (2) RA 6728,
seventy
percent
(70%)
of
P98,251,187.36 or P68,775,831.15 is
the amount UST has to allocate for
salaries, wages, allowances and
other benefits of its 2,290 employees,
categorized as follows: 619 nonteaching personnel represented by
herein petitioner SM-UST; 1,452
faculty members represented by
UST-Faculty Union (UST-FU) and
219 academic/administrative officials.

The last group of employees is

excluded from the coverage of the
two bargaining units.
Public respondent, taking into
consideration the bargaining history
of the parties, the needs of the
members of Union in relation to the
capability of its employer, UST, to
grant its demands, the impact of the
award on the UST-Faculty Union
members (UST-FU), and how the
present salary and benefits of the
non-academic personnel compare
with the compensation of the
employees
of
other
learning
institutions, arrived at the following
"fair and reasonable" resolution to the
wage issue:
1st year P1,000.00/month

2nd year P2,000.00/month

3rd year P2,000.00/month
Based on public respondents arbitral
award for the first year (AY 20012002), We determine the allocation
that SM-UST would get from the 70%
of the tuition fee increment for AY
2001-2002 by approximating USTs
expense on the increment of
salaries/wages,
allowances
and
benefits
of
the
non-teaching
personnel:
1. Increment
on P 8,047,000.00
Salaries/Wages
+ 13th month pay
(P1,000
x
13
months x 619
employees)

2. Signing
Bonus 6,190,000.00
(P10,000/employe
e)
3. P2,000 Christmas 1,238,000.00
Bonus
Total

P15,475,000.0
0
===========
==

The amount of P15,475,000.00

represents 22.50% of the allocated
P68,775,831.00 (70% of the tuition
fee increment for AY 2001-2002).
UST has allocated P45 million or
65.43% of the P68,775,831 to USTFaculty Union.
Is the distribution equitable? If the
share
from
the
allocated

P68,775,831.00 for each bargaining

unit would be based on the unions
membership, then the distribution
appears fair and reasonable:
xxxx
1,452
Academic employe
es
619
Nonemploye
academic
es
Academic & 219
Administrati employe
ve
es

awarded P45
million
awarded
P15.475
million
awarded
million

P8

Total
P68,475,000.
awarded 00

The difference between P68,775,831

(70% of incremental tuition fee
proceeds) and P68,475,000 (total
actual allocation or award to the two
bargaining units and the school
officials) is P300,831.00, which is
only .437% of the 70% mandatory
allocation (P68,775,831.00).
The Supreme Court in the case of
Cebu Institute of Medicine v. Cebu
Institute of Medicine Employees
Union National Federation of Labor
held that SSS, Medicare and PagIbig employers share may be
charged against the "seventy percent
(70%)
incremental
tuition
fee
increase (sic)" as they are, after all,
for the benefit of the Universitys
teaching
and
non-teaching

personnel. The High Court further

ruled that "the private educational
institution
concerned
has
the
discretion on the disposition of the
seventy percent (70%) incremental
tuition fee increase (sic). It enjoys the
privilege of determining how much
increase in salaries to grant and the
kind and amount of allowances and
other benefits to give. The only
precondition is that seventy percent
(70%) of the incremental tuition fee
increase (sic) goes to the payment of
salaries, wages, allowances and
other benefits of teaching and nonteaching personnel."a1f
In the (sic) light of the foregoing
jurisprudence, the University, in order
to comply with R.A. 6728, must fully

allocate the 70% of the tuition fee

increases
to
salaries,
wages,
allowances and other benefits of the
teaching
and
non-teaching
personnel.
The
amount
of
P300,831.00 must therefore be
allocated either as salary increment
or fringe benefits of the non-teaching
personnel.
We noted that USTs non-teaching
employees enjoy several fringe
benefits.
We listed them down and estimated
their costs for AY 2001-2002:
1 P3,000.00
. mid-year
bonus
2 6 sacks

P1,857,000.00
of 3,714,000.00

. rice/employee
@
P1,000.00/sac
k
3 Hospitalization
2,476,000.00
. benefit
4 Meal
. allowance
(P600/month/e
mployee)
4,456,800.00
5 Hazard
pay
. (P200/month
for
198
entitled
8,430,780
employees)
.00
6 Medicine
7,428,0 20,407,00
. Allowance
00.00
0.00
(P1,000/month

/employee)
7 SSS (P910.00
. employers
share
per 6,759,4
employee)
80.00
8 Pag-Ibig (2%
742,800
. of the basic
.00
pay)
9 Phil
Health
928,500
. (P125.00/empl
.00
oyee)
Total

P28,837,
780.00
=======
======

The allocation for salary increases,

13th month pay, signing bonus and
Christmas bonus for USTs teaching

and non-teaching employees, as well

as the school officials, amount to
P68.475 million. This represents
almost 70% of the UST incremental
tuition fee proceeds for AY 20012002. Considering the fringe benefits
being extended to UST employees, it
is safe to assume that the funds for
such benefits need to be sourced
from the Universitys other revenues.
We looked into USTs financial
statements to determine its financial
standing. The financial statements
duly audited by independent and
credible external auditors constitute
the normal method of proof of profit
and loss performance of a company.
We examined UST audited financial
statements from 1997 to 2001 and
found that the Universitys "other

incomes" come from parking fees,

rent income and interest income. It,
likewise, derives income from school
operations:
1999
Income
from
Operatio P19,874,
ns
937.00
Other
85,995,0
Income 39.00
Excess 96,869,9
of
76.00
Revenue
s Over
Expense
s Before
Income

2000

2001

(24,222,
602)
77,335,0
32.00
53,112,4
80.00

(40,90
5,598)
78,358,
303
(29,72
6,651)

Tax
Provisio
n
for
Income 2,122,51
Tax
8.00
Excess
of
Revenue
s
Over
Expense 94,747,4
s
58.00
ACCUM P180,99
ULATED 6,950.00
EXCESS
OF
REVEN
UES
OVER

2,602,30
5.00

50,510,1
75.00
P130,48
6,775.00

(32,115
,272)
P148,8
81,678

EXPENS
ES
AT
END OF
YEAR
Thus, if We charge the
employees other benefits from
the accumulated excess of
revenues, We will come up with
the following:
Accumulated
Excess
of
Revenues
Over Expenses
(2001)
P148,881,678.00
Less:
28,837,780.00
Other Benefits
of
NonTeaching

Personnel
Balance

P120,043,898.00

Even if the other benefits of the

faculty members were to be charged
from the remaining balance of the
Accumulated Excess of Revenues
Over Expenses, there would still be
sufficient amount to fund the other
benefits
of
the
non-teaching
personnel.
xxxx
However, while We subscribe to
USTs position on "salary distortion",
Our earlier findings support the
petitioners contention that the UST
has substantial accumulated income
and thus, We deem it proper to

award an increase, not in salary, to

prevent any salary distortion, but in
signing bonus. The arbitral award of
P10,000 signing bonus per employee
awarded by public respondent is
hereby increased to P18,000.00.
We are well aware of the need for the
University to maintain a sound and
viable financial condition in the light
of the decreasing number of its
enrollees and the increasing costs of
construction
of
buildings
and
modernization of equipment, libraries,
laboratories
and
other
similar
facilities. To balance this concern of
the University with the need of its
non-academic
employees,
the
additional award, which We deem
reasonable, and to be funded from

the Universitys accumulated income,

is thus limited to the increase in
signing bonus.6
Petitioner filed a motion for
reconsideration, which the appellate
court denied in its September 23,
2005 Resolution. Hence, the instant
petition which raises the following
issues:
I.
THE HONORABLE COURT OF
APPEALS COMMITTED PALPABLE
ERROR OF SUBSTANCE WHEN IT
RULED THAT THE MEMBERS OF
PRIVATE RESPONDENT DID NOT
VOLUNTARILY AND KNOWINGLY
ACCEPT THE ARBITRAL AWARD
OF THE SECRETARY OF DOLE.

II.
THE HONORABLE COURT OF
APPEALS COMMITTED PALPABLE
ERROR
OF
SUBSTANCE
AMOUNTING TO GRAVE ABUSE
OF
DISCRETION
WHEN
IT
INCREASED THE SIGNING BONUS
AWARDED BY THE SECRETARY
OF DOLE TO EACH OF THE
MEMBERS
OF
PRIVATE
RESPONDENT FROM P10,000.00
TO P18,000.00.
III.
THE HONORABLE COURT OF
APPEALS
HAS
COMPLETELY
IGNORED THE CLEAR MANDATE
AND INTENTION OF R.A. 6728
OTHERWISE KNOWN AS THE

GOVERNMENT ASSISTANCE TO
STUDENTS AND TEACHERS IN
PRIVATE EDUCATION ACT.
IV.
THE HONORABLE COURT OF
APPEALS COMMITTED PALPABLE
ERROR
OF
SUBSTANCE
AMOUNTING TO GRAVE ABUSE
OF DISCRETION WHEN IT RULED
THAT THE FRINGE BENEFITS
BEING
ENJOYED
BY
THE
ACADEMIC AND NON-ACADEMIC
EMPLOYEES
OF
PETITIONER
WERE SOURCED OUT FROM ITS
OTHER INCOME.
V.
THE HONORABLE COURT OF
APPEALS COMMITTED PALPABLE

ERROR
OF
SUBSTANCE
AMOUNTING TO GRAVE ABUSE
OF
DISCRETION
WHEN
IT
IGNORED THE TIME HONORED
PRINCIPLES
GOVERNING
PETITION
FOR
CERTIORARI
INVOLVING LABOR CASES.7
Petitioner alleges that, as of
December 11, 2002, 526 regular nonacademic employees out of a total
of 619 respondents members have
decided to unconditionally abide by
the May 31, 2002 Order of the DOLE
Secretary.8 A letter signed by the 526
non-academic employees allegedly
reads:
December 3, 2002

TO: REV. FR.

LANA,
Rector

TAMERLANE

R.
O.P.

REV. FR. JUAN V. PONCE, O.P.

Vice-Rector
KAMI NA NAKALAGDA SA IBABA AY
NAGPAPAABOT
NG
AMING
TAHASANG
PAGTANGGAP
SA
AWARD NG SECRETARY OF
LABOR
SA
AMING
(CBA)
DEADLOCK CASE.
SANA PO AY MA-RELEASE ANG
AMING MGA WAGE ADJUSTMENTS
AT IBA PANG BENEPISYO BAGO
MAG DECEMBER 15, 2002.
x x x x9

Petitioner claims that it began paying

the wage adjustment and other
benefits pursuant to the May 31,
2002 Order of the DOLE Secretary;
and that to date, 572 out of the 619
members of respondent have been
paid. It now argues that by their
acceptance of the award and the
resulting payments made to them,
the said union members have ratified
its offer and thus rendered moot the
case before the Court of Appeals
(CA-G.R. SP No. 72965).
Petitioner also argues that the Court
of Appeals erred in ordering it to
source part of its judgment award
from the schools other income,
claiming
that
Republic
Act
672810 does not compel or require

schools to allocate more than 70% of

the incremental tuition fee increase
for the salaries and benefits of its
employees. Citing an authority in
education law, it stresses that
Clearly, only 70% may be used for
the "payment of salaries, wages,
allowances and other benefits of
teaching
and
non-teaching
personnel," since 20% "shall go to
the improvement or modernization of
buildings,
equipment,
libraries,
laboratories, gymnasia and similar
facilities and the payment of other
costs of operation."
A school does not exist solely for the
benefit of its teachers and nonteaching personnel. A school is
principally established to deliver

quality education at all levels, as the

Constitution requires. Therefore, any
tuition fee increase authorized by
either the DepEd Secretary, the
CHED or the Director General of the
TESDA for private schools should not
solely benefit the teaching and nonteaching personnel but should rather
be used for the welfare of the entire
school community, particularly the
students. The students are entitled as
a matter of right to the improvement
and modernization of the school
"buildings, equipment," as this is
fundamental to the maintenance or
improvement of the quality of
education they receive.
Thus, if schools use any part of the
20% reserved for the upgrading of

school facilities to supplement the

salaries of their academic and nonacademic personnel, they would not
only be violating the students
constitutional
right
to
quality
education through "improvement and
modernization" but also committing a
serious infraction of the mandatory
provisions of RA 6728.
The law is silent, however, on the
remaining ten percent of the tuition
fee increase. The DepEd has
referred to it as the "return of
investment" for proprietary schools
and the "free portion" for non-stock,
non-profit educational institutions.
This ten percent (10%) is the only
portion of the tuition fee increase

which schools may use as they

wish.11
Petitioner thus concedes liability only
up to P300,831.00, which is the
remaining
balance
of
the
undistributed
amount
of
P68,775,831.00, which represents
70% of the incremental tuition fee
proceeds for the period in question.
Petitioner contends further that the
appellate courts award of additional
signing bonus (from P10,000.00 to
P18,000.00) is contrary to the nature
and principle behind the grant of such
benefit, which is one given as a
matter of discretion and cannot be
demanded by right,12 a consideration
paid for the goodwill that existed in
the negotiations, which culminate in

the signing of a CBA.13 Petitioner

claims that since this condition is
absent in the parties case, it was
erroneous
to
have
rewarded
respondent with an increased signing
bonus.
Finally, petitioner endorses the
original award of the DOLE
Secretary, calling her disposition of
the case "fair and equitable"14 and
deserving of our attention, in light of
the principle that
The conclusions reached by public
respondent (Secretary of Labor) in
the discharge of her statutory duty as
compulsory arbitrator, demand the
high respect of this Court. The study
and settlement of these disputes fall
within public respondent's distinct

administrative expertise. She is

especially trained for this delicate
task, and she has within her
cognizance
such
data
and
information as will assist her in
striking
the
equitable
balance
between the needs of management,
labor, and the public. Unless there is
clear showing of grave abuse of
discretion, this Court cannot and will
not interfere with the labor expertise
of public respondent x x x.15
On the other hand, respondent seeks
to sustain the appellate courts
disposition, echoing its ruling that
even though majority of the nonteaching employees agreed to
petitioners offer and accepted
payment thereupon, they are not

precluded from receiving additional

benefits that the courts may award
later on, bearing in mind that
the employer and the employee do
not stand on the same footing.
Considering the countrys prevailing
economic conditions, the employee
oftentimes finds himself in no position
to resist money proffered, thus, his
case becomes one of adherence and
not of choice. This being the case,
they are deemed not to have waived
any of their rights.16
As regards petitioners assertion that
the funds to cover for the cost of the
other benefits awarded by the DOLE
Secretary may not be sourced from
its other income pursuant to R.A.
6728 as these benefits should only

be paid out from the 70% tuition fee

increment, respondent argues that
R.A. 6728
does not provide that the increase or
improvement of the salaries and
fringe benefits of the employees
should be exclusively funded from
the income of the University which is
derived from the increase in tuition
fees. In fact, the statute has no
application with respect to the
manner of disposition of the other
incomes (as distinguished from
income derived from tuition fee
increases) of the University, nor does
it preclude or exempt the latter from
using its other income or part thereof
to fund the cost of increases or

improvements in the salaries and

benefits of its employees. x x x
15. Contrary to the assertion of
Petitioner, it is very clear that the
funds used by the University to cover
the cost of other fringe benefits
(under the existing CBA) granted to
the non-academic employees for AY
2001-2002 in the amount of
P28,837,780.00 as observed by the
Court of Appeals, came from
the other income of the University
and not from the share of the said
employees in the income derived
from the tuition fee increases during
the same period. Logically, the grant
of the said fringe benefits could not
have come from the amount of
P15,475,000.00 which was already

allocated by the University to cover

the total cost of the increases in the
salaries, grant of signing bonus, and
increase in the Christmas bonus to
the non-academic employees for AY
2001-2002.17
On the appellate courts award of
additional signing bonus, respondent
argues that since no strike or any
untoward incident occurred, goodwill
between the parties remained, which
entitles respondents members to
receive their signing bonus. Besides,
respondent asserts that since
petitioner did not appeal the DOLE
Secretarys award, it may not now
argue against its grant, the issue
remaining being the propriety of the
awarded amount; that is, whether or

not it was proper for the appellate

court to have raised it from
P10,000.00 to P18,000.00.
We resolve to PARTIALLY GRANT
the petition.
To put matters in their proper context,
we must first simplify the facts.
Although the parties were negotiating
on the CBA for academic years 2001
through 2006 (2001-2006 CBA
Proposals), we are here concerned
only with the economic provisions for
the academic year (AY) 2001-2002,
specifically the appellate courts
increased award of signing bonus,
from P10,000.00 as originally granted
by
the
DOLE
Secretary,
to
P18,000.00; the parties do not

appear to question
disposition made by
Secretary.

any other
the DOLE

Thus, it has been determined that

from the tuition fees for the academic
year in question, petitioner earned an
increment of P101,036,330.37. Under
R.A. 6728, 70% of that amount or
the net18 amount of P68,775,831.15
should be allotted for payment of
salaries, wages, allowances and
other benefits of teaching and nonteaching
personnel
except
administrators who are principal
stockholders of the school.
Of this amount (P68,775,831.15), an
aggregate of P15,475,000.00 (or 22.5
%) was allocated to the universitys

non-teaching
or
non-academic
personnel, by way of the following:
Increment
on P 8,047,000.00
Salaries/Wages
plus 13th month pay
(P1,000
x
13
months
x
619
non-academic
personnel)
Signing
Bonus 6,190,000.00
(P10,000
per
employee)
P2,000
Christmas
1,238,000.00
Bonus
TOTAL

15,475,000.00

On the other hand, the amount of

P45
million
(or
65.43%
of

P68,775,831.15) was allocated to the

teaching personnel.
After distribution of the respective
shares of the teaching and nonteaching personnel, there remained a
balance of P300,831.00 from the
P68,775,831.15.
In addition to the salary increase,
signing and Christmas bonuses, the
Court of Appeals extended to
respondents members the following
fringe benefits for AY 2001-2002,
which benefits petitioner has been
giving its non-teaching employees in
the past, and which are included in
the DOLE Secretarys award an
award which petitioner prays for this
Court to affirm in toto:

1
.
2
.
3
.
4
.

5
.

6
.

P3,000.00 midP1,857,000.00
year bonus
6 sacks of
rice/employee
@ P1,000/sack 3,714,000.00
Hospitalization
2,476,000.00
benefit
Meal
allowance
4,456,800.00
(P600/month/e
mployee)
Hazard
pay
(P200/month
for
8,430,780.00
198
entitled
employees)
Medicine
7,428,00 20,407,0
Allowance
0.00
00.00

7
.

8
.
9
.

(P1,000/month/
employee)
SSS (P910.00
employers
6,759,48
share
per 0.00
employee)
Pag-Ibig (2%
742,800.
of the basic
00
pay)
Philhealth
928,500.
(P125.00/empl
00
oyee)
Total

P28,837,
780.00

Clearly, these fringe benefits would

have to be obtained from sources

other than the incremental tuition fee

proceeds (P68,775,831.15), since
only P15,475,000.00 thereof was set
aside for the non-teaching personnel;
the rest was allocated to the teaching
personnel.
The appellate court, moreover,
granted an increase in the signing
bonus, that is, from the DOLE
Secretarys award of P10,000.00, to
P18,000.00. This, exactly, is the
parties point of contention.
Going now to the question of whether
respondents members individual
acceptance of the award and the
resulting
payments
made
by
petitioner operate as a ratification of
the DOLE Secretarys award which
renders CA-G.R. SP No. 72965 moot,

we find that such do not operate as a

ratification of the DOLE Secretarys
award; nor a waiver of their right to
receive further benefits, or what they
may be entitled to under the law. The
appellate court correctly ruled that
the respondents members were
merely
constrained
to
accept
payment at the time. Christmas was
then just around the corner, and the
union members were in no position to
resist the temptation to accept muchneeded cash for use during the most
auspicious occasion of the year. Time
and again, we have held that
necessitous men are not, truly
speaking, free men; but to answer a
present emergency, will submit to any
terms that the crafty may impose
upon them.19

Besides, as individual components of

a union possessed of a distinct and
separate
corporate
personality,
respondents members should realize
that in joining the organization, they
have surrendered a portion of their
individual freedom for the benefit of
all the other members; they submit to
the will of the majority of the
members in order that they may
derive the advantages to be gained
from the concerted action of
all.20 Since the will of the members is
personified by its board of directors
or trustees, the decisions it makes
should accordingly bind them.
Precisely, a labor union exists in
whole or in part for the purpose of
collective bargaining or of dealing
with employers concerning terms and

conditions of employment.21 What the

individual employee may not do
alone, as for example obtain more
favorable terms and conditions of
work, the labor organization, through
persuasive and coercive power
gained as a group, can accomplish
better.1avvphi1
Regarding petitioners assertion that
it was unlawful for the Court of
Appeals to have required it to source
the award of fringe benefits (in the
amount of P28,837,780.00) from the
schools other income, since R.A.
6728 does not compel or require
schools to allocate more than 70% of
the incremental tuition fee increase
for the salaries and benefits of its
employees, we find it unnecessary to

rule on this matter. These fringe

benefits are included in the DOLE
Secretarys award an award which
petitioner seeks to affirm in toto; this
being so, it cannot now argue
otherwise. Since it abides by the
DOLE Secretarys award, which it
finds "fair and equitable," it must
raise the said amount through
sources other than incremental tuition
fee proceeds.
Finally, we come to the appellate
courts award of additional signing
bonus, which we find to be
unwarranted
under
the
circumstances. A signing bonus is a
grant motivated by the goodwill
generated
when
a
CBA
is
successfully negotiated and signed

between the employer and the

union.22 In the instant case, no CBA
was successfully negotiated by the
parties. It is only because petitioner
prays for this Court to affirm in toto
the DOLE Secretarys May 31, 2002
Order that we shall allow an award of
signing bonus. There would have
been no other basis to grant it if
petitioner had not so prayed. We
shall take it as a manifestation of
petitioners liberality, which we cannot
now allow it to withdraw. A bonus is a
gratuity or act of liberality of the
giver;23 when petitioner filed the
instant
petition
seeking
the
affirmance of the DOLE Secretarys
Order in its entirety, assailing only the
increased amount of the signing
bonus awarded, it is considered to

have unqualifiedly agreed to grant

the original award to the respondent
unions members.
WHEREFORE,
the
petition
is
PARTIALLY GRANTED. The signing
bonus of EIGHTEEN THOUSAND
PESOS (P18,000.00) per member of
respondent Samahang Manggagawa
ng U.S.T. as awarded by the Court of
Appeals is REDUCED to TEN
THOUSAND PESOS (P10,000.00).
All other findings and dispositions
made by the Court of Appeals in its
January 31, 2005 Decision and
September 23, 2005 Resolution in
CA-G.R. SP No. 72965 are
AFFIRMED.
SO ORDERED.

A.M. No. MTJ-06-1630

March
31,
2006
[Formerly OCA I.P.I. No. 04-1590MTJ]
ESTRELLA
A.
BARBA, Complainant,
vs.
JUDGE ROSITA B. SALAZAR, and
CLERK OF COURT II JOSEPH L.
BRILLANTES, both of the MCTC,
LICUAN-BAAY,
ABRA, Respondents.
RESOLUTION
TINGA, J.:
On 23 June 2004, the Office of the
Court Administrator (OCA) received

an undated Letter-Complaint 1 from

Estrella A. Barba (complainant)
against Judge Rosita B. Salazar
(respondent judge), Presiding Judge,
Metropolitan Circuit Trial Court
(MCTC), Baay-Licuan, Abra for
Conduct Unbecoming and/or Abuse
of Discretion and Gross Dishonesty.
Complainant alleged that she is the
mother of Rosette Rosario B. Pineda
(Pineda), Clerk II of the MCTC, BaayLicuan, Abra who resigned from her
post effective 1 March 2004 to work
abroad. Even after her resignation,
Pinedas name remained in the
payroll and several checks 2 were still
issued in her favor. Complainant

claimed that her daughter did not

receive any of the checks. Yet three
(3) of the checks were allegedly
encashed by respondent judge.
Complainant related that the checks
issued for Pineda were in the
following amounts: midyear bonus for
the year 2004 in the amount
of P5,925.50; clothing allowance in
the amount of P4,000.00; Judiciary
Development Fund allowance for the
month of April in the amount
of P3,000.00;
fiscal
autonomy
allowance for the year 2004 in the
amount of P4,000.00; monthly salary
for the months of March and April

2004; and Judiciary Development

Fund allowance for March 2004.
It was later determined that the
monthly salary checks for the months
of March and April 2004 and the
Judiciary
Development
Fund
allowance for March 2004 were
promptly returned to the Court.
However, the four remaining checks
representing the midyear bonus,
clothing allowance, fiscal autonomy
allowance,
and
the
Judiciary
Development Fund allowance for
April 2004 remained unremitted.
After further inquiry, complainant
learned that three (3) of the

checks 3 were in the possession of

respondent judge. To support her
claim,
complainant
submitted
photocopies of the payroll registry of
two (2) of the three (3) checks where
the signature of respondent judge
may be seen opposite the name of
Pineda, thus signifying that the
checks were indeed received by
respondent judge. The check for the
Judiciary
Development
Fund
allowance was eventually returned to
the Court after some time.
A Supplemental Complaint 4 was filed
by herein respondent implicating
Joseph Brillantes (respondent clerk
of court), Clerk of Court of the same

MCTC, in the instant administrative

case for non-feasance in view of his
failure to perform his duty to return
the checks of Pineda to the Court,
thereby allowing respondent judge to
take the checks.
On 23 September 2004, respondent
clerk
of
court
filed
his
Comment 5 averring that while it is
true that he was the addressee for all
the checks for the court employees,
the last checks he received under the
name of Pineda were for her salary
for the months of March and April
2004, and the Judiciary Development
Fund allowance for March 2004. The
others were obtained from the

Philippine Postal Corporation on

different dates by respondent judge
herself.
Respondent clerk of court upon
receipt of the checks for Pineda
immediately returned the same to the
Checks Disbursement Division of this
Court. However, the checks taken by
respondent judge were not returned
as she herself volunteered to return
them personally since she was
supposedly going to the Supreme
Court at that time.
Respondent
judge
in
her
Comment 6 admits taking the checks
of Pineda representing the latters

midyear bonus, clothing allowance,

and fiscal autonomy allowance from
the post office. She states that she
did so not for any immoral motive or
sinister interest but for the sole and
honest purpose of returning them
herself to the Court. However, she
discovered that the checks were
missing from the book were she
inserted them and her earnest efforts
to locate them, to the point of
castigating the members of her
household, proved futile. Upon
discovering the loss, respondent
judge immediately informed the Court
of such loss and requested the
stoppage of payment of the checks

through the Checks Disbursement

Division. 7 Finally, respondent judge
reiterates that the loss was
completely beyond her perception.
On 7 December 2004, the OCA
recommended that the instant
administrative complaint be referred
to the executive judge of the
Regional Trial Court (RTC), Bangued,
Abra for investigation, report and
recommendation. In addition, the
OCA, upon verification with the Land
Bank of the Philippines, reported that
two (2) of the three (3) missing
checks 8 were
already
encashed/negotiated.

In a Resolution 9 dated 31 January

2005, the Court resolved to refer the
case to the executive judge of RTC,
Bangued, Abra.
After hearing and submission of the
parties
respective
pleadings,
Executive Judge Charito B. Gonzales
(investigating judge) found that the
midyear
bonus
and
clothing
allowance checks were encashed at
Lands Merchandising Store by
respondent judges son, James
Salazar (Salazar). On the other hand,
the fiscal autonomy allowance check
was encashed at Co Chiok
Department Store. The signature of

respondent judge appeared on the

dorsal portion of the said check.
During the investigation of the case,
complainant, in her Memorandum
presented
a
Certification 10 by
Christine Co (Co), owner/manager of
Co Chiok Department Store, which
imputes that the check for Pineda
was encashed by respondent judge.
This was disputed by respondent
judge who in turn presented Cos
sworn statement saying that though
the signature of respondent judge
appeared at the back of the check,
Co did not see respondent judge
personally encashing the check and
that it was encashed because she

honored the name of respondent

judge which appeared at the back of
the check. 11
The investigating judge filed her
Report
and
Recommendation 12 recommending
that the administrative complaint
against respondent clerk of court be
dismissed for lack of substantial
evidence. The investigating judge
reasoned that:
With respect to the charge against
respondent Clerk of Court Joseph
Brillantes the undersigned believes
that there is no substantial proof to
establish that he had any complicity

in the loss and subsequent

negotiation and encashment of the
subject missing checks. In her
memorandum[,] the complainant
herself pinned all liabilities on the
respondent
Judge
not
even
mentioning a bit of any administrative
infraction on the part of respondent
clerk of court. Respondent Clerk of
Court was earlier included in the
administrative
complaint
having
allowed respondent Judge to take
custody of the missing checks. The
undersigned however believes that
the mere passive act of the
respondent clerk of court in allowing
respondent Judge to take custody of

the missing checks, with the

assurance that she would return
them herself to the Supreme Court,
does
not
amount
to
any
administrative liability. Respondent
Judge
exercises
administrative
supervision over respondent clerk of
court hence the latter cannot be
faulted for trusting his superior. At this
point, the undersigned concludes that
respondent clerk of court should be
absolved from any administrative
charge pertaining to the missing
checks. 13
As to respondent judge, the
investigating judge recommended
that she be exonerated of the

charges of gross dishonesty, conduct

unbecoming of a judge, and abuse of
discretion. The investigating judge
concluded that, after taking pains in
comparing
respondent
judges
signature in the records of the case
and her purported signature on the
check, she failed to arrive at any
conclusion as to the purported
signatures genuineness. However, it
was recommended that respondent
judge be held liable for simple
neglect of duty for the loss of the
checks,
and
that
she
be
fined P10,000.00
and
ordered
restitution of the amount of the three
(3) checks.

We agree in part with the

recommendation of the investigating
judge.
Respondent clerk of court should be
reminded that he works not for
respondent judge but for the
Judiciary
and
as
such,
his
responsibilities which this Court has
prescribed should be fulfilled with
keenness. The Court recognizes the
fact that judges have the control and
supervision of their court employees.
However,
with
the
irregularity
respondent clerk of court saw in the
acts of respondent judge, he should
have been more circumspect in
upholding his task in safeguarding

the checks which, in the first place,

should have been in his custody.
This notwithstanding, the Court
absolves him of any liability in the
loss and eventual encashment of the
checks as respondent judge has
already admitted that she kept the
check before its alleged loss.
Furthermore, it was respondent
judges assurance that she will
personally return the checks that
made respondent clerk of court
cease reminding her of the need for
the remittance of the check to the
Checks
Disbursement
Division.
Hence, respondent clerk of court
acted within the bounds of his duties.

We cannot say the same for

respondent judge. Her act of taking
the three (3) checks, even if with
honorable intentions, does not
excuse her from the eventual
consequences prejudicing Pineda
and more importantly, the Judiciary.
Respondent
judge
clearly
overstepped
her
responsibilities
when she went the extra mile to go to
the post office on three separate
occasions to claim Pinedas checks.
That circumstance alone is already a
cause for suspicion. In so doing,
respondent judge violated Canon 2 of
the Code of Judicial Conduct, which
states that "[a] judge should avoid

impropriety and the appearance of

impropriety in all activities."
It should be noted that respondent
clerk of court returned Pinedas
checks
on
26
April
2004. 14 Respondent judge, on the
other hand, received Pinedas
midyear
bonus
and
clothing
allowance checks on 12 May 2004
and
29
April
2004,
respectively. 15 There is no record
however of the date of receipt of the
check for fiscal autonomy allowance.
This would mean that the checks
which respondent clerk of court
received and returned were those
issued by the Court prior to the

issuance of the subject checks.

Respondent judge executed an
Affidavit of Loss and the request for
stoppage of payment on 10 June
2004, or roughly a month after she
took the checks of Pineda. She had
sufficient time to return the checks.
Her procrastination in the remitting
the checks to the Court was the
direct cause of the loss. Hence, there
is negligence on the part of
respondent judge in performing her
duty to return the subject checks.
The Court has said time and time
again that the conduct and behavior
of everyone charged with the
administration and disposition of

justicefrom the presiding judge to

the
lowliest
clerkshould
be
circumscribed with the heavy burden
of responsibility and free from any
suspicion that may taint the wellguarded image of the judiciary. The
conduct of judges and court
personnel must not only be
characterized by propriety and
decorum at all times, but must also
be above suspicion. Verily, the image
of a court of justice is necessarily
mirrored in the conduct, official and
otherwise, of the men and women,
from the judge to the lowest
employee, hence, it becomes the
imperative sacred duty of each and

everyone in the court to maintain its

good name and standing as a true
temple of justice. Thus, every
employee of the court should be an
exemplar of integrity, uprightness,
and honesty.16
A magistrate of the law must comport
himself at all times in such manner
that his conduct, official or otherwise,
can bear the most searching scrutiny
of the public that looks up to him as
the epitome of integrity and justice. 17
In SPO4
Manaois
Leomo, 18 we ruled:

v.

Judge

Canon 2 mandates that a judge

should avoid impropriety, or even an

appearance of impropriety in all his

conduct as a magistrate.
It bears reiterating the dictum that,
like Caesars wife, a judge must not
only be pure, but must also be above
suspicion. He must conduct himself
in a manner that gives no ground for
reproach. This exacting standard of
decorum is demanded from judges to
promote public confidence in the
integrity and impartiality of the
judiciary. 19
Respondent
judges
irregular
obtention of the three (3) checks, and
their subsequent loss in her custody,
stand as the proximate cause of the

illegal encashment of these checks to

the financial damage of the Supreme
Court. Even if there is no substantial
evidence establishing respondents
participation or acquiescence to the
encashment of the checks, her
negligence is sufficiently proved, and
administrative sanction warranted.
Respondent
judge,
in
her
Memorandum,
questioned
the
motives of complainant in instituting
the instant case, as according to her,
complainant or Pineda had no more
right to the checks and thus,
respondent judge had the authority to
take custody of the checks.
Furthermore,
respondent
judge

admitted that her son Salazar, was

hooked on illegal drugs and things of
value in their house went missing and
she never mentioned her son
previously because it is "the tendency
of every mother to protect her
beloved child." 20
Respondent judge has a misplaced
appraisal of the situation. The
ultimate victim in this case is neither
complainant nor her daughter
Pineda. The money was illegally
extracted from the funds of the Court.
Evidently, it is the Court which is
prejudiced by the negligence of
respondent judge since the money

was given to someone who did not

render service to the Court.
Had she prudently turned over the
checks and not kept it in a book, she
would
not
be
administratively
charged in the present case. She did
not even have to sign the payroll
registry and personally receive the
checks of Pineda as she could have
just simply returned them to the
Checks Disbursement Division as
soon as she found out that these
were checks issued for a resigned
employee. In the first place, it was
not her responsibility to get the bulk
of the checks from the Philippine
Postal
Corporation. The 2002

Revised Manual for Clerks of

Court 21 states that it is the function of
the Office of the Clerk of Court to
distribute salary checks and other
benefits, and not the judges. For the
act of keeping the checks alone,
respondent judge may already be
liable for administrative sanctions.
Thus, when the checks allegedly lost
were encashed not by the person to
whom it was issued, respondent
judges liability is compounded. Not
only is she responsible for keeping
the checks to which she is not
entitled but she is also directly
accountable for the loss and the
encashment of these checks by no

other than her son and another

person whose signature appears to
be hers.
Furthermore, having admitted that
she had a problem with her son and
that valuable belongings in her house
had disappeared, she should have
been put on guard and particularly
careful with the checks, if truly
respondent judge was committed to
delivering the checks personally to
this Court.
Complainant cannot be faulted in
instituting
this
administrative
complaint because her daughter was
also prejudiced by the culpable acts

of respondent judge. As stated in her

Reply to the Memorandum of
Respondent Judge, 22 because the
checks were not returned to the
Court, Pineda could not get a
clearance and thus cannot claim her
terminal leave, GSIS, and other
benefits due her, which she would
have used to pay for the loans she
obtained from the Supreme Court
Savings and Loans Association.
WHEREFORE, premises considered,
the case against respondent Clerk of
Court Joseph L. Brillantes is
DISMISSED for lack of merit.
Respondent Judge Rosita B. Salazar
is hereby FINED Twenty Thousand

Pesos (P20,000.00) and ORDERED

to restitute the amount of Thirteen
Thousand Nine Hundred Twenty Five
and Thirty Centavos (P13, 925.30)
taken from the Court.
The Office of the Court Administrator
(OCA) is DIRECTED to institute
appropriate criminal charges against
James Salazar and all other persons
responsible for the encashment of
the three (3) checks.
SO ORDERED.
G.R. No. 175803
4, 2009

December

GOVERNOR ORLANDO A. FUA,

JR.,* IN REPRESENTATION OF THE

PROVINCIAL GOVERNMENT OF
SIQUIJOR and ALL ITS OFFICIALS
AND
EMPLOYEES, Petitioners,
vs.
THE COMMISSION ON AUDIT and
ELIZABETH S. ZOSA, DIRECTOR
IV, LEGAL AND ADJUDICATION
OFFICE-LOCAL COMMISSION OF
AUDIT,
QUEZON
CTY,
PHILIPPINES, Respondents.
DECISION
PERALTA, J.:
This
resolves
the
Petition
for Certiorari, under Rule 64 in
relation to Rule 65 of the Rules of
Court, praying that the Decision1 of

the Commission on Audit (COA)

dated October 19, 2006, denying
petitioner's appeal, be declared null
and void.
The undisputed facts, as gathered
from the records, are as follows.
On November 14, 2003, the
Sangguniang Panlalawigan of the
Province
of
Siquijor
adopted
Resolution No. 2003-247 segregating
the
sum
of P8,600,000.00
as
payment for the grant of extra
Christmas bonus at P20,000.00 each
to all its officials and employees. On
the same date, corresponding

Appropriation Ordinance No. 029 was

passed.
Thereafter, Resolution No. 2003-239
was adopted requesting President
Gloria Macapagal Arroyo for an
authority
to
the
Provincial
Government of Siquijor to grant such
bonus. On even date, petitioner wrote
a letter to the President reiterating
said request. On said letter, the
President then wrote a marginal note
reading, NO OBJECTION.
The provincial government, relying on
the aforementioned resolutions and
the Presidents marginal note, then
proceeded to release the extra

Christmas bonus to its officials and

employees. However, a post-audit
was conducted by Ms. Eufemia C.
Jaugan, Audit Team Leader (ATL),
Province of Siquijor, and thereafter,
she
issued
Audit
Observation
Memorandum (AOM) Nos. 2004-011
and 2004-022, dated June 28, 2004
and October 27, 2004, respectively.
In AOM Nos. 2004-011 and 2004022, Ms. Jaugan questioned the
legality of the payment of said
bonuses, citing Section 4.1 of Budget
Circular No. 2003-7 dated December
5, 2003, limiting the grant of Extra
Christmas Bonus to P5,000.00, and
Section 325 (a) of the Local

Government Code imposing a 55%

limitation on Personal Services
expenditures.
AOM Nos. 2004-011 and 2004-022
were then reviewed by Atty. Roy L.
Ursal, Regional Cluster Director,
Legal and Adjudication Sector,
Commission on Audit Region VII.
Atty. Ursal disallowed the payments
and issued Notices of Disallowance
Nos. 2004-001-100 (2003) L3-05164-00-018-A and 2004-002-100
(2003) L3-05-164-00-019-A, both
dated October 28, 2005 in the total
amount of P6,345,000.00 on the
following grounds:

1. Violation of item 8.0 of Budget

Circular
No.
2002-A
dated
November 28, 2002 on the
prohibition of any increase in
compensation not in accordance
with the Salary Standardization
Law (SSL) and the grant of other
additional incentives, bonuses,
cash gifts and similar benefits
outside of those authorized in said
Circular and Republic Act (R.A.)
No. 6686, without the prior
approval of the President. The
Presidents marginal note of "No
Objection" cannot be considered
an approval.

2. Based on the computation

submitted by the Provincial Budget
Officer for the Province of Siquijor,
Personal Services of the local
government unit has exceeded the
limitation for Budget Year 2003.
Petitioner filed a motion for
reconsideration dated October 28,
2005, but in the 1st Indorsement
dated February 1, 2006, the same
was denied by the Regional Cluster
Director.
From said denial, petitioner appealed
to the Commission on Audit-Legal
and Adjudication Office (COA-LAOLocal), headed by respondent

Director IV, Elizabeth S. Zosa.

Petitioner raised the issues of (1)
whether the Presidents marginal
note of No Objection on the letterrequest of Gov. Orlando B. Fua to
grant extra Christmas bonus to the
provincial governments employees
should be a ground to lift the
disallowance, and (2) whether the
Province, in granting the extra
Christmas bonus, has complied with
the 55% Personal Service limitation
under Section 325 of the Local
Government Code.
On October 19, 2006, the COA-LAOLocal issued a Decision affirming the
Regional Cluster Directors Notice of

Disallowance, the dispositive portion

of which reads thus:
WHEREFORE, premises considered,
the herein appeal is hereby denied
for lack of merit and the disallowance
is affirmed in the total amount
of P6,345,000.00.2
Aggrieved by the foregoing Decision
of the COA-LAO-Local, petitioner
filed the present petition alleging that:
THE COMMISSION ON AUDIT
COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO
LACK
OR
IN
EXCESS
OF
JURISDICTION IN RULING FOR
THE
DISALLOWANCE

OF P6,345,000.00 PURSUANT TO
ADMINISTRATIVE ORDER NO. 88
AND
DISREGARDING
THE
CONSENT OF THE PRESIDENT OF
THE
REPUBLIC
OF
THE
PHILIPPINES TO THE GIVING OF
EXTRA BONUS.3
Respondents, on the other hand,
argued that the petition should not be
given due course because of
petitioners failure to observe the
doctrine
of
exhaustion
of
administrative remedies.4 Moreover,
respondents emphasized that the
marginal note allegedly written by the
President stating No Objection had
never been authenticated and was

effectively
revoked by Budget
Circular
No.
2003-7
and
Administrative Circular No. 88,
limiting extra cash-gift to all
government and local government
personnel to P5,000.00 only.5
Petitioner counters that the present
case should be deemed an exception
to the above-mentioned general rule,
because the issue raised here is a
purely legal one.6
The petition is doomed to fail.
The 1997 Revised Rules of
Procedure of the COA states, thus:

RULE
APPEAL FROM DIRECTOR
COMMISSION PROPER

VI
TO

Section 1. Who May Appeal and

Where to Appeal. The party
aggrieved by a final order or decision
of the Director may appeal to the
Commission Proper.
RULE
JUDICIAL REVIEW

XI

Section 1. Petition for Certiorari.

Any decision, order or resolution of
the Commission may be brought to
the Supreme Court on certiorari by
the aggrieved party within thirty (30)
days from receipt of a copy thereof in

the manner provided by law, the

Rules of Court and these Rules.
Clearly, by immediately filing the
present
petition
for
certiorari,
petitioner failed to exhaust the
administrative remedies available to
him.
The
hornbook
doctrine,
reiterated in Joseph Peter Sison, et
al. v. Rogelio Tablang, etc.,7 is as
follows:
The general rule is that before a party
may seek the intervention of the
court, he should first avail himself of
all the means afforded him by
administrative processes. The issues
which administrative agencies are

authorized to decide should not be

summarily taken from them and
submitted to the court without first
giving such administrative agency the
opportunity to dispose of the same
after due deliberation.
xxxx
x x x The non-observance of the
doctrine results in the petition having
no cause of action, thus, justifying its
dismissal. In
this
case,
the
necessary consequence of the
failure to exhaust administrative
remedies
is
obvious:
the
disallowance as ruled by the LAO-

C has now become final and

executory.8
There is nothing in this case to
convince us that it should be
considered as an exception to the
aforementioned general rule. The
issue presented is not a purely legal
one. The Commission Proper, which
is the tribunal possessing special
knowledge, experience and tools to
determine technical and intricate
matters of fact involved in the
conduct of the audit, would still be the
best body to determine whether the
marginal note of No Objection on
petitioners letter-request to the

President is indeed authentic and

tantamount to the required approval.
In addition, Section 1, Rule 65 of the
Rules of Court, provides that the
remedy of certiorari may only be
availed of if "there is no appeal, nor
any plain, speedy, and adequate
remedy in the ordinary course of law."
In Badillo v. Court of Appeals,9 it was
held that:
x x x "the special civil action
for certiorari is a limited form of
review and is a remedy of last
recourse." It lies only where there is
no appeal or plain, speedy, and

adequate remedy in the ordinary

course of law.10
It was absolutely necessary for
petitioner to allege in the petition, and
adduce evidence to prove, that any
other existing remedy is not speedy
or adequate.11 Thus, since petitioner
could have appealed the Decision of
the Director to the Commission
Proper under the 1997 Revised
Rules of Procedure of the COA, he is
definitely not entitled to a writ of
certiorari, because there was some
other speedy and adequate remedy
available to him.1avvphi1

Petitioner having failed to pursue an

appeal with the Commission Proper,
the Decision issued by the COALAO-Local has become final and
executory. In Pea v. Government
Service Insurance System,[12] the
Court held that:
x x x it is axiomatic that final and
executory judgments can no longer
be attacked by any of the parties or
be modified, directly or indirectly,
even by the highest court of the
land. Just as the losing party has the
right to file an appeal within the
prescribed period, so also the
winning party has the correlative right

to enjoy the finality of the resolution

of the case.13
xxxx
The rule on finality of decisions,
orders or resolutions of a judicial,
quasi-judicial or administrative
body is "not a question of
technicality but of substance and
merit," the underlying consideration
therefore, being the protection of the
substantive rights of the winning
party. Nothing is more settled in
law than that a decision that has
acquired
finality
becomes
immutable and unalterable and
may no longer be modified in any

respect even if the modification is

meant
to
correct
erroneous
conclusions of fact or law and
whether it will be made by the
court that rendered it or by the
highest court of the land.14
Consequently, the Decision of the
COA-LAO-Local can no longer be
altered or modified.
WHEREFORE,
the
petition
is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 177705
September 18, 2009

KIMBERLY-CLARK PHILIPPINES,
INC. Petitioner,
vs.
NORA DIMAYUGA, ROSEMARIE C.
GLORIA, and MARICAR C. DE
GUIA, Respondents.
DECISION
CARPIO MORALES, J.:
Respondents were employees of
Kimberly-Clark
Philippines,
Inc.
(petitioner). Nora Dimayuga (Nora)
was Cost Accounting Supervisor,
Rosemarie Gloria (Rosemarie) was
Business Analyst, and Maricar de
Guia
(Maricar)
was
General
Accounting Manager.

On September 19, 2002, Nora

tendered her resignation effective
October 21, 2002.1
On October 7, 2002, Rosemarie
tendered her resignation, also
effective October 21, 2002.2
As petitioner had been experiencing
a downward trend in its sales, it
created a tax-free early retirement
package for its employees as a costcutting and streamlining measure.
Twenty-four of its employees availed
of the offer that was made available
from November 10-30, 2002.3
Despite their resignation before the
early retirement package was

offered,
Nora
and
Rosemarie
pleaded with petitioner that they be
retroactively extended the benefits
thereunder, to which petitioner
acceded.4 Hence, Nora received a
total
of P1,025,113.73
while
Rosemarie
received
a
total
of P1,006,493.94, in consideration of
which they executed release and
quitclaim deeds dated January 17,
20035 and
January
16,
2003,6 respectively.
On November 4, 2002, Maricar
tendered her resignation effective
December 1, 2002,7 citing career
advancement as the reason therefor.
As at the time of her resignation the

early retirement package was still

effective, she received a total
of P523,540.13 for which she signed
a release and quitclaim.8
On November 28, 2002, petitioner
announced that in lieu of the merit
increase which it did not give that
year, it would provide economic
assistance, to be released the
following day, to all monthly-paid
employees on regular status as of
November 16, 2002.
Still later or on January 16, 2003,
petitioner announced that it would the
grant a lump sum retirement pay in
the amount of P200,000, in addition

to the early retirement package

benefit, to those who signed up for
early retirement and who would sign
up until January 22, 2003.9
On May 23, 2003, respondents filed a
Complaint,10 docketed as NLRC Case
No. RAB-IV 5-17522-03-L, before the
National
Labor
Relations
Commission
(NLRC)
Regional
Arbitration Branch No. IV against
petitioner and its Finance Manager
Fernando B. Gomez (Gomez) whom
respondents
alleged
to
be
"responsible for the withholding of
[their]
additional
retirement
benefits,"11 claiming entitlement to
the P200,000 lump sum retirement

pay.
Respondents
Nora
and
Rosemarie
additionally
claimed
entitlement
to
the
economic
assistance.
By Decision of August 31, 2004,
Labor Arbiter Generoso V. Santos
dismissed the claims of Nora and
Rosemarie, holding that they were
not entitled to the P200,000 lump
sum retirement pay, they having
ceased to be employees of petitioner
at the time it was offered or made
effective on January 16, 2003. He,
however, granted Maricars claim for
the same pay, holding that she was
entitled to it because at the time she
resigned from the company effective

December 1, 2002, such pay was

already offered. Besides, the Labor
Arbiter ruled, Maricar had a vested
right to it as she was given a formal
notice of her entitlement to it by
petitioner,
through
its
Human
Resources Director.
On appeal by both parties,12 the
NLRC, by Decision13 of November
22, 2005, modified the Labor Arbiters
Decision by ordering petitioner to pay
Nora P200,000 additional bonus
and P2,880 economic assistance,
and to pay Rosemarie P200,000
additional
bonus
and P2,656
economic assistance. It affirmed

Maricars entitlement to the lump sum

retirement pay.
Applying the ruling in Businessday
Information Systems and Services,
Inc. v. NLRC (Businessday),14 the
NLRC ratiocinated that petitioners
refusal to give Nora and Rosemarie
the lump sum retirement pay was an
act of discrimination, more so
because a certain Oscar Diokno,
another employee who presumably
resigned also prior to January 16,
2003, was given said benefit.
As to the award of economic
assistance, the NLRC held that Nora
and Rosemarie were also entitled to

it as the same was given in lieu of the

annual performance-based salary
increase that was not given in 2002
and, therefore, already earned by
them when they resigned. Petitioners
Motion for Reconsideration15 having
been denied,16 it filed a Petition for
Certiorari17 before the Court of
Appeals.
By Decision18 of January 19, 2007,
the appellate court affirmed the
NLRC Decision. It held that, contrary
to petitioners assertion that the early
retirement package was extended to
respondents out of generosity, the
offer/grant thereof, as well as their
inclusion in the termination report

submitted to the Department of Labor

and Employment, made them "full
retirees," hence, they must be given
the other benefits extended to
petitioners
other
employees,
following the ruling in Businessday.
The appellate court added that since
respondents resigned from their
respective positions barely a month
before the effectivity of the early
retirement package, the general
principles of fair play and justice
dictate that petitioner extend to them
the same benefits in consideration of
their long years of service.

The appellant court, noting that Nora

and
Rosemarie
received
commendable ratings, upheld their
entitlement
to
the
economic
assistance as their resignation before
the grant of such benefit took effect
did not detract from the fact that it
was in substitution of the traditional
merit increase extended by petitioner
to its employees with commendable
or outstanding ratings which it failed
to give in 2002.
Petitioners
Motion
for
Reconsideration19 having
been
denied,20 it filed the present petition,
insisting that Nora and Rosemarie
are no longer entitled to the

economic assistance and lump sum

pay considering that they were
already retired and have in fact
executed quitclaims and waivers.
And
petitioner
questions
the
application to the present case by the
appellate court of the doctrine laid
down in Businessday.
The petition is impressed with merit.
It is settled that entitlement of
employees to retirement benefits
must specifically be granted under
existing laws, a collective bargaining
agreement or employment contract,
or
an
established
employer
policy.21 No
law
or
collective

bargaining agreement or other

applicable contract, or an established
company policy was existing during
respondents
employment entitling
them to the P200,000 lump-sum
retirement pay. Petitioner was not
thus obliged to grant them such pay.
Respondents nevertheless argue that
since other employees who resigned
before the announcement of the
grant of the lump sum retirement pay
received
the
same,
they
(respondents) should also receive
it,22 citing the pronouncement in
Businessday that:

x x x The law requires an employer

to extend equal treatment to its
employees. It may not, in the guise of
exercising management prerogatives,
grant greater benefits to some and
less
to
others.
Management
prerogatives
are
not
absolute
prerogatives but are subject to legal
limits,
collective
bargaining
agreements, or general principles of
fair play and justice.23 (Underscoring
supplied)
Respondents
Businessday is
factual milieu in
markedly different
present case. That

reliance
on
misplaced. The
Businessday is
from that of the
case involved the

retrenched
employees separation
pay to which they are entitled under
Article 283 of the Labor Code. In the
present case, Nora and Rosemarie
resigned prior to petitioners offer of
the lump sum retirement pay as an
incentive to those employees who
would voluntarily avail of its early
retirement scheme as a cost-cutting
and streamlining measure. That
respondents resigned, and not
retrenched, is clear from their
respective letters to petitioner. And
nowhere in the letters is there any
allegation that they resigned in view
of the companys downward trend in

sales which necessitated downsizing

or streamlining.
The appellate courts finding that
petitioners inclusion of Nora and
Rosemarie in the termination report
submitted to the DOLE and its grant
to them of the early retirement
benefits made them "full retirees" to
thus entitle them to the same benefits
offered to those who would
voluntarily resign after November 16,
2003 does not lie.
Petitioners claim that it allowed Nora
and Rosemarie to avail of the early
retirement package despite their
previous
separation
from
the

company out of pure generosity is

well-taken in light of Noras letter of
September 15, 2002 asking if she
could avail of the early retirement
package as "it would certainly be of
great assistance to us financially." It
is thus absurd to fault petitioner for
acceding to such a request out of
compassion by directing it to pay
additional benefits to resigned
employees who are not entitled
thereto.1avvphi1
Petitioners decision to extend the
benefit to some former employees
who had already resigned before the
offer of the lump sum pay incentive
was thus an act of generosity which it

is not obliged to extend to

respondents. Apropos is this Courts
ruling in Businessday:
With
regard
to
the
private
respondents claim for the mid-year
bonus, it is settled doctrine that
the grant of a bonus is a
prerogative, not an obligation, of the
employer. The matter of giving a
bonus over and above the workers
lawful salaries and allowances is
entirely dependent on the financial
capability of the employer to give it.
The fact that the companys business
was no longer profitable (it was in
fact moribund) plus the fact that the
private respondents did not work up

to the middle of the year (they were

discharged in May 1998) were valid
reasons for not granting them a midyear bonus. Requiring the company
to pay a mid-year bonus to them also
would in effect penalize the company
for its generosity to those workers
who remained with the company "till
the end" of its days.24 (Citations
omitted) (Emphasis and underscoring
supplied)
Neither are Nora and Rosemarie
entitled to the economic assistance
which petitioner awarded to "all
monthly employees who are under
regular status as of November 16,

2002," they having resigned earlier or

on October 21, 2002.
Again, contrary to the appellate
courts ruling that Nora and
Rosemarie already earned the
economic assistance, the same
having been given in lieu of the
performance-based annual salary
increase, the Court finds that the
economic assistance was a bonus
over and above the employees
salaries and allowances. A perusal of
the memorandum regarding the grant
of economic assistance shows that it
was granted in lieu of salary increase
(the grant of which depends on
petitioners financial capability) and

that it was not intended to be a

counterpart
of
the
Collective
Bargaining Agreement grant to
members of the K-CPI union. The
grant of economic assistance to all
monthly employees under regular
status as of November 16, 2002 was
thus
well
within
petitioners
prerogatives.1avvphi1
Moreover, petitioners decision to
give economic assistance was
arrived
at
more
than
a
month after respondents resignation
and, therefore, it was a benefit not
yet existing at the time of their
separation.

In any event, assuming that Nora and

Rosemarie are entitled to the
economic assistance, they had
signed release and quitclaim deeds
upon their resignation25 in which they
waived x x x any or manner of action
or actions, course or courses of
action, suits, debts, dues, sums of
money,
accounts,
reckonings,
promises, damages (whether actual,
moral, nominal, temperate, liquidated
or exemplary), claims and liabilities
whatsoever, in law or equity, arising
out or and in connection with, but not
limited
to
claims
for
salary,
termination pay, vacation leave,
overtime, night work, compensation

for injuries or illness directly caused

by my employment or either
aggravated by or the results of the
nature of my employment and claims
for which I may or shall make, or may
have for or by any reason of any
matter, cause or thing whatsoever,
including but not limited to my
employment and to matters arising
from my employment by KIMBERLYCLARK PHILIPPINES, INC. over any
period or periods in the past.26
While
quitclaims
executed
by
employees are commonly frowned
upon as being contrary to public
policy and are ineffective to bar
claims for the full measure of their

legal rights, where the person making

the waiver has done so voluntarily,
with a full understanding thereof, and
the consideration for the quitclaim is
credible
and
reasonable,
the
transaction must be recognized as
being
a
valid
and
binding
undertaking.27 In the case at bar,
Nora and Rosemarie are Accounting
graduates. They have not alleged
having been compelled to sign the
quitclaims,
nor
that
the
considerations
thereof
(P1,024,113.73
for
Nora
and P682,721.24 for Rosemarie) are
unconscionable.

As for Maricars claim to the lump

sum retirement pay, the Court finds
that, like Nora and Rosemarie, she is
not entitled to it. Although the
incentive was offered when she was
still
connected
with
petitioner,
she resigned from employment, citing
career advancement as the reason
therefor. Indubitably, the incentive
was addressed to those employees
who, without prior plans of resigning,
opted to terminate their employment
in light of the downsizing being
undertaken by petitioner. In other
words,
Maricar
resigned
from
petitioner in order to find gainful
employment elsewhere a reason

which has no bearing on the financial

viability of petitioner.
WHEREFORE,
the
petition
is
GRANTED. The Decision and
Resolution of the Court of Appeals
dated January 19, 2007 and April 30,
2007, respectively, are REVERSED
and SET ASIDE. NLRC Case No.
RAB-IV-17522-03-L is DISMISSED.
SO ORDERED.
G.R. No. 191661
13, 2013

August

CITY GOVERNMENT OF MAKATI,

AS REPRESENTED BY HON.
MAYOR
JEJOMAR
C.
BINAY, PETITIONER,

vs.
EMERITA
ODEA, RESPONDENT.

B.

DECISION
SERENO, CJ.:
This is a Rule 45 Petition for Review
on Certiorari assailing the Resolution
dated 17 March 2010 of the Court
Appeals (CA) docketed as CA-G.R.
SP No. 108983.1 The assailed
Resolution denied the Motion for
Reconsideration filed by petitioner
City of Makati (petitioner) of the CAs
earlier Resolution dated 23 October
20092 that
in
turn
dismissed

petitioners
Review.3

Rule

43

Petition

for

This case involves respondent

Emerita B. Odea (respondent) who
was a teacher previously employed
by petitioner. She was illegally
dismissed and is now seeking full
payment of her backwages and other
benefits as she interprets them to be.
Facts of the Case
Some of the incidents of this case
have been previously resolved by this
Court in Elenita S. Binay, in her
capacity as Mayor of the City of
Makati, Mario Rodriguez and Priscilla
Ferrolino v. Emerita Odea, docketed

as G.R. No. 163683, in a Decision

dated 08 June 2007 (hereinafter, the
2007 Decision).4 This Court ruled
therein that respondent had been
illegally dismissed and was thus
ordered to be reinstated and paid her
backwages, computed from date of
dismissal up to date of reinstatement,
but in no case to exceed five (5)
years.5
2007 Decision
The factual findings in the 2007
Decision
of
this
Court
are
summarized as follows:
Respondent had been employed by
petitioner as a teacher since 1980.

She was a contractual employee up

to 30 July 1992 and a casual
employee from July 1992 until
November 1996. Sometime in 1996,
she held the position of Clerk I and
was
detailed
at
the
Library
Department of the Makati High
School.
It was the practice of respondent to
sign an Attendance Sheet bearing
her name and signature to signify
attendance, instead of using a Daily
Time Record.
In 2000, she was asked to explain
why she supposedly failed to report
for work starting in November 1999.

She explained that she did not incur

those
alleged
absences
and
presented the employees log book
as proof of her attendance. Her
explanation was disregarded by then
education
consultant
Priscilla
Ferrolino.
Thereafter, on 8 June 2000, Mayor
Elenita
S.
Binay
issued
a
Memorandum dropping respondent
from the roll of employees, effective
at the close of office hours of 15 May
2000, in view of the latters absences
without official leave (AWOL) starting
on 10 November 1999. Respondent
moved for reconsideration, but her
motion was denied. Aggrieved, she

appealed to the
Commission (CSC).

Civil

Service

The CSC ruled that the dropping of

respondent
from
the
roll
of
employees was not supported by
evidence.6 It found that she had
actually reported for work from
November 1999 to May 2000; and
that, while she had incurred
absences during that period, those
were not equivalent to a continuous
absence of at least thirty (30) working
days.7 The Attendance Sheet duly
complied with regulations,8 as it
indicated her name and signature, as
well as times of arrival and departure,
and was verified by her immediate

supervisor.9 Furthermore, she could

not have received her corresponding
salary for the said period if she were
indeed absent.
The CSC, by virtue of respondents
illegal dismissal, directed petitioner
to: (1) reinstate her; and (2) to pay
her back salaries from the time of her
separation up to her actual
reinstatement.10
Consequently, petitioner moved for
reconsideration, but the motion was
denied.11 Aggrieved, it filed a Rule 43
Petition appealing the findings of the
CSC to the CA.12

The CA denied the Petition and

affirmed that respondent was illegally
dismissed.13 The CA affirmed the
CSC Resolutions which ordered the
reinstatement of respondent and
payment of back salaries, but subject
to the modification that an illegally
terminated civil service employee,
like respondent, is entitled to back
salaries limited to a maximum period
of five (5) years, and not to full
salaries from her illegal dismissal up
to her reinstatement.14
The dispositive portion of the CA
Decision provides as follows:

WHEREFORE,
the
petition
is
DISMISSED for lack of merit. CSC
Resolution No. 010962 dated May
29, 2001 and CSC Resolution No.
021491 dated November 18, 2002
are affirmed, without prejudice to the
filing
of
whatever
appropriate
disciplinary case against Emerita
Odea,
and
subject
to
the
modification that payment of her back
salaries shall be computed from date
of dismissal up to date of
reinstatement, but in no case to
exceed five (5) years.
SO
ORDERED.
supplied)15

(Emphasis

Thereafter, petitioner filed a Petition

with this Court16 arguing that the CA
committed serious error in ruling that
the respondent had been illegally
dismissed.
In its 2007 Decision, this Court
dismissed the Petition and affirmed
the ruling of the CA in its entirety;
more specifically, that respondent
had indeed been illegally dismissed
and was thus entitled to payment of
backwages to be computed from the
date of dismissal up to the date of
reinstatement, but not exceeding five
(5) years.17

The dispositive portion of the 2007

Decision in no uncertain terms
affirmed the CA Decision without any
modification as follows:
WHEREFORE, the instant petition is
DISMISSED for lack of merit. The
assailed CA Decision dated May 14,
2004 is hereby AFFIRMED. Costs
against petitioners.
SO
supplied)

ORDERED.18 (Emphasis

The Present Case

The 2007 Decision became final. The
following events significant to the
present Petition occurred after the

promulgation of this Courts 2007

Decision:19
The
CSC,
upon
motion
of
respondent,20 directed the incumbent
Mayor of Makati to immediately
reinstate respondent to her former
position and cause the payment of all
her salaries and other benefits from
the date of her removal from service
up to her reinstatement.21
The directive, however, was not
complied
with,22 which
then
compelled the CSC to subsequently
reiterate its previous order to
immediately reinstate respondent.23

The directive to reinstate respondent

was
never
complied
with.
Respondent instead opted to avail
herself of early retirement effective 13
February 2008.
Petitioner thereafter paid her the
amount of P558,944.19, representing
her supposed back salaries and other
benefits.24
In acknowledging receipt of this
amount, she signed in favor of
petitioner a "Release, Quitclaim, and
Waiver" dated 05 May 2008
(Quitclaim).25
The Letter-Complaint

Respondent alleges that after

realizing that she had been
shortchanged by petitioner, she
complained to the CSC, asserting
that the amount paid her did not
correspond to the entire amount she
was legally entitled to.26She claimed
in her Letter-Complaint that the
payment made to her, the amount of
which corresponded to five years of
service, was insufficient to cover her
almost eight years of suffering, viz.:
Ipinaglaban ko itong karapatang ito at
ito ay aking nakamtan sa papel nga
lamang dahil hindi ito lubos na
kapanalunan.
Limang
taong
kabayaran katumbas ng halos

walong (8) taong pagdurusa ko at ng

aking pamilya, ito ba ang tamang
katarungan na iginawad sa akin ng
City Government of Makati? Proseso
po ba ng inyong pamahalaan ang
pagpapapirma ng pilit ng Release
quit claim at waiver (See attached
A&B) na pag hindi ka pumirma hindi
mo makukuha ang iyong kabayaran.
Kinontra ko iyon sa pagdagdag ng
gusto ko (See attached C&C-1)
ngunit walang nangyari. Nagalit sila,
matigas daw ang ulo ko di ko raw
makukuha ang nais ko pag di ako
sumunod. Pananakot para pumirma
lang ako sa waiver (see attached D
&D-1) kasama ba iyon sa Decision

ng Korte Suprema? Batas ba iyon ng

Civil Service Commission?
Takot na mamatay sa gutom ang
pamilya ko kaya naghihimagsik man
ang aking kalooban sa matinding
pagtutol ay napilitan akong pirmahan
iyon-kapalit
ng
tsekeng
nagkakahalaga ng limang daan at
limamput libong piso (P550,000.00)
lamang para sa limang (5) taong
kabayaran. (See attached "E") Ito
ang nangyari noong Mayo 5, 2008 sa
opisina ng legal ng City Hall ng
Makati. Ito po ba ay angkop na
HATOL na inilapat sa akin ng City
Government ng Makati? Alam ko
hindi ulit makatarungan ang ginawa

nilang ito. Hindi makatarungang

pagtanggal sa trabaho ang ginawa
nila sa akin noon naipanalo ko nga
ang aking karapatan ngunit ngayon
hindi pa rin makatarungan ang
kanilang kabayaran. Hindi sapat ang
limang taong (5) kabayaran sa halos
magwawalong (8) taong walang
hanapbuhay, dapat po bang ako ang
umatang ng kakulangan? Nasaan po
ba ang tunay na batas?
xxxx
Dahil hindi na ako nagreinstate
nagfile ako ng retirement letter
effective noong February 13, 2008,
petsa nang matanggap ko ang CSC,

Resolution No. 08-0132. Di po ba isa

sa mga benepisyo ko na dapat
matanggap ay ang GSIS, PAG-IBIG
at yung mga leave credits ko? May
karapatan po ba ako na makuha ko
ang kumpletong leave credits ko
simula nang maglingkod ako sa City
Government of Makati, hanggang sa
petsa ng reinstatement ko, kahit ako
ay nagfile na ng early retirement?
Ayon sa legal ng City Government ng
Makati, wala daw po akong
karapatan sa benepisyong iyon, lalo
na yong pitong taon (7) at labing
isang (11) buwan na di ko pagpasok
simula nang tinanggal nila ako sa
trabaho, kasi accumulation daw po

iyon, di ko naman pinasukan kaya di

ako dapat bayaran, proseso din daw
po iyon ng gobyerno, gaano po
katotoo iyon? Naaangkop po ba iyon
sa aking katayuan, sila naman po
ang dahilan kung bakit di ako
nagtrabaho,
bakit
ako
ang
magdudusa, ayon po ba iyon sa
desisyon ng korte? Bakit inilagay nila
yun sa Release quit claim at waiver
na pinapirmahan nila sa akin bilang
pagsang-ayon kung iyon ay proseso?
Meron bang dapat pangilagan ang
City Government ng Makati kaya nila
ako pinapirma ng Release quit claim
at waiver nang sapilitan?
xxxx

Kaya muli po akong maninikluhod

upang humingi ng tamang hustisya at
mabigyang linaw ang lahat ng
katanungan ko sa kung ano ang
tunay na batas ng Civil Service
Commission. Sana po ay mabigyan
ng makatarungang paglapat ng
hustisya ang hamak na kawani na
katulad ko nang sa ganon ay hindi na
maulit muli, at sana ay mabigyan ng
karampatang lunas ang hinaing kong
ito at maimplemento nang tama ang
CSC Resolution 08-132 sa lalong
madaling
panahon.27 (Emphasis
supplied.)
The CSC took cognizance of
respondents Letter-Complaint and

directed petitioner
comment.28

to

file

her

In her Comment,29 petitioner denied

the allegations of respondent for
being false and baseless. She
argued that the 2007 Decision of this
Court has become final and executor,
and that, under the same, payment of
respondents back salaries shall be
limited to five years only. Moreover,
respondent had not been forced to
sign a Release, Quitclaim and
Waiver, as she executed the same
voluntarily. While respondent claimed
that
the
amount
of P550,000
representing five (5)-year back
salaries is insufficient, respondent

has not submitted the supposed

correct amount that she should
receive. Furthermore, as to her leave
credits, respondent had failed to
submit the necessary documents so
the city government could start
processing the release. Finally, as
regards the GSIS and PAG-IBIG
benefits, petitioner contended that
respondent has to personally apply
for their release from the said
government agencies.
The Ruling of the CSC
The CSC ruled in favor of
respondent, and directed petitioner to
pay her backwages and other

benefits from the period of her illegal

dismissal until her early retirement, or
for a period of seven (7) years, eight
(8) months and twenty-eight (28)
days.30
The CSC, in its Resolution No.
082264,31 stated that the 5-year limit
was inequitable, to wit:
Although it would appear that the
Supreme
Court
in
the
aforementioned case affirmed the
ruling of the Court of Appeals, it is
worth noting, however, that there is
nothing in the High Courts decision,
either in the body or the dispositive
portion, that categorically states that

Odena is entitled to back salaries and

other benefits only for a period not
exceeding five (5) years. As such, it
is apposite to conclude that Odena is
entitled to the payment of her entire
back salaries and other benefits from
the date of her illegal dismissal up to
the date of her retirement, as will be
explained later. This is precisely why
the Commission, in all its Resolutions
promulgated in relation with this
case, was consistent in holding that
Odena must be paid her back
salaries and other benefits from the
days of her illegal dismissal up to her
reinstatement.
xxxx

Admittedly, there are rulings of the

Supreme Court where the claims of
an illegally dismissed employee were
limited only to five (5) years without
conditions and qualifications. Such
rulings, however, were expressly and
explicitly abandoned in subsequent
decisions of the High Court.
xxxx
But even if the Supreme Court had
implicitly intended, in the case of
Binay vs. Odena, 524 SCRA 248
(2007), that Odena is entitled only to
five (5) years of back salaries and
other benefits, such will not bar her
from claiming payment of the same in

full for the entire period she was out

from the service as a result of her
illegal dismissal. To limit the
entitlement of Odena to only five (5)
years of back salaries and other
benefits will indubitably cause serious
injustice to her inasmuch as the
prevailing jurisprudence at the time of
promulgation of the Binay case,
supra, is that an illegally dismissed
employee who is ordered reinstated
by competent authority is entitled to
the payment of his/her illegal
dismissal up to his/her reinstatement.
Thus, even if the Supreme Court
indeed intended to limit to only five
(5) years the back salaries and other

benefits of Odea, and that said

decision had already become final
and executory, the same had to yield
to the higher interest of justice. x x
x.32 (Emphases supplied)
The dispositive portion of CSC
Resolution No. 08226433 provides as
follows:
WHEREFORE, the incumbent City
Mayor of Makati is hereby directed to
recompute the full back salaries and
other benefits of Emerita B. Odena
which she is entitled for seven (7)
years, eight (8) months, and twentyeight (28) days, the entire period she
was out of the service as a result of

her illegal dismissal. Said benefits

shall include the allowances, 13th
month pay, bonuses, cash gifts, all
other monetary benefits which other
employees of the City Government of
Makati received within the same
period, yearly fifteen (15) days sick
and fifteen (15) days vacation leave
benefits for the same period including
commutation of her entire accrued
leave credits that she earned prior to
her illegal dismissal. Should there
appear, upon re-computation of
Odeas back salaries and other
benefit, an excess of the amount
of P558,944.19 which she already

received, said excess

immediately paid her.

must

be

The City Mayor of Makati is directed

to report to the Commission the
action he will take to implement the
Resolution, within 15 days from
receipt hereof. He is likewise
reminded that his failure to implement
the decision of the Commission shall
be reason enough to cite him in
indirect contempt of the Commission
and shall be the basis for the filing of
administrative and criminal charges
against him before the proper
forum.34 (Emphases supplied)

It is clear from the foregoing that the

CSC ignored the 5-year limit imposed
on backwages and instead awarded
respondent backwages and other
benefits equivalent to a period of
more than 7 years, pegged from her
illegal dismissal in 2000 until her
early retirement in 2008.
Petitioner
moved
for
reconsideration,35 but
the
CSC
denied the motion and affirmed CSC
Resolution
No.
082264.36 In
Resolution No. 090622,37 CSC stated
that res judicata invoked by petitioner
must give way to the higher interest
of justice, to wit:

Notably, the issue on the computation

of the back salaries and other
benefits to which Emerita B. Odea is
entitled to raised by the City
Government of Makati in its motion
for reconsideration were already
discussed
and
passed
upon
extensively in the Resolution now
being sought to be reconsidered. By
sheer necessity, however, be it
reiterated and emphasized that the
apparent affirmation by the Supreme
Court of the Decision dated May 14,
2004 of the Court of Appeals must
not be employed as an instrument to
thwart and ultimately defeat the
lawful claim of Odea for the

payment in full of her back salaries

and other benefits after her illegal
dismissal from the service.
Thus, the doctrine of res judicata
being
invoked
by
the
City
Government of Makati must give way
to the higher interest of justice. x x x
(Emphasis supplied)38
The dispositive portion of CSC
Resolution
No.
090622,39 which
dismissed petitioners Motion for
Reconsideration, states as follows:
WHEREFORE, the motion for
reconsideration
of
the
City
Government of Makati is hereby
DENIED
for
lack
of
merit.

Accordingly, the directive of the

Commission
stated
in
CSC
Resolution No. 08-2264 dated
December 8, 2008 is REITERATED
whether the incumbent City Mayor of
Makati is directed to re-compute the
full back salaries and other benefits
which Emerita B. Odea is entitled to
for a period of seven (7) years, eight
(8) months and twenty-eight (28)
days. x x x. (Emphasis supplied)
Thereafter, petitioner filed a Rule 43
Petition with the CA40 and argued
that: (1) the CSC Resolutions were
violative of the doctrine of res
judicata;41 and (2) the CSC erred in
including respondents retirement as

a ground for her entitlement to full

back salaries and other benefits,
more than what was granted by this
Court
in
its
2007
Decision.42 Petitioner contended that
the cause of action of the case is the
entitlement of respondent to back
salaries, and therefore, the issues of
her retirement and entitlement to
other benefits cannot be assailed.43
The Ruling of the CA
The CA dismissed the Rule 43
Petition. The CA regarded the CSC
Resolutions, issued in relation to
respondents Letter-Complaint, as
orders of execution of the final and

executory 2007 Decision of this

Court.44 Thus, petitioners recourse to
a Rule 43 Petition was unavailing,
because orders of execution cannot
be the subject of appeal, the proper
remedy
being
a
Rule
65
petition.45 The CA ruled that:
This notwithstanding, even if such
procedural infirmity is to be
disregarded, the instant Petition for
Review must still be dismissed for
being a wrong mode of remedy.
Section 1(f), Rule 41 of the Revised
Rules of Civil Procedure provides
that:

Section 1. Subject of appeal. An

appeal may be taken from a
judgment or final order that
completely disposes of the case, or
of a particular matter therein when
declared by these Rules to be
appealable.
No appeal may be taken from:
xxx
(f) an order of execution;
xxx
In all the above instances where the
judgment or final order is not
appealable, the aggrieved party may

file an appropriate special civil action

under Rule 65. (Emphasis supplied)
It is thus explicit from the above
provision that no appeal may be
taken from an order of execution.
Instead, such order may be
challenged by the aggrieved party by
way of a special civil action for
certiorari under Rule 65 of the Rules
of Court.
Here, the instant Petition for review
assails the CSCs Resolution No.
082264 dated December 8, 2008 and
Resolution No. 090622 dated April
28, 2009 ordering herein petitioner
City of Government Makati to re-

compute the full back salaries and

benefits of private respondent from
the time of her illegal dismissal up to
her retirement. A cursory reading of
the petition, however, reveals that the
merits of the illegal dismissal case
has already been adjudged with
finality by the Supreme Court in a
Decision dated June 8, 2007. The
assailed Resolutions of the CSC
arose merely as an incident of the
execution when the CSC modified
the judgment award on account of
private
respondents
complaint
wherein she sought to be paid more
than what has been awarded to her
by the Supreme Court.

Such being the case, petitioners

recourse to a Petition for Review is
unavailing. The filing of a special civil
action for certiorari under Rule 65 of
the Rules of Court was the proper
remedy questioning an order of
execution on the ground of grave
abuse of discretion amounting to lack
or excess of jurisdiction. x x
x.46 (Emphasis supplied)
Petitioner moved for reconsideration,
but the CA denied the motion and
affirmed its previous ruling.47
The Present Petition
On 8 April 2010, petitioner filed
before this Court a Motion for

Extension of Time to File Petition for

Review on Certiorari (Motion for
Extension), praying for an additional
period of thirty (30) days or until 9
May 2010 within which to file a
petition for review on certiorari.48 On
27 April 2010, We denied the Motion
for Extension for failing to state
material dates.49 Petitioner received
notice of the denial only on 9 June
2010, or one and a half months after
its promulgation.50
In the meantime, on 7 May 2010,
petitioner
filed
the
instant
Petition.51 Thereafter,
this
Court
required respondent to file a
comment,52 notwithstanding
the

previous denial of petitioners Motion

for Extension.
In
her
Comment,53 respondent
argued: (1) the CA did not err in
considering the CSC Resolutions as
execution orders; (2) petitioner failed
to properly serve its pleadings upon
respondent; (3) respondent is entitled
to the moneys awarded her by the
CSC; and (4) the Petition was filed
out of time, since petitioners Motion
for Extension had been denied by
this Court.
In response, petitioner countered as
follows:54 (1) no motion for execution
was ever filed before the CSC, since

petitioner had already complied with

this Courts 2007 Decision by paying
respondent; (2) petitioner had been
serving its pleadings at respondents
last address on record; (3) the issue
of respondents benefits had already
been settled with finality; and (4)
petitioner was notified of this Courts
denial of its Motion for Extension only
on 9 June 2010, many days after the
present Petition had been filed and
after this Court had constructively
admitted the present Petition by
requiring respondent to file her
Comment.
Issues

Based on the submissions of both

parties, the following main issues are
presented for resolution by this Court:
1. Whether petitioner undertook an
improper remedy when it filed a
Rule 43 Petition with the CA to
question the Resolutions issued
by the CSC; and
2. Whether respondent, after
receiving payment from petitioner,
is still entitled to the additional
amount awarded by the CSC.
Respondent raises the following
preliminary procedural matters:
First, she argues that the present
Petition was filed out of time, since

petitioners Motion for Extension had

been denied, thereby causing the
lapse of the original period for filing
the Petition.
We dispose of this argument
forthwith. While it is true that the
Petition was belatedly filed, it may
still be admitted and allowed by this
Court in the exercise of its
discretion,55 as in fact it effectively did
when it required respondent to file
her Comment.
Second, respondent argued that
petitioner improperly sent its Petition
to the wrong address. On the other
hand, the latter insisted that it served

its Petition at her last address on

record. We note that respondent was
able to secure a copy of the Petition
and intelligently respond thereto.
Thus, we adopt the principle that
rules of procedure are employed only
to help secure and not override
substantial justice.56 If a stringent
application of the rules would hinder
rather than serve the demands of
substantial justice, the former must
yield to the latter.57
The Courts Ruling
We find the instant
impressed with merit.

Petition

I. Petitioner undertook the correct

remedy in assailing the CSC
Resolutions by filing a Rule 43
Petition with the Court of Appeals.
Petitioner insists that its filing of a
Rule 43 Petition to assail the CSC
Resolutions was proper, as these
supposedly involved a new subject
matter and were thus issued
pursuant to CSCs exercise of its
quasi-judicial function. They were not
merely incidental to the execution of
this Courts 2007 Decision.
We rule that filing a Rule 43 Petition
with the CA is the proper remedy to
assail the CSC Resolutions, but not

for the reasons

petitioner.

advanced

by

First, the jurisdiction of the CA over

petitions for review under Rule 43 is
not limited to judgments and final
orders of the CSC, but can extend to
appeals from awards, judgments,
final orders or resolutions issued by
the latter.58Section 1, Rule 43 of the
Rules, provides in part:
Section 1. Scope. This Rule shall
apply to appeals from judgments or
final orders of the Court of Tax
Appeals
and
from
awards,
judgments, final orders or resolutions
of or authorized by any quasi-judicial

agency in the exercise of its quasijudicial functions. Among these

agencies are the Civil Service
Commission x x x. (Emphasis
supplied.)
In PAGCOR v. Aumentado, Jr.,59 this
Court ruled that it is clear from the
above-quoted provision that the CAs
jurisdiction covers not merely final
judgments and final orders of the
CSC, but also awards, judgments,
final orders or resolutions of the
CSC.60
Second, although the general rule is
that an order of execution is not
appealable, the CA failed to consider

that there are exceptions to this rule,

as illustrated in this case.
A writ of execution is a direct
command of the court to the sheriff to
carry out the mandate of the writ,
which is normally the enforcement of
a judgment.61 By analogy, the CSC
Resolutions were orders of execution
and were issued in connection with
the implementation of this Courts
2007 Decision.
It is obvious from both the body and
the dispositive portions of the CSC
Resolutions
that
they
carried
instructions to enforce this Courts

2007 Decision, albeit erroneously

made.
The dispositive portion of CSC
Resolution No. 082264,62 directed
petitioner to pay respondents
backwages:
WHEREFORE, the incumbent City
Mayor of Makati is hereby directed to
recompute the full back salaries and
other benefits of Emerita B. Odea
which she is entitled for seven (7)
years, eight (8) months, and twentyeight (28) days, the entire period she
was out of the service as a result of
her illegal dismissal. Said benefits
shall include the allowances, 13th

month pay, bonuses, cash gifts, all

other monetary benefits which other
employees of the City Government of
Makati received within the same
period, yearly fifteen (15) days sick
and fifteen (15) days vacation leave
benefits for the same period including
commutation of her entire accrued
leave credits that she earned prior to
her illegal dismissal. Should there
appear, upon re-computation of
Odeas back salaries and other
benefit, an excess of the amount
of P558,944.19 which she already
received, said excess must be
immediately paid her.

The City Mayor of Makati is directed

to report to the Commission the
action he will take to implement the
Resolution, within 15 days from
receipt hereof. He is likewise
reminded that his failure to implement
the decision of the Commission shall
be reason enough to cite him in
indirect contempt of the Commission
and shall be the basis for the filing of
administrative and criminal charges
against him before the proper
forum.63 (Emphasis supplied)
The directive addressed to petitioner
to recompute the amount of full back
salaries and other benefits is derived

from the enforcement of this Courts

2007 Decision.
In a similar vein, the dispositive
portion of CSC Resolution No.
090622,64 which
dismissed
petitioners
Motion
for
Reconsideration
of
the
above
Resolution, states as follows:
WHEREFORE, the motion for
reconsideration
of
the
City
Government of Makati is hereby
DENIED
for
lack
of
merit.
Accordingly, the directive of the
Commission
stated
in
CSC
Resolution No. 08-2264 dated
December 8, 2008 is REITERATED

where the incumbent City Mayor of

Makati is directed to re-compute the
full back salaries and other benefits
of which Emerita B. Odena is entitled
to for a period of seven (7) years,
eight (8) months, and twenty-eight
(28) days. x x x.
Based on the foregoing, the CA was
correct
in
treating
the
CSC
Resolutions as orders of execution
that were issued in connection with
the implementation of this Courts
2007 Decision. The CA, however
erred in dismissing petitioners Rule
43 Petition for being improper.

To recall, the CA ruled that an order

of execution is not appealable under
Section 1(f), Rule 41of the Rules of
Court.65 It reasoned that the correct
remedy should have been a special
civil action for certiorari under Rule
65.66
Section 1(f), Rule 41provides, in
pertinent part:
SECTION 1. Subject of Appeal. An
appeal may be taken from a
judgment or final order that
completely disposes of the case, or
of a particular matter therein when
declared by these Rules to be
appealable.

No appeal may be taken from:

xxxx
f) An order of execution;
xxxx
In all the above instances where the
judgment or final order is not
appealable, the aggrieved party may
file an appropriate special civil action
under Rule 65. (Emphasis supplied)
Indeed, the general rule is that an
order of execution is not appealable;
otherwise, a case would never
end.67 The CA, however, failed to
consider that there are exceptions to
this rule. This Court in Banaga v.

Majaducon68enumerated
exceptions as follows:

the

Even prior to the promulgation of the

1997 Rules of Civil Procedure, the
rule that no appeal lies from an order
or writ directing the execution of a
final judgment, for otherwise a case
will not attain finality, is not absolute
since a party aggrieved by an
improper or irregular execution of a
judgment is not without a remedy.
Thus, in Limpin v. Intermediate
Appellate
Court,
the
Court
enumerated
the
exceptional
circumstances where a party may
elevate the matter of an improper
execution for appeal, to wit:

There may, to be sure, be instances

when an error may be committed in
the course of execution proceedings
prejudicial to the rights of a party.
These instances, rare though they
may be, do call for correction by a
superior court, as where
1) the writ of execution varies the
judgment;
2) there has been a change in the
situation of the parties making
execution inequitable or unjust;
xxxx
6) it appears that the writ of
execution has been improvidently
issued, or that it is defective in

substance, or is issued against the

wrong party, or that the judgment
debt has been paid or otherwise
satisfied, or the writ was issued
without authority;
In these exceptional circumstances,
considerations of justice and equity
dictate that there be some mode
available to the party aggrieved of
elevating the question to a higher
court. That mode of elevation may be
either by appeal (writ of error or
certiorari), or by a special civil action
of
certiorari,
prohibition,
or
mandamus.

The aforementioned pronouncement

has been reiterated in cases
subsequent to t he adoption of the
1997 Rules of Civil Procedure. The
Court finds no sound justification to
abandon
the
aforequoted
pronouncement
insofar
as
it
recognizes the filing of an ordinary
appeal as a proper remedy to assail
a writ or order issued in connection
with the execution of a final
judgment, where a factual review in
the manner of execution is called for
to determine whether the challenged
writ or order has indeed varied the
tenor
of
the
final
judgment.69 (Emphases supplied)

To rule that a special civil action for

certiorari constitutes the sole and
exclusive remedy to assail a writ or
order of execution would unduly
restrict the remedy available to a
party prejudiced by an improper or
illegal execution.70 It must be borne in
mind that the issue in a special civil
action for certiorari is whether the
lower court acted without or in excess
of jurisdiction or with grave abuse of
discretion.71
In the instant case, the appeal of the
CSC Resolutions under Rule 43 is
proper on two (2) points: (1) they
varied the 2007 Decision and (2) the

judgment debt has been paid or

otherwise satisfied.
First, the CSC Resolutions have
varied the 2007 Decision, considering
that instead of directing the payment
of backwages for a period not
exceeding five (5) years, the CSC
ordered petitioner to pay an amount
equivalent to almost eight (8) years.
Second, the judgment debt arising
from the 2007 Decision has been
satisfied as respondent has already
received payment from petitioner the
amount of P558,944.19, representing
her back salaries not exceeding five
(5) years, as computed by petitioner.

All these circumstances require a

factual review of the manner of the
execution of the 2007 Decision,
which should have prompted the CA
to take cognizance of the appeal.
Clearly, these circumstances fall
under the above-quoted enumeration
of the exceptions to the general rule
that an order of execution is not
subject to appeal. Thus, the CA
committed grave error when it denied
petitioners appeal for being the
wrong remedy.
At this juncture, however, a remand
of the case to the CA would serve no
useful purpose, since the core issue
hereinmore specifically, whether

respondent is entitled to the money

awarded to her by the CSCmay
already be resolved using the records
of the proceedings. A remand would
unnecessarily burden the parties with
the concomitant difficulties and
expenses of another proceeding, in
which they would have to present
similar arguments and pieces of
evidence.
Thus, we deem it proper to resolve
the issue of whether respondent is
entitled to the amount awarded to her
by the CSC. We rule in the negative.
II. Respondent is not entitled to the
amount awarded to her by the CSC.

We reverse the ruling of the CSC

granting
respondent
additional
amounts pertaining to her back
wages equivalent to seven (7) years,
eight (8) months and twenty-eight
(28) days, or for the entire period that
she was not reinstated; more
specifically, from the time of her
illegal dismissal on 15 May 2000 until
her early retirement on 13 February
2008, contrary to our 2007 Decision,
which limited the said award only to
five (5) years. We reverse based on
the following reasons:
1. The Letter-Complaint is a
belated attempt to seek the
reversal of the 2007 Decision,

which should not have been

considered by the CSC in the first
place. Thus, the CSC Resolutions
awarding
additional
amounts
arising therefrom are void and
ineffectual.
2. The CSC Resolutions are void
and ineffectual for varying the
tenor of our 2007 Decision.
3. Petitioner had already complied
with this Courts 2007 Decision,
and its obligation under the 2007
Decision was extinguished, when
it paid respondent the amount
of P558,944.19 representing her
backwages, from the time of illegal

dismissal up to reinstatement (in

this case, early retirement) for a
period not exceeding five (5)
years. The amounts awarded by
the CSC exceeding this payment
is not justified under this Courts
2007 Decision.
To recall, the 2007 Decision, in
relation to the CA Decision dated 14
May 2004, directed petitioner to do
two
things:
(1)
to
reinstate
respondent
to
her
former
position;72 and (2) to pay her back
wages to be computed from the time
of her illegal dismissal until her
reinstatement to her former position,
but not to exceed five (5) years.

The reinstatement portion was

rendered moot by respondents early
retirement effective on 13 February
2008.
To comply with the second directive,
the
amount
of P558,944.19
representing the amount of back
wages for a period not exceeding five
(5) years, as computed by petitioner,
was paid to respondent.
We rule, however, that the Quitclaim
executed by respondent is void and
of no effect and cannot validly
foreclose her right to receive
amounts pertaining to her early
retirement.

A. The Letter-Complaint is a belated

attempt to seek the reversal of this
Courts 2007 Decision, which should
not have been considered by the
CSC.
The CSC grievously erred in taking
cognizance of respondents LetterComplaint which was actually a
prohibited appeal of the 2007
Decision that by then had long
become final and executory.
It is axiomatic that final and executory
judgments can no longer be attacked
by any of the parties or be modified,
directly or indirectly, even by the
highest court of the land.73

In the instant case, respondents

Letter-Complaint, which is clearly
geared towards the reversal of this
Courts 2007 Decision, states as
follows:
Ipinaglaban ko itong karapatang ito at
ito ay aking nakamtan sa papel nga
lamang dahil hindi ito lubos na
kapanalunan.
Limang
taong
kabayaran katumbas ng halos
walong (8) taong pagdurusa ko at ng
aking pamilya, ito ba ang tamang
katarungan na iginawad sa akin ng
City Government of Makati? Proseso
po ba ng inyong pamahalaan ang
pagpapapirma ng pilit ng Release
quit claim at waiver (See attached

A&B) na pag hindi ka pumirma hindi

mo makukuha ang iyong kabayaran.
Kinontra ko iyon sa pagdagdag ng
gusto ko (See attached C&C-1)
ngunit walang nangyari. Nagalit sila,
matigas daw ang ulo ko di ko raw
makukuha ang nais ko pag di ako
sumunod. Pananakot para pumirma
lang ako sa waiver (see attached D
&D-1) kasama ba iyon sa Decision
ng Korte Suprema? Batas ba iyon ng
Civil Service Commission?
Takot na mamatay sa gutom ang
pamilya ko kaya naghihimagsik man
ang aking kalooban sa matinding
pagtutol ay napilitan akong pirmahan
iyonkapalit
ng
tsekeng

nagkakahalaga ng limang daan at

limamput libong piso (P550,000.00)
lamang para sa limang (5) taong
kabayaran. (See attached "E") Ito
ang nangyari noong Mayo 5, 2008 sa
opisina ng legal ng City Hall ng
Makati. Ito po ba ay angkop na
HATOL na inilapat sa akin ng City
Government ng Makati? Alam ko
hindi ulit makatarungan ang ginawa
nilang ito. Hindi makatarungang
pagtanggal sa trabaho ang ginawa
nila sa akin noon naipanalo ko nga
ang aking karapatan ngunit ngayon
hindi pa rin makatarungan ang
kanilang kabayaran. Hindi sapat ang
limang taong (5) kabayaran sa halos

magwawalong (8) taong walang

hanapbuhay, dapat po bang ako ang
umatang ng kakulangan? Nasaan po
ba ang tunay na batas?
xxxx
Kaya muli po akong maninikluhod
upang humingi ng tamang hustisya at
mabigyang linaw ang lahat ng
katanungan ko sa kung ano ang
tunay na batas ng Civil Service
Commission. Sana po ay mabigyan
ng makatarungang paglapat ng
hustisya ang hamak na kawani na
katulad ko nang sa ganon ay hindi na
maulit muli, at sana ay mabigyan ng
karampatang lunas ang hinaing kong

ito at maimplemento nang tama ang

CSC Resolution 08-132 sa lalong
madaling
panahon.74 (Emphasis
supplied.)
It can be gleaned from the abovequoted portion of the LetterComplaint that respondent was
assailing the award of back wages for
a period not exceeding five (5) years
as decreed by this Court in the 2007
Decision. In the said LetterComplaint, respondent expresses her
dismay at the seemingly insufficient
award of back wages, which were
limited to five (5) years vis--vis the
period of almost eight (8) years that
she was out of work. The CSC should

have realized that it did not have any

authority to entertain any attempt to
seek the reversal of the 2007
Decision.
Indeed, while being well-aware that
the 2007 Decision had long become
final and executory, and that any
such appeal by respondent would be
futile and useless, it still erringly took
cognizance of the appeal and worse,
modified the 2007 Decision, instead
of dismissing the Letter-Complaint
outright.
As the final arbiter of all legal
questions properly brought before it,
our decision in any given case

constitutes the law of that particular

case, from which there is no
appeal.75 The 2007 Decision bars a
further repeated consideration of the
very same issues that have already
been settled with finality; more
particularly, the illegal dismissal of
respondent, as well as the amount of
back wages that she was entitled to
receive by reason thereof.
To once again reopen that issue
through a different avenue would
defeat the existence of our courts as
final arbiters of legal controversies.
Having attained finality, the decision
is beyond review or modification even
by this Court.76 Every litigation must

come to an end once a judgment

becomes
final,
executory
and
unappealable.77Just as a losing party
has the right to file an appeal within
the prescribed period, the winning
party also has the correlative right to
enjoy the finality of the resolution of
the latters case by the execution and
satisfaction of the judgment, which is
the "life of the law."78
Thus, the CSC gravely erred in taking
cognizance of respondents appeal of
this Courts 2007 Decision in the
guise of a Letter-Complaint. Any
proceedings and resolutions arising
therefrom should be rendered
nugatory.

B. The CSC Resolutions are void and

ineffectual for varying the tenor of the
2007 Decision.
We likewise rule that the CSC
Resolutions are void and ineffectual
for varying the tenor of our 2007
Decision. These Resolutions directed
petitioner to pay respondents back
salaries for the entire period of seven
(7) years, eight (8) months and
twenty-eight (28) days or for the
entire period that she had not been
reinstated; more specifically, from the
time of her illegal dismissal on 15
May 2000 until her early retirement
on 13 February 2008, contrary to our

2007 Decision limiting the said award

only to five (5) years.
It is a fundamental rule that when a
final judgment becomes executory, it
thereby becomes immutable and
unalterable.79 It may no longer be
modified in any respect, even if the
modification is meant to correct what
is perceived to be an erroneous
conclusion of fact or law, and
regardless
of
whether
the
modification is attempted to be made
by the court rendering it or by this
Court.80 The
only
recognized
exception is the correction of clerical
errors; or the making of so-called
nunc pro tunc entries which cause no

prejudice to any party or when the

judgment is void.81 Any amendment
or alteration that substantially affects
a final and executory judgment is null
and void for lack of jurisdiction,
including the entire proceedings held
for that purpose.82
In the instant case, when the CSC
directed petitioner to pay respondent
an amount pertaining to her
backwages for a period of almost
eight (8) years, it erroneously
modified the 2007 Decision of this
Court. The CSCs directive cannot be
considered as mere correction of a
clerical error either, since it
substantially altered the amount of

benefits respondent was entitled to

as decreed by this Court.
To recall, an examination of the CA
Decision dated 14 May 200483 would
reveal that it clearly imposed a fiveyear limit on the amount of back
wages that respondent is entitled to
receive upon her illegal dismissal.
The appellate court ruled in this wise:
However, as regards the CSCs order
to pay Emerita Odeas "salaries
from the time of her separation up to
her actual reinstatement," the Court
deems it appropriate to modify the
same. It is settled that an illegally
terminated civil service employee is

entitled to back salaries limited only

to a maximum period of five years,
not full back salaries from her illegal
dismissal up to her reinstatement
(Marohombsar vs. Court of Appeals,
326 SCRA 62 [2000]). Hence,
considering that Emerita Odea was
dropped from the rolls effective at the
close of office hours of May 15, 2000,
her back salaries shall be computed
from May 16, 2000 up to date of
reinstatement, but not to exceed five
(5) years.84 (Emphases supplied)
The five-year limit was also reflected
in the dispositive portion of the CA
Decision as follows:

WHEREFORE,
the
petition
is
DISMISSED for lack of merit. CSC
Resolution No. 010962 dated May
29, 200185and CSC Resolution No.
021491
dated
November
18,
200286 are affirmed, without prejudice
to the filing of whatever appropriate
disciplinary case against Emerita
Odea,
and
subject
to
the
modification that payment of her back
salaries shall be computed from date
of dismissal up to date of
reinstatement, but in no case to
exceed five (5) years.
SO
ORDERED.
supplied)87

(Emphasis

The discussion in the 2007 Decision

did not mention any qualification
pertaining to the five-year limit set by
the CA on the amount of back wages
to be received by respondent.
Likewise, the dispositive portion of
the 2007 Decision simply provides as
follows:
WHEREFORE, the instant petition is
DISMISSED for lack of merit. The
assailed CA Decision dated May 14,
2004 is hereby AFFIRMED. Costs
against petitioners.
SO ORDERED. (Emphasis supplied)
Thus,
our
unequivocally

2007
affirmed

Decision
the CA

Decision
dated
14
May
200488 without modification. Since
there is no qualification stated in
either the body or the dispositive
portion, the ordinary and literal
meaning of the word "affirm" should
prevail, that is, that the CA Decision
had been affirmed in its entirety;
including the five-year limit imposed
by the appellate court.89 This Court in
Jose
Clavano,
Inc.
v.
HLURB90 reiterated previous rulings
wherein We nullified orders that
veered away from the dispositive
portion of final judgments:
Clearly, there is nothing in the body
much less in the dispositive portion of

the HLURB Decision nor in the

pleadings of the parties from where
we may deduce that petitioner must
pay for the amounts spent in
transferring
title
to
private
respondents. It is well-settled that
under these circumstances no
process may be issued to enforce the
asserted legal obligation. In De la
Cruz Vda. de Nabong v. Sadang we
nullified an order requiring an
indemnity bond since the requirement
was not contained in the dispositive
part of the final judgment. Similarly in
Supercars, Inc. v. Minister of Labor
we set aside the award of backwages
for the period that the writ of

execution was unserved since the

final and executory decision of the
Minister of Labor merely directed the
reinstatement of the laborers to their
former positions. Finally, David v.
Court of Appeals affirmed the ruling
of the Court of Appeals mandating
the payment of simple legal interest
only with nothing said about
compounded interest since the
judgment sought to be executed
therein ordered the payment of
simple legal interest only and held
nothing
about
payment
of
compounded interest. This Court can
do no less than follow these
precedents in the instant petition.

xxxx
Verily, since the Orders in question
are a wide departure from and a
material amplification of the final and
at least executory HLURB Decision,
they are pro tanto void and absolutely
unenforceable for any purpose. It is
well settled that after the decision has
become final and executory, it can no
longer be amended or corrected by
the court except for clerical errors or
mistakes. In Robles v. Timario we
nullified and set aside the imposition
of interest in a subsequent order of
the lower court on the ground that the
dispositive part of the judgment
"absolutely made no mention of any

interest on the amount of the

judgment, hence there is no
ambiguity to be clarified from the
statements made in the body of the
decision x x x" We shall do the same
in the instant case. (Emphasis
supplied)
We have often ruled that when the
dispositive portion of a judgment is
clear and unequivocal, it must be
executed strictly according to its
tenor.91 A definitive judgment is no
longer subject to change, revision,
amendment or reversal. Upon finality
of the judgment, the Court loses its
jurisdiction to amend, modify or alter
it.92 The 2007 Decision had been

clear and unambiguous to both

parties; otherwise, the parties would
have filed a motion for its clarification,
but neither party did in this case.
Thus, the CSCs act of increasing the
amount of benefits awarded to
respondent was improper. It did not
have any authority to modify, let
alone increase the said award which
has already been adjudged with
finality.
The CSC has no authority to vary or
modify such final and executory
judgment. It is merely obliged with
becoming modesty to enforce that
judgment and has no jurisdiction

either to modify in any way or to

reverse the same.93
C. Petitioner already complied with
this Courts 2007 Decision, and its
obligation was extinguished, when it
paid
respondent
the
amount
of P558,944.19 representing her
backwages for a period not
exceeding five (5) years, as
computed by petitioner.
Petitioner insists that it has complied
with this Courts 2007 Decision upon
its
payment
of
the
amount
ofP558,944.19 to respondent. We
agree.

The rule is fundamental, that after a

judgment has been fully satisfied, the
case is deemed terminated once and
for all. It cannot be modified or
altered.94 The CSC gravely erred in
modifying a judgment which had in
fact already been satisfied even
before respondent filed her LetterComplaint.
As previously stated, the 2007
Decision, in relation to the CA
Decision dated 14 May 2004,
directed petitioner to do two things:
(1) to reinstate respondent to her
former position;95 and (2) to pay her
back wages to be computed from the
time of her illegal dismissal until her

reinstatement to her former position,

but not to exceed five (5) years. We
rule that these directives have
already been complied with prior to
the filing of the Letter-Complaint.
Moreover,
respondents
reinstatement was rendered moot by
the fact of her early retirement. Thus,
petitioner could no longer carry out
the same.
As earlier discussed, it is undisputed
that the respondent received from the
petitioner the amount of P558,944.19
as
backwages.
Thus,
upon
satisfaction of the judgment, any
subsequent
modification
thereof

ordered by the CSC was rendered

useless and futile.
D. The quitclaim executed by
respondent is void and of no effect in
terms of foreclosing her rights to
receive additional amounts pertaining
to her retirement benefits.
We are aware that respondent has
already retired. We emphasize that
this Decision, as well as our 2007
Decision, pertain mainly to her
entitlement to back wages due to her
illegal dismissal. We were made
aware, however, of a quitclaim that
she executed in favor of petitioner,
signed after receiving payment of her

back wages, and which seemingly

included a waiver of her rights to her
retirement benefits. We deem it
necessary, therefore, to discuss the
implications of that quitclaim, with
regard not only to the payment of
back wages, but also as to her
retirement benefits.
Petitioner argues that the waiver
executed by respondent forecloses
any right to receive additional
amounts pertaining to her benefits.
We cannot sustain petitioners
argument. The waiver made by
respondent cannot repudiate her
entitlement to her retirement benefits

after having served petitioner for

almost twenty-eight years (28) or
beginning 1980.
In our jurisprudence, quitclaims,
waivers or releases are looked upon
with disfavor.96 In Interorient Maritime
Enterprises, Inc. v. Remo,97 this Court
elucidated
on
the
following
requirements for a waiver of rights to
be valid:
To be valid, a Deed of Release,
Waiver and/or Quitclaim must meet
the following requirements: (1) that
there was no fraud or deceit on the
part of any of the parties; (2) that the
consideration for the quitclaim is

credible and reasonable; and (3) that

the contract is not contrary to law,
public order, public policy, morals or
good customs, or prejudicial to a third
person with a right recognized by law.
Courts have stepped in to invalidate
questionable transactions, especially
where there is clear proof that a
waiver, for instance, was obtained
from an unsuspecting or a gullible
person, or where the agreement or
settlement was unconscionable on its
face. A quitclaim is ineffective in
barring recovery of the full measure
of a worker's rights, and the
acceptance of benefits therefrom
does not amount to estoppel.

Moreover, a quitclaim in which the

consideration is scandalously low
and inequitable cannot be an
obstacle to the pursuit of a worker's
legitimate claim.
A reading of the wording of the
Release,
Waiver
and
Quitclaim98 executed by respondent
reveals that the waiver also included
her retirement benefits as follows:
1. In accordance with the Decision
of the Supreme Court dated June
08, 2007 in SC G.R. 163683, I
hereby agree to accept payment in
the amount of FIVE HUNDRED
FIFTY EIGHT THOUSAND NINE

HUNDRED FORTY FOUR AND

19/100 (Php 558,944.19) which is
full and total payment pursuant to
the said Decision;
2. It is understood and agreed that
with the payment to me of the
specified amount, receipt of which
is hereby acknowledged, I hereby
release and forever discharge the
City Government of Makati of all
its obligations and liabilities
pursuant to the said Decision and
in relation to my previous
employment
to
the
City
Government of Makati;

3. It is also understood and agreed

that the amount paid to me is in
full settlement of my benefits,
except for the terminal leave
earned during the period that I
rendered actual service to the City
Government of Makati as maybe
allowed under the law, and I
hereby waive any further action,
causes of actions, demands,
damages,
or
any
claim
whatsoever against the City
Government of Makati and its
officials;
4. Further, I hereby state that I
have
carefully
read
and
understood the foregoing release,

waiver and quitclaim and have

signed the same freely and
voluntarily. (Emphases supplied)
We find that respondents waiver is
void and contrary to public policy,
insofar as it included therein her
entitlement to retirement benefits.
The waiver states that petitioner was
being discharged from its obligations
pertaining not only to the 2007
Decision, but also from those
obligations in relation to respondents
previous employment with petitioner.
Those obligations in relation to her
previous employment erroneously
include within its scope her

retirement benefits. This waiver,

therefore, cannot be countenanced,
insofar as it included her retirement
benefits.1wphi1
We rule that the said waiver is void in
two respects, more particularly the
following: (1) there was fraud or
deceit on the part of petitioner; and
(2) the consideration for the quitclaim
was unreasonable.
Obviously, the waiver was merely
inveigled from respondent, who had
been anxiously waiting to receive
payment of her back wages as
decreed by this Court. Petitioner
basically cornered respondent into

signing the same by making its

execution a pre-condition before she
could receive her back wages.
Similarly, the consideration for the
quitclaim is unreasonably low, if we
consider that she was supposed to
receive her retirement benefits as
well, computed from the time she
started serving petitioner since way
back in 1980. The quitclaim basically
meant that the P558,944.19 she
received from petitioner as payment
of back wages was likewise in
fulfillment of her retirement benefits
as well. Needless to state, the
quitclaim, in effect, unduly limited the
amount of retirement pay that she

was supposed to receive from

petitioner. The waiver is, therefore,
without effect insofar as it foreclosed
her entitlement to her retirement
benefits. It should not prevent her
from receiving her retirement benefits
for her employment.
WHEREFORE, the instant Petition
for Review filed by City of Makati is
hereby GRANTED. The Resolutions
dated 23 October 2009 and 17 March
2010 of the Court of Appeals in CAG.R.
SP
No.
108983
are
REVERSED. The Release, Waiver
and Quitclaim signed by respondent,
however, is without force and effect,
and should not foreclose her

entitlement to retirement benefits.

The City of Makati is hereby likewise
directed to immediately pay the
same.
SO ORDERED.
G.R. No. 168654
2009

March 25,

ZAYBER
JOHN
B.
PROTACIO, Petitioner,
vs.
LAYA MANANGHAYA & CO. and/or
MARIO
T.
MANANGHAYA, Respondents.
DECISION
TINGA, J.:

Before the Court is a petition for

review on certiorari1 under Rule 45 of
the 1997 Rules of Civil Procedure,
assailing
the
decision2 and
resolution3 of the Court of Appeals in
CA-G.R. SP No. 85038. The Court of
Appeals decision reduced the
monetary award granted to petitioner
by the National Labor Relations
Commission (NLRC) while the
resolution denied petitioners motion
for reconsideration for lack of merit.
The following factual antecedents are
matters of record.
Respondent
KPMG
Laya
Mananghaya & Co. (respondent firm)

is a general professional partnership

duly organized under the laws of the
Philippines. Respondent firm hired
petitioner Zayber John B. Protacio as
Tax Manager on 01 April 1996. He
was subsequently promoted to the
position of Senior Tax Manager. On
01 October 1997, petitioner was
again promoted to the position of Tax
Principal.4
However, on 30 August 1999,
petitioner tendered his resignation
effective 30 September 1999. Then,
on 01 December 1999, petitioner
sent a letter to respondent firm
demanding the immediate payment
of his 13th month pay, the cash

commutation of his leave credits and

the issuance of his 1999 Certificate of
Income
Tax
Withheld
on
Compensation. Petitioner sent to
respondent firm two more demand
letters for the payment of his
reimbursement claims under pain of
the legal action.5
Respondent firm failed to act upon
the demand letters. Thus, on 15
December 1999, petitioner filed
before the NLRC a complaint for the
non-issuance of petitioners W-2 tax
form for 1999 and the non-payment
of the following benefits: (1) cash
equivalent of petitioners leave credits
in the amount of P55,467.60; (2)

proportionate 13th month pay for the

year 1999; (3) reimbursement claims
in the amount of P19,012.00; and (4)
lump sum pay for the fiscal year 1999
in the amount of P674,756.70.
Petitioner also sought moral and
exemplary damages and attorneys
fees.
Respondent
Mario
T.
Managhaya was also impleaded in
his official capacity as respondent
firms managing partner.6
In
his
complaint,7 petitioner
averred, inter alia, that when he was
promoted to the position of Tax
Principal in October 1997, his
compensation
package
had
consisted of a monthly gross

compensation of P60,000.00, a 13th

month pay and a lump sum payment
for the year 1997 in the amount
of P240,000.00 that was paid to him
on 08 February 1998.
According to petitioner, beginning 01
October 1998, his compensation
package was revised as follows: (a)
monthly
gross
compensation
of P95,000.00,
inclusive
of
nontaxable allowance; (b) 13th month
pay; and (c) a lump sum amount in
addition to the aggregate monthly
gross compensation. On 12 April
1999, petitioner received the lump
sum amount of P573,000.00 for the
fiscal year ending 1998.8

Respondent firm denied it had

intentionally delayed the processing
of petitioners claims but alleged that
the abrupt departure of petitioner and
three other members of the firms Tax
Division had created problems in the
determination of petitioners various
accountabilities, which could be
finished only by going over
voluminous documents. Respondents
further averred that they had been
taken aback upon learning about the
labor case filed by petitioner when all
along they had done their best to
facilitate the processing of his
claims.9

During the pendency of the case

before the Labor Arbiter, respondent
firm on three occasions sent check
payments to petitioner in the
following amounts: (1) P71,250.00,
representing petitioners 13th month
pay; (2)P54,824.18, as payments for
the cash equivalent of petitioners
leave credits and reimbursement
claims; and (3)P10,762.57, for the
refund of petitioners taxes withheld
on his vacation leave credits.
Petitioners copies of his withholding
tax certificates were sent to him
along
with
the
check
payments.10 Petitioner acknowledged
the receipt of the 13th month pay but

disputed the computation of the cash

value of his vacation leave credits
and reimbursement claims.11
On 07 June 2002, Labor Arbiter
Eduardo J. Carpio rendered a
decision,12 the dispositive portion of
which reads:
WHEREFORE, judgment is hereby
rendered ordering respondents to
jointly and solidarily pay complainant
the following:
P12,681.00 - representing
reimbursement
claims
complainant;
P28,407.08 underpayment

the
of

representing the
of
the
cash

equivalent of the unused leave

credits of complainant;
P573,000.00
representing
complainants 1999 year-end lump
sum payment; and
10% of the total judgment awards
way of attorneys fees.
SO ORDERED.13
The
Labor
Arbiter
awarded
petitioners reimbursement claims on
the ground that respondent firms
refusal to grant the same was not so
much because the claim was
baseless but because petitioner had
failed
to
file
the
requisite
reimbursement forms. He held that

the formal defect was cured when

petitioner filed several demand letters
as well as the case before him.14
The Labor Arbiter held that petitioner
was not fully paid of the cash
equivalent of the leave credits due
him because respondent firm had
erroneously based the computation
on a basic pay of P61,000.00. He
held that the evidence showed that
petitioners monthly basic salary
was P95,000.00 inclusive of the other
benefits that were deemed included
and integrated in the basic salary and
that respondent firm had computed
petitioners 13th month pay based on
a monthly basic pay of P95,000.00;

thus, the cash commutation of the

leave credits should also be based
on this figure.15
The Labor Arbiter also ruled that
petitioner was entitled to a year-end
payment of P573,000.00 on the basis
of the company policy of granting
yearly lump sum payments to
petitioner during all the years of
service and that respondent firm had
failed to give petitioner the same
benefit for the year 1999 without any
explanation.16
Aggrieved, respondent firm appealed
to the NLRC. On 21 August 2003, the
NLRC
rendered
a
modified

judgment,17 the dispositive portion of

which states:
WHEREFORE, the Decision dated
June 7, 2002 is hereby Affirmed with
the modification that the complainant
is only entitled to receive P2,301.00
as reimbursement claims. The award
of P12,681.00
representing
the
reimbursement claims of complainant
is set aside for lack of basis.
SO ORDERED.18
From the amount of P12,681.00
awarded by the Labor Arbiter as
payment for the reimbursement
claims, the NLRC lowered the same
to P2,301.00
representing
the

amount which remained unpaid.19 As

regards the issues on the lump sum
payments and cash equivalent of the
leave credits, the NLRC affirmed the
findings of the Labor Arbiter.
Respondents filed a motion for
reconsideration20 but
the
NLRC
denied the motion for lack of
merit.21 Hence, respondents elevated
the matter to the Court of Appeals via
a petition for certiorari.22
In the assailed Decision dated 19
April 2005, the Court of Appeals
further reduced the total money
award to petitioner, to wit:

WHEREFORE, in the light of the

foregoing, the assailed resolution of
public respondent NLRC dated
August 21, 2003 in NLRC NCR Case
No. 30-12-00927-99 (CA No. 03230402) is hereby MODIFIED, ordering
petitioner firm to pay private
respondent the following:
(1) P2,301.00 representing private
respondents
reimbursement
claims;
(2) P9,802.83 representing the
underpayment
of
the
cash
equivalent of private respondents
unused leave credits;
(3) P10,000.00 attorneys fees.

SO ORDERED.23
Petitioner sought reconsideration. In
the assailed Resolution dated 27
June 2005, the Court of Appeals
denied
petitioners
motion
for
reconsideration for lack of merit.
Hence, the instant petition, raising
the following issues:
I.
WHETHER PUBLIC RESPONDENT
COURT OF APPEALS SUMMARY
DENIAL OF PETITIONERS MOTION
FOR
RECONSIDERATION
VIOLATES THE CONSTITUTIONAL
REQUIREMENT
THAT
COURT
DECISIONS MUST STATE THE

LEGAL AND
[THEREOF].

FACTUAL

BASIS

II
WHETHER PUBLIC RESPONDENT
COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION
AND ACTED IN WANTON EXCESS
OF JURISDICTION IN TAKING
COGNIZANCE
OF
[RESPONDENTS] PETITION FOR
CERTIORARI
WHEN
THE
RESOLUTION THEREOF HINGES
ON
MERE
EVALUATION
OF
EVIDENCE.
III.

WHETHER PUBLIC RESPONDENT

COURT OF APPEALS WANTONLY
ABUSED ITS DISCRETION IN
EMPLOYING A LARGER DIVISOR
TO
COMPUTE
PETITIONERS
DAILY SALARY RATE THEREBY
DIMINISHING HIS BENEFITS, IN
[VIOLATION] OF THE LABOR
CODE.
IV.
WHETHER PUBLIC RESPONDENT
COURT
OF
APPEALS
CAPRICIOUSLY
ABUSED
ITS
DISCRETION IN REVERSING THE
[CONCURRING]
FINDINGS
OF
BOTH LABOR ARBITER AND NLRC

ON THE COMPENSABLE NATURE

OF PETITIONERS YEAR END
[LUMP] SUM PLAY [sic] CLAIM.24
Before delving into the merits of the
petition, the issues raised by
petitioner
adverting
to
the
Constitution must be addressed.
Petitioner contends that the Court of
Appeals resolution which denied his
motion for reconsideration violated
Article VIII, Section 14 of the
Constitution, which states:
Section 14. No decision shall be
rendered by any court without
expressing therein clearly and

distinctly the facts and the law on

which it is based.
No petition for review or motion for
reconsideration of a decision of the
court shall be refused due course or
denied without stating the legal basis
therefor.
Obviously, the assailed resolution is
not a "decision" within the meaning of
the Constitutional requirement. This
mandate is applicable only in cases
"submitted for decision," i.e., given
due course and after filing of briefs or
memoranda and/or other pleadings,
as
the
case
may
be.25 The
requirement is not applicable to a

resolution denying a motion for

reconsideration of the decision. What
is applicable is the second paragraph
of the above-quoted Constitutional
provision referring to "motion for
reconsideration of a decision of the
court." The assailed resolution
complied with the requirement therein
that a resolution denying a motion for
reconsideration should state the legal
basis of the denial. It sufficiently
explained that after reading the
pleadings filed by the parties, the
appellate court did not find any
cogent reason to reverse itself.
Next, petitioner argues that the Court
of Appeals erred in giving due course

to the petition for certiorari when the

resolution thereof hinged on mere
evaluation of evidence. Petitioner
opines that respondents failed to
make its case in showing that the
Labor Arbiter and the NLRC had
exercised their discretion in an
arbitrary and despotic manner.
As a general rule, in certiorari
proceedings under Rule 65 of the
Rules of Court, the appellate court
does not assess and weigh the
sufficiency of evidence upon which
the Labor Arbiter and the NLRC
based their conclusion. The query in
this proceeding is limited to the
determination of whether or not the

NLRC acted without or in excess of

its jurisdiction or with grave abuse of
discretion in rendering its decision.
However, as an exception, the
appellate court may examine and
measure the factual findings of the
NLRC if the same are not supported
by substantial evidence.26 The Court
has not hesitated to affirm the
appellate courts reversals of the
decisions of labor tribunals if they are
not
supported
by
substantial
evidence.27
The Court is not unaware that the
appellate court had reexamined and
weighed the evidence on record in
modifying the monetary award of the

NLRC. The Court of Appeals held

that the amount of the year-end lump
sum compensation was not fully
justified and supported by the
evidence on record. The Court fully
agrees that the lump sum award
of P573,000.00 to petitioner seemed
to have been plucked out of thin air.
Noteworthy is the fact that in his
position paper, petitioner claimed that
he was entitled to the amount
of P674,756.70.28 The
variance
between the claim and the amount
awarded, with the record bereft of
any proof to support either amount
only shows that the appellate court
was correct in holding that the award

was a mere speculation devoid of

any factual basis. In the exceptional
circumstance as in the instant case,
the Court finds no error in the
appellate courts review of the
evidence on record.
After an assessment of the evidence
on record, the Court of Appeals
reversed the findings of the NLRC
and the Labor Arbiter with respect to
the award of the year-end lump sum
pay and the cash value of petitioners
leave credits. The appellate court
held that while the lump sum
payment was in the nature of a
proportionate share in the firms
annual income to which petitioner

was entitled, the payment thereof

was contingent upon the financial
position of the firm. According to the
Court of Appeals, since no evidence
was adduced showing the net income
of the firm for fiscal year ending 1999
as well as petitioners corresponding
share therein, the amount awarded
by the labor tribunals was a baseless
speculation and as such must be
deleted.29
On the other hand, the NLRC
affirmed the Labor Arbiters award of
the lump sum payment in the amount
ofP573,000.00 on the basis that the
payment thereof had become a
company policy which could not be

withdrawn arbitrarily. Furthermore,

the NLRC held that respondent firm
had failed to controvert petitioners
claim that he was responsible for
generating some P7,365,044.47 in
cash revenue during the fiscal year
ending 1999.
The evidence on record establishes
that aside from the basic monthly
compensation,30 petitioner received a
yearly lump sum amount during the
first two years31 of his employment,
with the payments made to him after
the annual net incomes of the firm
had been determined. Thus, the
amounts thereof varied and were
dependent on the firms cash position

and financial performance.32 In one of

the
letters
of
respondent
Mananghaya to petitioner, the
amount
was
referred
to
as
petitioners "share in the incentive
compensation program."33
While the amount was drawn from
the annual net income of the firm, the
distribution thereof to non-partners or
employees of the firm was not, strictly
speaking,
a
profit-sharing
arrangement between petitioner and
respondent firm contrary to the Court
of Appeals finding. The payment
thereof to non-partners of the firm like
herein petitioner was discretionary on
the part of the chairman and

managing partner coming from their

authority to fix the compensation of
any employee based on a share in
the partnerships net income.34 The
distribution
being
merely
discretionary, the year-end lump sum
payment may properly be considered
as a year-end bonus or incentive.
Contrary to petitioners claim, the
granting of the year-end lump sum
amount was precisely dependent on
the firms net income; hence, the
same was payable only after the
firms annual net income and cash
position were determined.
By definition, a "bonus" is a gratuity
or act of liberality of the giver. It is

something given in addition to what is

ordinarily received by or strictly due
the recipient.35 A bonus is granted
and paid to an employee for his
industry and loyalty which contributed
to the success of the employers
business and made possible the
realization of profits.36 Generally, a
bonus is not a demandable and
enforceable obligation. It is so only
when it is made part of the wage or
salary or compensation. When
considered
as
part
of
the
compensation
and
therefore
demandable and enforceable, the
amount is usually fixed. If the amount
would be a contingent one dependent

upon the realization of the profits, the

bonus is also not demandable and
enforceable.37
In the instant case, petitioners claim
that the year-end lump sum
represented the balance of his total
compensation package is incorrect.
The fact remains that the amounts
paid to petitioner on the two
occasions varied and were always
dependent upon the firms financial
position.
Moreover, in Philippine Duplicators,
Inc. v. NLRC,38 the Court held that if
the bonus is paid only if profits are
realized or a certain amount of

productivity achieved, it cannot be

considered part of wages. If the
desired goal of production is not
obtained, of the amount of actual
work accomplished, the bonus does
not accrue.39 Only when the employer
promises and agrees to give without
any conditions imposed for its
payment, such as success of
business or greater production or
output, does the bonus become part
of the wage.40
Petitioners assertion that he was
responsible for generating revenues
amounting to more than P7 million
remains a mere allegation in his
pleadings. The records are absolutely

bereft of any supporting evidence to

substantiate the allegation.
The granting of a bonus is basically a
management
prerogative
which
cannot be forced upon the employer
who may not be obliged to assume
the onerous burden of granting
bonuses or other benefits aside from
the employees basic salaries or
wages.41 Respondents
had
consistently maintained from the start
that petitioner was not entitled to the
bonus as a matter of right. The
payment of the year-end lump sum
bonus based upon the firms
productivity
or
the
individual
performance of its employees was

well
within
respondent
firms
prerogative. Thus, respondent firm
was also justified in declining to give
the bonus to petitioner on account of
the
latters
unsatisfactory
performance.
Petitioner failed to present evidence
refuting respondents allegation and
proof that they received a number of
complaints
from
clients
about
petitioners "poor services." For
purposes of determining whether or
not petitioner was entitled to the yearend lump sum bonus, respondents
were not legally obliged to raise the
issue of substandard performance
with petitioner, unlike what the Labor

Arbiter had suggested. Of course, if

what was in question was petitioners
continued employment vis--vis the
allegations
of
unsatisfactory
performance, then respondent firm
was required under the law to give
petitioner due process to explain his
side before instituting any disciplinary
measure. However, in the instant
case, the granting of the year-end
lump sum bonus was discretionary
and conditional, thus, petitioner may
not question the basis for the
granting of a mere privilege.1avvph!1
With regard to the computation of the
cash equivalent of petitioners leave
credits, the Court of Appeals used a

base
figure
of P71,250.00
representing petitioners monthly
salary as opposed to P95,000.00
used by the Labor Arbiter and NLRC.
Meanwhile, respondents insist on a
base figure of only P61,000.00, which
excludes the advance incentive pay
of P15,000.00,
transportation
allowance
of P15,000.00
and
representation
allowance
ofP4,000.00,
which
petitioner
regularly received every month.
Because of a lower base figure
(representing the monthly salary)
used by the appellate court, the cash
equivalent of petitioners leave credits

was
lowered
fromP28,407.08
to P9,802.83.lawphil.net
The
monthly
compensation
of P71,250.00 used as base figure by
the Court of Appeals is totally without
basis. As correctly held by the Labor
Arbiter and the NLRC, the evidence
on record reveals that petitioner was
receiving a monthly compensation
of P95,000.00 consisting of a basic
salary
of P61,000.00,
advance
incentive
pay
ofP15,000.00,
transportation
allowance
of P15,000.00 and representation
allowance
of P4,000.00.
These
amounts totaling P95,000.00 are all
deemed part of petitioners monthly

compensation
package
and,
therefore, should be the basis in the
cash commutation of the petitioners
leave credits. These allowances were
customarily furnished by respondent
firm and regularly received by
petitioner on top of the basic monthly
pay of P61,000.00. Moreover, the
Labor Arbiter noted that respondent
firms act of paying petitioner a 13th
month-pay at the rate of P95,000.00
was an admission on its part that
petitioners basic monthly salary
was P95,000.00
The Court of Appeals, Labor Arbiter
and NLRC used a 30-working day
divisor instead of 26 days which

petitioner insists. The Court of

Appeals relied on Section 2, Rule IV,
Book III42 of the implementing rules of
the Labor Code in using the 30working day divisor. The provision
essentially states that monthly-paid
employees are presumed to be paid
for all days in the month whether
worked or not.
The provision has long been nullified
in Insular Bank of Asia and American
Employees Union (IBAAEU) v. Hon.
Inciong, etc., et al.,43 where the Court
ruled that the provision amended the
Labor Codes provisions on holiday
pay by enlarging the scope of their
exclusion.44 In any case, the provision

is inapplicable to the instant case

because
it
referred
to
the
computation of holiday pay for
monthly-paid employees.
Petitioners claim that respondent
firm used a 26-working day divisor is
supported by the evidence on record.
In a letter addressed to
petitioner,45 respondents
counsel
expressly admitted that respondent
used a 26-working day divisor. The
Court is perplexed why the tribunals
below used a 30-day divisor when
there was an express admission on
respondents part that they used a
26-day
divisor
in
the
cash

commutation of leave credits. Thus,

with
a
monthly
compensation
of P95,000.00 and using a 26working day divisor, petitioners daily
rate is P3,653.85.46 Based on this
rate, petitioners cash equivalent of
his
leave
credits
of
23.5
is P85,865.48.47 Since petitioner has
already
received
the
amount P46,009.67,
a
balance
of P39,855.80 remains payable to
petitioner.
WHEREFORE, the instant petition for
review on certiorari is PARTLY
GRANTED. The Decision of the
Court of Appeals in CA-G.R. SP No.
85038
is AFFIRMED with

the MODIFICATION that respondents

are liable for the underpayment of the
cash equivalent of petitioners leave
credits in the amount of P39,855.80.
SO ORDERED.
G.R. No. 187232
2013

April 17,

ZENAIDA D. MENDOZA, Petitioner,

vs.
HMS
CREDIT
CORPORATION
and/or FELIPE R. DIEGO, MA.
LUISA B. DIEGO, HONDA MOTOR
SPORTS CORPORATION and/or
FELIPE R. DIEGO, MA. LUISA B.
DIEGO, BETA MOTOR TRADING
INCORPORATED and/or FELIPE

DIEGO, MA. LUISA B. DIEGO,

JIANSHE CYCLE WORLD IN
CORPORATED and/or JOSE B.
DIEGO, Respondents.
DECISION
SERENO, CJ.:
Before this Court is a Petition for
Review on Certiorari under Rule 45
of the Rules of Court, assailing the
Decision
dated
14
November
20081 issued by the Court of Appeals
(CA) in CA G.R. SP No. 82653.
Petitioner Zenaida D. Mendoza
(Mendoza) was the Chief Accountant
of
respondent
HMS
Credit
Corporation (HMS Credit) beginning

1
August
1999.2 During
her
employment, she simultaneously
serviced three other respondent
companies, all part of the Honda
Motor
Sports
Group
(HMS
Group),3 namely, Honda Motor Sports
Corporation (Honda Motors), Beta
Motor Trading Incorporated (Beta
Motor) and Jianshe Cycle World
(Jianshe).4Respondent
Luisa
B.
Diego (Luisa) was the Managing
Director of HMS Credit, while
respondent Felipe R. Diego (Felipe)
was the company officer to whom
Mendoza directly reported.5
Mendoza avers that on 11 April 2002,
after she submitted to Luisa the

audited financial statements of

Honda Motors, Beta Motor, and
Jianshe, Felipe summoned Mendoza
to advise her of her termination from
service.6
She claims that she was even told to
leave the premises without being
given the opportunity to collect her
personal belongings.7
Mendoza also contends that when
she went back to the office building
on 13 April 2012, the stationed
security guard stopped her and
notified her of the instruction of Felipe
and Luisa to prohibit her from
entering the premises.8 Later that

month, she returned to the office to

pick up her personal mail and to
settle her food bills at the canteen,
but the guard on duty told her that
respondents
had
issued
a
memorandum barring her from
entering the building.9
On the other hand, respondents
maintain that Mendoza was hired on
the basis of her qualification as a
Certified
Public
Accountant
(CPA),10 which turned out to be a
misrepresentation.11 They
likewise
contend that not only did she fail to
disclose
knowledge
of
the
resignations of two HMS Group
officers, Art Labasan (Labasan) and

Jojit de la Cruz (de la Cruz), and their

subsequent transfer to a competitor
company, but she also had a hand in
pirating them. Thus, on 12 April 2002,
they supposedly confronted her
about these matters. In turn, she
allegedly told them that if they had
lost their trust in her, it would be best
for them to part ways.12 Accordingly,
they purportedly asked her to
propose an amount representing her
entitlement to separation benefits.
Before she left that night, they
allegedly handed her P30,000 as
payment for the external auditor she
had contracted to examine the books
of the HMS Group.13

On 30 April 2002, Mendoza filed with

the
National
Labor
Relations
Commission (NLRC) a Complaint for
Illegal Dismissal and Non-payment of
Salaries/Wages, 13th Month Pay and
Mid-Year Bonus.14 The case was
docketed as NLRC-NCR North
Sector Case No. 00-04-025762002.15
On 28 January 2003, the Labor
Arbiter rendered a Decision ruling
that Mendoza had been illegally
dismissed, and that the dismissal had
been effected in violation of due
process requirements.16 Thus, the
Labor Arbiter held respondents jointly
and severally liable for the payment

of separation pay, backwages, moral

and exemplary damages, and
attorneys fees in the total amount
of P1,025,081.82.17
Respondents filed an Appeal dated
14 March 200318 and a Motion to
Reduce Appeal Bond dated 21 March
2003 with the National Labor
Relations
Commission
(NLRC),
tendering
the
amount
of
only P650,000 on the ground of
purported business losses.19 In its
Order dated 30 May 2003, the NLRC
denied the request for the reduction
of the appeal bond, and directed
respondents to put up the additional
amount of P122,801.66 representing

the differential between the judgment

award not including the moral and
exemplary damages and attorneys
fees and the sum previously
tendered by them.20 Respondents
complied with the Order.21
On 30 September 2008, the NLRC
rendered a Decision reversing the
ruling of the Labor Arbiter.22 In
declaring that Mendoza had not been
summarily dismissed, the NLRC held
as follows: (a) her claim that she was
terminated was incompatible with
respondents act of entrusting the
amount of P30,000 to her as
payment for the external auditor; (b)
the same act demonstrated that the

parties parted amicably, and that she

had the intention to resign; and (c)
her admission that respondents
allowed her to take a leave of
absence
subsequent
to
their
confrontation also belied her claim
that she was dismissed.23 Further, it
also ruled that her misrepresentation
as to her qualifications, her
concealment of her meeting with a
rival motorcycle dealership, and her
non-disclosure of her meeting with
the officers and mechanics of HMS
Group amounted to a breach of trust,
which constituted a just cause for
termination, especially of managerial
employees like her.24 Nevertheless, it

ordered respondents to pay her

separation pay equivalent to one
month for every year of service.25
The NLRC denied the Motion for
Reconsideration
filed
by
Mendoza,26 prompting her to file a
Petition for Certiorari with the CA,
which rendered a Decision affirming
that of the lower tribunal.27 The CA
ruled that that there was no
dismissal, as the parties had entered
into a compromise agreement
whereby respondents offered to pay
Mendoza separation benefits in
exchange
for
her
voluntary
resignation.28 It further explained:

On the merits, this case involves

neither dismissal on the part of the
employer nor abandonment on the
part of the employee. On the evening
of April 11, 2002, respondents and
petitioner had already agreed on an
amicable settlement with petitioner
voluntarily resigning her employment
and
respondents
paying
her
separation benefits. This is evident
from the amiable manner with which
the parties ended their meeting, with
respondents entrusting to petitioner
the P30,000.00 payment for the
external auditor and the petitioner
considering
her
absence
the
following day as a previously

approved leave from work. It

appears, however, that respondents
had a sudden change of heart while
petitioner was away on leave on April
12, 2002 because when the latter
returned on April 13, 2002 she was
already prevented from entering the
office premises per strict instructions
from respondents. Clearly, this was
an attempt on the part of respondents
to
effectively
renege
on
its
commitment to pay separation
benefits to petitioner.
While, generally, an employee who
voluntarily resigns from employment
is not entitled to separation pay, an
arrangement whereby the employee

would receive separation pay despite

having
resigned
voluntarily
constitutes a contract which is freely
entered into and which must be
performed in good faith. Thus, the
NLRC correctly sustained the prior
commitment of respondents to pay
separation benefits to petitioner. For
although loss of trust and confidence
could have been a valid ground
available to respondents, they did not
institute the appropriate dismissal
procedures
against
petitioner.
Instead, they opted to enter into a
compromise agreement with an offer
to pay separation benefits in
exchange for the latters voluntary

resignation. It is an accepted practice

for parties to adjust their difficulties by
mutual consent and, through the
execution
of
a
compromise
agreement, prevent or to put an end
to a lawsuit. And, since there was no
dismissal, valid or otherwise, involved
in this case, the non-observance of
the notice requirements is of no
relevance.29
Mendoza consequently filed the
present Petition for Review, raising
the following grounds:
a. The CA erred in concluding that
respondents had timely filed their
appeal with the NLRC.

b. The CA erred in ruling that there

was no illegal dismissal.30
Thus, in disposing of the instant
case, the following issues must be
discussed: (a) whether the appeal of
respondents to the NLRC was timely
filed, and (b) whether Mendoza was
illegally dismissed.
First issue: Timely filing of the
appeal before the NLRC
The relevant portion of Article 223 of
the Labor Code on appeals of
decisions, awards or orders of the
Labor Arbiter as follows:
Art. 223. x x x In case of a judgment
involving a monetary award, an

appeal by the employer may be

perfected only upon the posting of a
cash or surety bond issued by a
reputable bonding company duly
accredited by the Commission in the
amount equivalent to the monetary
award in the judgment appealed
from.
In Pasig Cylinder v. Rollo,31 this Court
explained that the required posting of
a bond equivalent to the monetary
award in the appealed judgment may
be liberally interpreted as follows:
x x x. True, Article 223 of the Labor
Code requires the filing of appeal
bond "in the amount equivalent to the

monetary award in the judgment

appealed from." However, both the
Labor Code and this Courts
jurisprudence abhor rigid application
of procedural rules at the expense of
delivering just settlement of labor
cases. Petitioners reasons for their
filing of the reduced appeal bond
the downscaling of their operations
coupled with the amount of the
monetary award appealed are not
unreasonable. Thus, the recourse
petitioners
adopted
constitutes
substantial compliance with Article
223 consistent with our ruling in
Rosewood Processing, Inc. v. NLRC,
where we allowed the appellant to file

a
reduced
bond
of P50,000
(accompanied by the corresponding
motion) in its appeal of an arbiters
ruling in an illegal termination case
awarding P789,154.39 to the private
respondents.32
In the case at bar, respondents filed a
Motion to Reduce Appeal Bond,
tendering the sum of P650,000
instead of the P1,025,081.82 award
stated in the Decision of the Labor
Arbiter because it was allegedly
what respondents could afford, given
the business losses they had
suffered at that time.33 Upon the
denial by the NLRC of this Motion,
respondents promptly complied with

its directive to post the differential in

the amount ofP122,801.66, which
had been computed without including
the award of moral and exemplary
damages
and
attorneys
fees.34 Following the pronouncement
in Pasig Cylinder, the CA was correct
in holding that the appeal was timely
filed on account of respondents
substantial compliance with the
requirement under Article 223.
Second issue: Illegal dismissal of
Mendoza
The Labor Code provides for
instances when employment may be

legally terminated by either the

employer or the employee, to wit:
Art. 282. Termination by employer. An
employer
may
terminate
an
employment for any of the following
causes:
a. Serious misconduct or willful
disobedience by the employee of
the lawful orders of his employer
or representative in connection
with his work;
b. Gross and habitual neglect by
the employee of his duties;
c. Fraud or willful breach by the
employee of the trust reposed in

him by his employer or duly

authorized representative;
d. Commission of a crime or
offense by the employee against
the person of his employer or any
immediate member of his family or
his
duly
authorized
representatives; and
e. Other causes analogous to the
foregoing.
xxx

xxx

xxx

Art. 285. Termination by employee.

a. An employee may terminate
without just cause the employeeemployer relationship by serving a

written notice on the employer at

least one (1) month in advance.
The employer upon whom no such
notice was served may hold the
employee liable for damages.
b. An employee may put an end to
the relationship without serving
any notice on the employer for any
of the following just causes:
1. Serious insult by the
employer or his representative
on the honor and person of the
employee;
2. Inhuman and unbearable
treatment
accorded
the

employee by the employer or

his representative;
3. Commission of a crime or
offense by the employer or his
representative
against
the
person of the employee or any
of the immediate members of
his family; and
4. Other causes analogous to
any of the foregoing.
In instances in which the termination
of employment by the employer is
based on breach of trust, a distinction
must be made between rank-and-file
employees
and
managerial
employees, thus:

The degree of proof required in labor

cases is not as stringent as in other
types of cases. It must be noted,
however, that recent decisions of this
Court
have
distinguished
the
treatment of managerial employees
from that of rank-and-file personnel,
insofar as the application of the
doctrine of loss of trust and
confidence is concerned. Thus, with
respect to rank-and-file personnel,
loss of trust and confidence as
ground for valid dismissal requires
proof of involvement in the alleged
events in question, and that mere
uncorroborated
assertions
and
accusations by the employer will not

be sufficient. But as regards a

managerial employee, the mere
existence of a basis for believing that
such employee has breached the
trust of his employer would suffice for
his dismissal. Hence, in the case of
managerial employees, proof beyond
reasonable doubt is not required, it
being sufficient that there is some
basis for such loss of confidence,
such as when the employer has
reasonable ground to believe that the
employee concerned is responsible
for the purported misconduct, and the
nature of his participation therein
renders him unworthy of the trust and

confidence
demanded
by
position.35 (Emphasis supplied)

his

Further, in the case of termination by

the employer, it is not enough that
there exists a just cause therefor, as
procedural due process dictates
compliance with the two-notice rule in
effecting a dismissal: (a) the
employer must inform the employee
of the specific acts or omissions for
which the dismissal is sought, and (b)
the employer must inform the
employee of the decision to terminate
employment after affording the latter
the opportunity to be heard.36

On the other hand, if the termination

of employment is by the employee,
the resignation must show the
concurrence of the intent to relinquish
and the overt act of relinquishment,
as held in San Miguel Properties v.
Gucaban:37
Resignation

the
formal
pronouncement or relinquishment of
a position or office is the voluntary
act of an employee who is in a
situation where he believes that
personal
reasons
cannot
be
sacrificed in favor of the exigency of
the service, and he has then no other
choice but to disassociate himself
from employment. The intent to

relinquish must concur with the overt

act of relinquishment; hence, the acts
of the employee before and after the
alleged
resignation
must
be
considered in determining whether he
in fact intended to terminate his
employment. In illegal dismissal
cases, fundamental is the rule that
when an employer interposes the
defense of resignation, on him
necessarily rests the burden to prove
that the employee indeed voluntarily
resigned.38(Emphases supplied)
In this case, the NLRC and the CA
were in agreement that although
Mendoza committed acts that
amounted to breach of trust, the

termination of her employment was

not on that basis.39 Instead, both
tribunals held that the parties parted
amicably, with Mendoza evincing her
voluntary intention to resign and
respondents proposed settlement to
pay her separation benefits.40 This
Court does not agree with these
findings in their entirety.
Whether Mendoza was a Chief
Accountant of HMS Credit, as stated
in her appointment letter,41 or a
Finance Officer of all the corporations
under the HMS Group, as claimed by
respondents,42 what is certain is that
she was a managerial employee. In
securing
this
position,
she

fraudulently
misrepresented
her
professional qualifications by stating
in her Personal Information Sheet
that she was a CPA. Based on the
records, she never controverted this
imputation of dishonesty or, at the
very least, provided any explanation
therefor. Thus, this deceitful action
alone was sufficient basis for
respondents loss of confidence in
her as a managerial employee.
In addition, this Court finds no reason
to deviate from the factual findings of
the NLRC and the CA as regards the
existence of other circumstances that
demonstrated Mendozas breach of
trust. The NLRC held in this wise:

In sum, the commission finds that

Mendoza
was
not
illegally
dismissed.1wphi1 Respondents
could have validly dismissed her for
just cause because she had forfeited
her employment by having incurred
breach of trust that they had reposed
in her. She had concealed from them
the fact that she was going to visit a
rival motorcycle dealership in Tarlac,
called Honda Mar, on the afternoon
of April 5, 2002, in the company of its
owner; the notice she had given was
that, on the morning of that date, she
would get her childs report card from
her school. She also failed to
disclose to them the fact that she saw

in that store Labasan and De la Cruz,

and respondents mechanics, Gatus
and Mejis, who cleaned and painted
the same. And she gave the
appearance of giving aid and support
to respondents competitor, to the
prejudice of their business standing
and goodwill. These were acts of
disloyalty for which [they] would have
been justified in terminating her
service on the ground of loss of
confidence.43
However, despite the existence of a
just cause for termination, Mendoza
was nevertheless dismissed from
service in violation of procedural due
process, as respondents failed to

observe the two-notice requirement.

Instead, respondents insisted that
she voluntarily resigned, which
argument the NLRC and the CA
sustained. This Court is not
persuaded.
Respondents
were
unable
to
discharge their burden to prove the
contemporaneous existence of an
intention on the part of Mendoza to
resign and an overt act of
resignation. Aside from their selfserving allegation that she had
offered to resign after they had
expressed their loss of trust in her,
there is nothing in the records to
show that she voluntarily resigned

from her position in their company. In

this regard, it is worthy to underscore
the established rule that the filing of a
complaint for illegal dismissal is
inconsistent with resignation or
abandonment.44
Moreover, the conclusion of the
NLRC and the CA that Mendoza
voluntarily resigned in consideration
of respondents supposed payment of
a settlement is bereft of any basis.
The lower tribunals merely surmised
that the parties forged a compromise
agreement despite respondents own
admission that they never decided
thereon.45 In fact, the records are
clear that none of the parties claimed

the existence of any settlement in

exchange for her resignation.
From the foregoing discussion, it is
evident that although there was a just
cause for terminating the services of
Mendoza, respondents were amiss in
complying with the two-notice
requirement. Following the prevailing
jurisprudence on the matter, if the
dismissal is based on a just cause,
then
the
non-compliance
with
procedural due process should not
render
the
termination
from
employment
illegal
or
ineffectual.46 Instead, the employer
must indemnify the employee in the
form
of
nominal

damages.47 Therefore, the dismissal

of Mendoza should be upheld, and
respondents cannot be held liable for
the payment of either backwages or
separation pay. Considering all the
circumstances surrounding this case,
this Courts finds the award of
nominal damages in the amount
of P30,00048 to be in order.
WHEREFORE, the Petition for
Review is DENIED. The Decision
dated 14 November 2008 of the CA
in CA G.R. SP No. 82653 is
AFFIRMED WITH MODIFICATION:
the award of separation pay is
deleted and in lieu thereof, nominal

damages in the amount of P30,000 is

awarded in favor of petitioner.
SO ORDERED.
G.R. No. 185001
September 25, 2009
RONNIE H. LUMAYNA, ROMEO O.
CHULANA, HELEN A. BONHAON,
PETER G. LAHINA, JR., JUANITO
O. LICHNACHAN, JR., SAMMY C.
CHANG-AGAN,
BONIFACIO
L.
BAICHON,
REYNALDO
B.
UCHAYAN, JOHN L. MARTIN,
AUGUSTA C. PANITO, ROSENDO
P. BONGYO, JR., KLARISA MAE C.
CHAWANA, Petitioners,
vs.
COMMISSION
ON
AUDIT, Respondent.

DECISION
DEL CASTILLO, J.:
Assailed
in
this
Petition
for Certiorari under Rule 64 in
relation to Rule 65 of the Rules of
Court is the Decision No. 20050711 dated 29 December 2005 of the
Commission on Audit (COA) affirming
the Notice of Disallowance2 of the 5%
salary increase of the municipal
personnel of the Municipality of
Mayoyao, Ifugao covering the period
15 February to 30 September 2002,
in the amount of P895,891.50, and
requiring petitioners to refund the
same. Also assailed is the COA
Decision No. 2007-0403 dated 25
October 2007 denying the Motion for
Reconsideration.

On 15 June 2001, the Department of

Budget and Management (DBM)
issued Local Budget Circular No.
744 (LBC No. 74), authorizing the
grant of a maximum of 5% salary
adjustment to personnel in the Local
Government Units (LGUs) effective 1
July 2001, pursuant to Republic Act
No. 91375 dated 8 June 2001.
On
13
May
2002,
the Sangguniang Bayan of Mayoyao,
Ifugao,
(Sangguniang
Bayan)
enacted Resolution No. 41, s.
2002,6 approving the 2002 Annual
Municipal Budget, and appropriating
the amount of P1,590,376.00 thereof
for the salaries and benefits of 17
newly created positions in the
municipality.7 Upon
review
by

the SangguniangPanlalawigan of the

Province
of
Ifugao
(Sangguniang Panlalawigan),
the
2002 Annual Municipal Budget of
Mayoyao, Ifugao was declared
operative subject to the conditions
that the creation of 17 new positions
shall in no case be made retroactive
and that the filling up of such
positions be made strictly in
accordance with the Civil Service
rules and regulations.8
On
8
July
2002,
the Sangguniang Bayan approved
Resolution No. 66, s. 2002, adopting
a first class salary scheme for the
municipality and implementing a 5%
salary increase for its personnel in
accordance with LBC No. 74.9 For

this purpose, it enacted Resolution

No. 94, s. 2002, re-aligning the
amount of P1,936,524.9610 from the
2002 municipal budget originally
appropriated for the salaries and
benefits of the 17 new positions.11
On 12 July 2002, DBM issued Local
Budget Circular No. 7512 (LBC No.
75) providing guidelines on personal
services limitation, pursuant to
Section 325(a) of the Local
Government Code of 1991 (LGC).
On
16
December
2002,
the Sangguniang Bayan through
Resolution No. 144, s. 2002,
approved the 2003 Annual Municipal
Budget stated in Appropriation
Ordinance
No.
03.13 This
was
reviewed
by

the SangguniangPanlalawigan and

approved
on
10
February
2003 via Resolution
No.
2003808.14 The SangguniangPanlalawiga
n, however, disallowed the 5% salary
increase and the re-alignment of
funds pursuant to Resolution No. 94,
s.
2002,
of
the Sangguniang
Bayan on the ground that the realignment is not sufficient in form to
implement a salary increase.
On 9 June 2003, the Sangguniang
Bayan enacted Resolution No. 73, s.
2003,15 earnestly
requesting
theSangguniang Panlalawigan to
reconsider its Resolution.16 Finding
good faith on the part of the officials
of the municipality, the Sangguniang
Panlalawigan in its Resolution No.

2004-1185 reconsidered its earlier

position.
Thus,
the Sangguniang Panlalawigan allow
ed the adoption of a first class salary
schedule and the 5% salary increase
of the Municipality of Mayoyao,
Ifugao.
Meanwhile, the Regional Legal and
Adjudication Office (RLAO) of the
COA-Cordillera
Administrative
Region (COA-CAR) issued a Notice
of Disallowance dated 16 May 2003
of the amount of P895,891.50,
representing payments for salary
increases of municipal personnel, for
the period 15 February - 30
September 2002. According to COACAR, the grant of the increase was
not in accordance with Sections 325

and 326 of the LGC; that the

limitation on personal services had
been
exceeded;
and
that
the Sangguniang Bayan resolution
was not the appropriate manner of
granting the increase. Pursuant
thereto, the following persons,
petitioners herein, were ordered to
refund the said amount:
Helen A. Bonhain
Peter G. Lahina, Jr.
Ronnie H. Lumayna

Budget

Officer
Municipal

Accountant
Municipal

Mayor

Romeo O. Chulana
\ SB
Juanito O. Lichnachan, | Members
who
Jr.

Sammy C. Chang|
agan
Bonifacio L. Baichon |
Reynaldo B. Uchayan >
John L. Martin
|
approved
Augusta C. Panitio
|
Resolution
Rosendo P. Bongyo, Jr.| No. 94, s.
Klarisa
Mae
C. 2002
/
Chawana
Petitioners
requested
a
reconsideration, which was denied on
5 August 2003 by the RLAO-COACAR.17 Thus, petitioners filed a
Notice of Appeal before the Director,
LAO-Local of COA but it was denied
on 10 November 2003 in Decision
No. 2003-104.

Hence, petitioners filed a Petition for

Review before respondent COA
assailing LAO-Local Decision No.
2003-104.
On 29 December 2005, the COA
rendered
the
herein
assailed
Decision No. 2005-07118 denying the
petition for lack of merit, and affirming
the disallowance in the amount
of P895,891.50. The COA held thus:
After a careful evaluation, this
Commission answers in the negative
subject to the extended discussions
hereunder.
Anent the first assignment of error,
the same has been judiciously
passed upon in LAO-Local Decision
No. 2003-104. While the Municipality

of Mayoyao may grant salary

increases pursuant to LBC No. 74,
such grant should comply with the
limitations
provided
by
law,
specifically Section 325 (a) of R.A.
No. 7160. There is no doubt that in
the grant of the 5% salary increase to
the officials and employees of the
Municipality
of
Mayoyao,
the
limitation for PS in the annual budget
of said Municipality had been
exceeded. In fact, in a recomputation
made Ms. Virginia B. Farro,
Provincial Budget Officer of Ifugao,
as embodied in her letter dated July
04, 2003, it was revealed that the
Annual Budget of the Municipality
exceeded
the
PS
limit
by
P3,944,568.05. Furthermore, Mr.
Julian L. Pacificador, Jr., Regional

Director, DBM-CAR, in his letter

dated December 3, 3003 asserted
that the grant of the increase through
the adoption of higher salary class
schedule is not included in the list of
items and activities whereby PS
limitation may be waived under LBC
No. 75. It must also be noted that the
Municipalitys budget adopted the
salary rates under LBC No. 69 and
not the salary rates under LBC No.
74.
Anent the second assignment of
error, the same will not suffice to
over-turn the other grounds for the
audit disallowance. The fact remains
that the grant of the 5% salary
increase contravened the limitation of
the law as explicitly provided under

item (a) of section 325 of R.A. No.

7160.
Anent the third assignment of error,
while
the
Sanggguniang
Panlalawigan of Ifugao, in its
resolution
No.
2002-556,
has
declared operative the 2002 Annual
Budget of Mayoyao, the review of
said Sanggunian was only limited to
the provisions stated in the said
budget which contained, among
others, provisions for the funding of
the 17 newly created positions and
not the salary increases. Thus, the
declaration of the Sangguniang
Panlalawigan of Ifugao that the 2002
annual budget was operative did not
include the grant of the 5% salary
increase because the same was not

actually contained in the said budget

but in SB Resolution No. 66, series of
2002.
Anent the 4th assignment of error,
the disallowance is not based solely
on the results of the favorable review
of the Sangguniang Panlalawigan of
Ifugao since there are other grounds
which would justify and uphold the
disallowance. 19
Petitioners filed a Motion for
Reconsideration but it was denied by
respondent COA on 25 October 2007
in its Decision No. 2007-040.20
Hence, this petition21 under Rule 64
of the Rules of Court raising the
following issues:

1. RESOLUTION NO. 66, S. 2002

ADOPTING A 5% INCREASE IN THE
SALARY OF THE PERSONNEL OF
LGU MAYOYAO PURSUANT TO
DBM LBC 74, AND RESOLUTION
NO. 94, S. 2002 PROVIDING THE
FUND
TO
IMPLEMENT
THE
FORMER ARE VALID EXERCISES
OF
LOCAL
LEGISLATIVE
PREROGATIVE
BY
THE
SANGGUNIANG
BAYAN
OF
MAYOYAO, IFUGAO. THERE IS
SUFFICIENT PROOF THAT THE
BUDGET OF THE MUNICIPALITY
OF MAYOYAO FOR 2002 DID NOT
EXCEED THE PS LIMITATIONS
FOR THAT PARTICULAR YEAR. IN
THE
SAME
MANNER,
THE
REALIGNMENT
OF
FUNDS
PURSUANT TO RESOLUTION NO.

94, S. 2002 DID NOT CREATE ANY

INCREASE IN THE PERSONAL
SERVICES ALLOCATION OF THE
AFORESAID MUNICIPALITY FOR
THAT
PARTICULAR
YEAR
BECAUSE THE REALIGNMENT
PERTAINS TO A REALIGNMENT OF
AN
EXISTING
PERSONAL
SERVICES FUND PARTICULARLY
THE
AMOUNT
ORIGINALLY
INTENDED FOR THE SEVENTEEN
POSITIONS
WHICH
WERE
VACATED AND/OR ABOLISHED, TO
FUND THE SALARY INCREASE
WHICH IN ITSELF IS A PERSONAL
SERVICE EXPENDITURE. THE
HONORABLE COMMISSION ON
AUDIT, THEREFORE, GRAVELY
ABUSED ITS DISCRETION WHEN
IT HELD THAT THE REALIGNMENT

PURSUANT TO RESOLUTION NO.

94, S. 2002 CAUSED THE LGU OF
MAYOYAO TO EXCEED THE PS
LIMITATIONS
FOR
2002
AS
PRESCRIBED
BY
LAW
AND
CONSEQUENTLY DECLARING AS
INVALID RESOLUTION NO. 66 S.
2002 OF THE SANGGUNIANG
BAYAN OF MAYOYAO, IFUGAO.
2. THE PERSONAL SERVICES
ALLOCATION
FOR
THE
MUNICIPALITY
OF
MAYOYAO,
IFUGAO FOR FY 2002 WAS
COMPUTED IN ACCORDANCE
WITH DBM LBC 74 IN RELATION
TO DBM LBC 69 WHICH WERE THE
CIRCULARS IN EFFECT AT THE
TIME THE BUDGET OF THE LGU
FOR FY 2002 WAS REVIEWED,

APPROVED
AND
DECLARED
OPERATIVE
BY
THE
SANGGUNIANG PANLALAWIGAN
OF THE PROVINCE OF IFUGAO
THROUGH
RESOLUTION
NO.
2002-556. SOON THEREAFTER
DBM LBC 75 WAS ISSUED WITH A
CLEAR
EFFECTIVITY CLAUSE
EXEMPTING
FROM
ITS
OPERATION BUDGETS WHICH
HAVE ALREADY BEEN REVIEWED
PRIOR TO ITS ISSUANCE. NOTICE
OF DISALLOWANCE (ND) NO. 03006 DATED MAY 16, 2003 IS
PREMISED
ON
A
RECOMPUTATION
OF
THE
ALLOWABLE PS LIMITATION OF
THE LGU BASED ON RATES
STATED
IN
DBM
LBC
75
CONTRARY TO THE CLEAR

LANGUAGE OF ITS EFFECTIVITY

CLAUSE.
THE
HONORABLE
COMMISSION,
THEREFORE,
GRAVELY
ABUSED
ITS
DISCRETION WHEN IT UPHELD
THE NOTICE OF DISALLOWANCE
(ND) NO. 03-007 WHICH DIRECTED
THE HEREIN PETITIONERS TO
REFUND
THE
AMOUNT
DISALLOWED THEREIN.
3. PUBLIC OFFICERS ENJOY THE
PRESUMPTION OF REGULARITY
OF PERFORMANCE OF OFFICIAL
FUNCTIONS AND DUTIES. FOR
THIS REASON AND MORE, THE
HONORABLE SUPREME COURT
UPHELD CERTAIN NOTICES OF
DISALLOWANCE ISSUED BY THE
HONORABLE COMMISSION TO

CERTAIN
GOVERNMENT
AGENCIES BUT DECLINED TO LET
THE
PERSONS
LIABLE
THEREFORE TO REFUND THE
AMOUNT DISALLOWED ON THE
GROUND OF GOOD FAITH. IN
RESOLUTION NO. 2004-1185 OF
THE
SANGGUNIANG
PANLALAWIGAN
OF
IFUGAO
RECOGNIZED THE GOOD FAITH
OF LGU MAYOYAO AND THE
NOBLE INTENTIONS OF THE
OFFICERS THEREOF TO GIVE THE
EMPLOYEES A DECENT PAY. THE
HONORABLE COMMISSION ON
AUDIT, THEREFORE GRAVELY
ABUSED ITS DISCRETION, WHEN
IT FAILED TO CONSIDER THE
GOOD FAITH OF THE OFFICERS
WHO
APPROVED
THE

QUESTIONED RESOLUTIONS AND

DEMANDED THE REFUND BY
HEREIN PETITIONERS OF THE
WHOLE AMOUNT DISALLOWED
THEREIN EVEN IF THE SAID
AMOUNTS
WERE
ALREADY
RECEIVED BY THE EMPLOYEES.22
The foregoing boils down to the core
issue of whether the COA committed
grave abuse of discretion in affirming
the disallowance of the amount
of P895,891.50, representing the 5%
salary increase of the personnel of
the municipality of Mayoyao for the
period 15 February to 30 September
2002, and in ordering petitioners to
refund the same.

We first dispense with the procedural

issue of whether the petition was
timely filed.
Respondent, through the Office of the
Solicitor General, argues that the
petition should be dismissed outright
for
being
filed
beyond
the
reglementary
period
to
appeal.23 Respondent maintains that
since petitioners received a copy of
Decision No. 2005-071 on 29 August
2006, they only had 30 days or until
28 September 2006 within which to
file a Motion for Reconsideration or a
Petition for Review on Certiorari with
the Supreme Court. As the Motion for
Reconsideration was filed only on 2
October 2006, the COA Decision No.
2005-71 already attained finality.24

On the other hand, petitioners allege

that this argument on belated filing is
misplaced
considering
that
respondent COA already gave due
course
to
their
Motion
for
Reconsideration, the resolution of
which was embodied in its Decision
No. 2007-040. At any rate, petitioners
argue that their failure to file the
Motion for Reconsideration with
respondent COA on 28 September
2006 was justified because the
government offices in Metro Manila
were closed due to typhoon
"Feria."25a1f
Petitioners contention has merit.
Records show that COA gave due
course
to
the
Motion
for
Reconsideration without stating in its

Decision No. 2007-04026 that it was

filed out of time. For this reason, we
find that the issue of whether the
petitioners timely filed the Motion for
Reconsideration has become moot.
Going now to the merits of the case,
petitioners contend that Resolution
Nos. 66 and 94, s. 2002, are valid
exercise of legislative prerogative in
accordance with DBM LBC No. 74,
which gave them the authority to
grant a maximum of 5% salary
adjustment to personnel in the LGU
effective 1 July 2001. Petitioners cite
as basis Resolution No. 2002-556 of
the Sangguniang Panlalawigan which
declared as operative the 2002
Annual Budget of the Municipality of
Mayoyao, Ifugao on 10 June 2002.

Petitioners also claim that the amount

allocated in the 2002 municipal
budget for personal services is within
the allowable limits prescribed by law.
In declaring that the municipality
exceeded the personal services
limitation set by law, respondent COA
based its finding on a computation
using the rates prescribed in LBC No.
75, and not LBC No. 74, in relation to
LBC No. 69, on which the
municipality based its computation.
Petitioners further explain that when
the municipality enacted Resolution
No. 94, s. 2002, re-aligning the
amount appropriated for the 17 newly
created positions to the 5% salary
increase of the municipal personnel,
it did so with the understanding that
the 17 newly created positions were

vacated and/or abolished. Thus, the

re-alignment of the aforesaid amount
was done without decreasing the
whole amount originally earmarked
for personal services.
Claiming good faith, petitioners insist
that Resolution No. 66, s. 2002 was
enacted on 2 July 2002, while LBC
No. 75 was issued by DBM on 12
July 2002 and was received by them
at a much later date; that Notice of
Disallowance No. 03-006 was issued
only on 16 May 2003, after the
municipality
had
already
implemented the 5% salary increase
pursuant to Resolution Nos. 66 and
94,
s.
2002;
and
that
the Sangguniang
Panlalawiganrecognized the good

faith of the municipality when it

enacted Resolution No. 2004-1185
where it reconsidered its earlier
Resolution No. 2003-808.
We PARTIALLY GRANT the petition.
The COA disallowed the amount
of P895,891.50 on the ground that
the 5% salary increase exceeded the
total allowable appropriations of the
municipality for personal services
provided by law, specifically Section
325(a)27 of the LGC. It based its
finding on the recomputation made
by Ms. Virginia B. Farro, Provincial
Budget Officer of Ifugao, which
showed that the Annual Budget of the
municipality exceeded the personal
services
limit
byP3,944,568.05.28 According to the

COA, the municipalitys budget

adopted the salary rates under LBC
No. 69 instead of the salary rates
prescribed under LBC No. 74 which
is the applicable circular in this
case.29
As regards petitioners reliance on
Resolution
No.
2002-556
of
the Sangguniang Panlalawigan, the
COA in its Decision No. 2005-071
made it clear that the review of the
2002
municipal
budget
by
the SangguniangPanlalawigan was
only limited to the provisions stated in
the said budget which contained,
among others, provisions for the
funding of the 17 newly created
positions, and not its re-alignment to
the
5%
salary
increase.

Consequently, the declaration by

the Sangguniang Panlalawigan in the
said Resolution that the 2002
municipal budget was operative did
not include the grant of the 5% salary
increase, as the same was not
contained in the said budget but in
Resolution No. 66, s. 2002.30
We find that the COA correctly
affirmed the disallowance of the
amount of P895,891.50.
At the outset, it must be stressed that
factual findings of administrative
bodies charged with their specific
field of expertise, are afforded great
weight by the courts, and in the
absence of substantial showing that
such findings were made from an
erroneous estimation of the evidence

presented, they are conclusive, and

in the interest of stability of the
governmental structure, should not
be disturbed.31
In this case, the assailed Decisions of
the COA clearly presented the factual
findings and adequately explained
the legal basis for disallowing the
said amount. Indeed, as computed by
Ms. Virginia Farro, the Provincial
Budget Officer of Ifugao, the annual
budget of Mayoyao for 2002
exceeded the limit for personal
services as prescribed in Section
325(a) of the LGC by P3,944,568.05.
Further, it was established that the
grant of the increase through the
adoption of higher salary class
schedule is not among the list of

items and activities whereby the

limitation for personal services may
be waived pursuant to LBC No. 75.
Finally, the municipality adopted the
salary rates under LBC No. 69 and
not the salary rates under LBC No.
74. No grave abuse of discretion
amounting to lack or excess of
jurisdiction can thus be attributed to
respondent COA. Grave abuse of
discretion exists where an act of a
court or tribunal is performed with a
capricious or whimsical exercise of
judgment equivalent to lack of
jurisdiction, or where the power is
exercised in an arbitrary or despotic
manner by reason of passion or
personal hostility which must be so
patent and gross as to amount to an
invasion of positive duty or to a virtual

refusal to perform the duty enjoined

or to act at all in contemplation of law
mere abuse of discretion is not
enough.32
However, we find that petitioners
should not be ordered to refund the
disallowed amount because they
acted in good faith.
In Abanilla
v.
Commission
on
Audit,33 the Board of Directors of the
Metropolitan Cebu Water District
(MCWD) issued several resolutions
giving benefits and privileges to its
personnel
which
included
hospitalization
privileges,
monetization
of
leave
credits,
Christmas bonus, and longevity
allowance. MCWD likewise entered
into
a
collective
bargaining

agreement
(CBA)
with
the
employees union providing for
benefits, such as cash advances,
13th month pay, mid-year bonus,
Christmas bonus, vacation and leave
credits, hospitalization, medicare,
uniform
privileges
and
water
allowance.
However, the COA disallowed the
amount
of P12,221,120.86
representing hospitalization benefits,
mid-year bonus, 13th month pay,
Christmas bonus and longevity pay
on the ground that the compensation
package of MCWD personnel may no
longer be subject of a CBA, as its
officers and employees were covered
by the Civil Service laws, and not by
the Labor Code.

On petition for certiorari before this

Court, the disallowance by COA was
sustained; however, the MCWD
personnel who received those
benefits were no longer required to
refund the same. The Court held,
thus:
While we sustain the disallowance of
the above benefits by respondent
COA, however, we find that the
MCWDaffected
personnel
who
received the above mentioned
benefits and privileges acted in good
faith under the honest belief that the
CBA authorized such payment.
Consequently, they need not refund
them.
In Querubin vs. Regional Cluster
Director, Legal and Adjudication

Office, COA Regional Office VI,

Pavia, Iloilo City, citing, De Jesus vs.
Commission on Audit, this Court
held.:
"Considering, however, that all the
parties here acted in good faith, we
cannot countenance the refund of
subject incentive benefits for the year
1992, which amounts the petitioners
have already received. Indeed,
no indicia of bad faith can be
detected under the attendant facts
and circumstances. The officials and
chiefs of offices concerned disbursed
such incentive benefits in the honest
belief that the amounts given were
due to the recipients and the latter
accept the same with gratitude,

confident that they richly deserve

such benefits.
x x x. Petitioners here received the
additional allowances and bonuses in
good faith under the honest belief
that the LWUA Board Resolution No.
313 authorized such payment. At the
time
petitioners
received
the
additional allowances and bonuses,
the
Court
had
not
yet
decided Baybay
Water
District.
Petitioners had no knowledge that
such payment was without legal
basis. Thus, being in good faith,
petitioners need not refund the
allowances and bonuses they
received but disallowed by the
COA."34

In Blaquera v. Alcala,35 petitioners

who were officials and employees of
several government agencies were
paid productivity incentive benefits for
the year 1992 pursuant to Executive
Order No. 292, otherwise known as
the Administrative Code of 1987. On
19 January 1993, then President
Fidel V. Ramos issued Administrative
Order No. 29 limiting the grant of
productivity incentive benefits for the
year 1992 in the maximum amount
of P1,000.00 and enjoining the grant
of said benefit without prior approval
of the President.1avvph!1
Consequently, all agencies that
authorized
the
payment
of
productivity incentive benefits for the
year 1992 in excess of P1,000.00

were directed to immediately cause

the return/refund of the excess
amount. Thus, respondents therein
caused
the
deduction,
from
petitioners salaries or allowances, of
the amounts needed to cover the
alleged overpayments.
On petition before the Court, it was
held that Administrative Order No. 29
limiting the amount of incentive
benefits and enjoining heads of
government agencies from granting
incentive benefits without prior
approval of the President, was a valid
exercise of the Presidents power of
control and authority over executive
departments. As regards petitioners
contention that respondents should
be held personally liable for the

refund in question, the Court held,

thus:
Untenable is petitioners contention
that the herein respondents be held
personally responsible for the refund
in question. Absent a showing of bad
faith or malice, public officers are not
personally
liable
for
damages
resulting from the performance of
official duties.
Every public official is entitled to the
presumption of good faith in the
discharge of official duties. Absent
any showing of bad faith and malice,
there is likewise a presumption of
regularity in the performance of
official duties.

In upholding the constitutionality of

AO 268 and AO 29, the Court
reiterates
the
well-entrenched
doctrine that "in interpreting statutes,
that which will avoid a finding of
unconstitutionality is to be preferred."
Considering, however, that all the
parties here acted in good faith, we
cannot countenance the refund of
subject incentive benefits for the year
1992, which amounts the petitioners
have already received. Indeed,
no indicia of bad faith can be
detected under the attendant facts
and circumstances. The officials and
chiefs of offices concerned disbursed
such incentive benefits in the honest
belief that the amounts given were
due to the recipients and the latter

accepted the same with gratitude,

confident that they richly deserve
such benefits.36
This ruling has been consistently
applied in several cases.37
In the instant case, although the 5%
salary
increase
exceeded
the
limitation for appropriations for
personal services in the Municipality
of Mayoyao, this alone is insufficient
to overthrow the presumption of good
faith in favor of petitioners as
municipal officials. It must be
mentioned that the disbursement of
the 5% salary increase of municipal
personnel was done under the color
and by virtue of resolutions enacted
pursuant to LBC No. 74, and was
made only after the Sangguniang

Panlalawigan declared operative the

2002 municipal budget. In fact, the
Notice of Disallowance was issued
only on 16 May 2003, after the
municipality
had
already
implemented the salary increase.
Moreover, in its Resolution No. 20041185,38 the Sangguniang
Panlalawigan reconsidered its prior
disallowance of the adoption of a first
class salary schedule and 5% salary
increase of the Municipality of
Mayoyao based on its finding that the
municipal officials concerned acted in
good faith, thus:
WHEREAS, the Sangguniang Bayan
of Mayoyao however justified that
their realignment of the amount of
Php 1,936,524.96 and the adoption

of a first class salary was done in

good faith and with the purpose of
giving decent pay to officials and
employees of the said Municipality
considering the high cost of living;
WHEREAS, this Body finding merit
on the justification of the said
Municipality hereby reconsiders its
earlier stand on the disallowed
adoption of a first class salary
schedule and the 5% salary increase
of the Municipality of Mayoyao,
Ifugao;
x x x x.39
Furthermore, granting arguendo that
the municipalitys budget adopted the
incorrect salary rates, this error or
mistake was not in any way indicative

of bad faith. Under prevailing

jurisprudence, mistakes committed
by a public officer are not actionable,
absent a clear showing that he was
motivated by malice or gross
negligence amounting to bad faith. It
does not simply connote bad moral
judgment or negligence. Rather,
there must be some dishonest
purpose or some moral obliquity and
conscious doing of a wrong, a breach
of a sworn duty through some motive
or intent, or ill will. It partakes of the
nature of fraud and contemplates a
state of mind affirmatively operating
with furtive design or some motive of
self-interest or ill will for ulterior
purposes.40 As we see it, the
disbursement of the 5% salary
increase was done in good faith.

Accordingly, petitioners need not

refund the disallowed disbursement
in the amount of P895,891.50.
WHEREFORE, the instant Petition
is PARTIALLY
GRANTED. The
Decision of the Commission on Audit
No. 2005-071 dated 29 December
2005 and its Decision No. 2007-040
dated 25 October 2007 affirming the
disallowance of the 5% salary
increase of the municipal personnel
of Mayoyao, Ifugao, covering the
period 15 February to 30 September
2002 in the amount of P895,891.50,
are AFFIRMED with MODIFICATION
that petitioners need not refund the
said
disallowed
amount
of P895,891.50.
SO ORDERED.

THIRD DIVISION
G.R. No. 161694
2006

June 26,

PEPITO
VELASCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS,
and
COMMISSION,
ANTONIO
TAYAG, ERNESTO TAYAG and
RODOLFO TAYAG, Respondents.
DECISION
TINGA, J.:
There is little difficulty on the part of
the Court in upholding the rulings
challenged in this Petition for Review
and confirming the finding that private

respondents in this case were

illegally dismissed. Further, it is clear
that private respondents should be
awarded
full
backwages,
an
entitlement denied them even as they
were granted separation pay in lieu of
reinstatement. We affirm, subject to
modification on the matter of
backwages.
Petitioner Pepito Velasco (Velasco) is
the owner-manager of Modern
Furniture Manufacturing (Modern
Furniture).1 Private
respondent
Ernesto Tayag was hired as a
carpenter by Velasco and Modern
Furniture in 1968, while his relatives,
co-private
respondents
Antonio

Tayag and Rodolfo Tayag, were hired

in the same capacity in 1970. All
three were paid on a piece-rate
basis.2
According to the Tayags, in 1998,
Velasco and Modern Furniture
started laying off workers due to
business losses, albeit with the
promise to the dismissed workers
that they would be rehired should the
business again prosper. Purportedly,
Antonio and Ernesto Tayag were laid
off in December of 1999, while
Rodolfo Tayag was dismissed in May
of 2000.3 All three filed complaints for
illegal dismissal against Modern
Furniture and Velasco with the

National
Labor
Relations
Commission, Regional Arbitration
Branch No. III, based in San
Fernando, Pampanga.4 The Tayags
sought separation pay in lieu of
reinstatement, as well as 13th month
pay, holiday pay, overtime pay, and
exemplary damages.5
Velasco and Modern Furniture have a
different version. They claimed that
while they had indeed suffered
business losses in 1998, causing
them to lay off some workers, they
subsequently agreed with their
employees, including the Tayags, to
pay wages on a piece-rate basis. In
the first part of the year 2000,

Ernesto Tayag inexplicably stopped

reporting to work. In June of that
year, Antonio and Rodolfo Tayag also
stopped reporting for work.6 Velasco
claimed that he next heard from the
three when he was served summons
in the instant case.7 It was thus
argued that the Tayags were not
actually terminated, but instead had
abandoned their work.
After the complaints of the Tayags
were consolidated, Labor Arbiter
Eduardo J. Carpio rendered a
Decision dated 15 September 2000
dismissing the complaints for illegal
dismissal.
The
Labor
Arbiter
reasoned that since Velasco and

Modern
Furniture
had
denied
terminating the employees in the first
place, the burden fell upon the
Tayags to prove by substantial
evidence that they were actually
terminated.8 The
Labor
Arbiter
concluded that the contentions of the
Tayags
of
dismissal
were
unsubstantiated,
and
thus
he
dismissed the complaints.
On appeal, the NLRC set aside the
Decision of the Labor Arbiter in its
Resolution
dated
26
March
2002.9 The NLRC held that the Labor
Arbiter had misappreciated the facts
of the case. It was noted that Velasco
and Modern Furniture had admitted

that since the Tayags were paid on a

per piece basis, they were not
required to go to the work place. In
fact, the Tayags were only required to
report for work when new job orders
came in and they were called upon
by Velasco and Modern Furniture.
The NLRC found that there was no
instance from the evidence adduced
wherein Velasco or Modern Furniture
called upon the Tayags to report for
work.10 From these facts, the NLRC
concluded that the Tayags had not
reported to the premises of Modern
Furniture simply because they were
not given any work, as in fact they
had actually been dismissed. Thus,

the NLRC did not agree with the

contention that the Tayags had
abandoned work, and concluded
instead that they were entitled to
separation
pay
in
lieu
of
reinstatement. Nonetheless, the other
monetary claims of the Tayags were
dismissed for lack of merit.11
Velasco filed a Petition for Certiorari
and Prohibition with the Court of
Appeals, assailing the Resolution of
the NLRC. In a Decision12 dated 30
September 2003, the Court of
Appeals sustained the NLRC and
dismissed the petition. The appellate
court agreed that it was Velasco, as
employer, who had the burden to

prove that the termination was for just

or authorized causes, and that
Velasco had failed to overcome such
burden.13 The Court of Appeals also
deemed the award of separation pay
as proper, with the finding of illegal
dismissal and separation pay being a
proper alternative remedy should
reinstatement
be
no
longer
possible.14
Hence this petition, brought forth
after the Court of Appeals had denied
Velascos
Motion
for
Reconsideration.15The
crux
of
Velascos arguments before this
Court rests on one sentence in the

Resolution
states:

of

the

NLRC,

which

Viewed in this light, the relief

available to complainants-appellants
is
reinstatement
without
backwages there being no showing
also that there was illegal
dismissal.16
Velasco argues that since the NLRC
had concluded that there was no
illegal dismissal, the Court of Appeals
erred in concluding instead that the
Tayags
were
illegally
dismissed.17 From the same premise,
Velasco also claims that the Court of
Appeals also erred in granting

separation pay, considering the

alleged finding of the NLRC that
there was no illegal dismissal.18
The proper perspective should be
asserted. This being an appeal by
certiorari under Rule 45 from a
decision of the Court of Appeals, the
petitioner must be able to establish
an error of law imputable to the Court
of Appeals, since it is the decision of
that court that is primarily reviewed
by this Court. In short, the petitioner
must stake the petition on the
position that in error was the Court of
Appeals itself, rather than the
agencies below.

In the case at bar, Velasco claims

that the Court of Appeals erred in
ruling that the Tayags were illegally
dismissed because the NLRC had
purportedly concluded otherwise. We
are not persuaded.
We have examined the entirety of the
Resolution of the NLRC, as well as
the controversial sentence. The
phrase "there being no showing also
that there was illegal dismissal" is
clearly off-tangent with the rest of the
Resolution, as well as the dispositive
portion thereof.
The Resolution of the NLRC is eight
(8) pages long. It devoted the first

four (4) pages to the factual narrative

and a summary of the ruling of the
Labor Arbiter. The Resolution then
proceeded to discuss the position of
the Labor Arbiter that with Velascos
counter-allegation of abandonment
the burden of proof shifted to the
Tayags to establish by substantial
evidence that they were terminated
by Velasco. On this point, the NLRC
concluded
that
"[the
Tayags
opposing]
contention
has
merit."19 The NLRC then proceeded
to cite the legal doctrines on
abandonment, including a statement
that the burden of proof was on the
employer to show an unequivocal

intent on the part of the employee to

discontinue employment.20
We now quote the next three pages
of the Resolution, culminating in the
paragraph
containing
the
controverted passage:
In this case, complainants-appellants
Antonio and Ernesto Tayag contend
that they were laid off in December
1999, while complainant-appellant
Rodolfo Tayag was laid-off in May,
2000 and that respondents-appellees
promised to recall them as soon as
business gets better. On the other
hand,
respondents-appellants
contend that complainant-appellant

Ernesto Tayag voluntarily did not

come to the work premises for about
six (6) months or since February,
2000;
that
in
June,
2000,
complainants-appellants Antonio and
Rodolfo Tayag likewise for no
apparent reason failed to report at
respondents-appellees
premises.
Moreover,
respondents-appellees
repeatedly assert that:
"Apparently, complainants-appellants
are being paid on a per piece basis
and not required to go to the work
place, they have the liberty to go or
not to go to the work place and
therefore, they cannot claim to have
been
illegally
dismissed
if

respondent-appellee does not notify

or call them for work. It should also
be noted that the complainantsappellants work is based on orders
received by the respondent-appellee,
thus, if there are no work orders, they
have no work. Furthermore, herein
complainants-appellants are not the
only workers engaged by herein
respondent-appellee,
thus
work
orders are usually divided among
them and if there are only few orders,
other workers would have no work."
(p. 55, Records)
From the foregoing, it is clear that
complainants-appellants only go
to work when there are orders that

need to be done and when they are

called upon by respondentsappellees. The choice to call
complainants-appellants rests on
respondents-appellees, so the
latter has no basis to complain
that
complainants-appellants
failed to appear at the work
premises. From the evidence
adduced, there was no instance
where
respondents-appellees
called
upon
complainantsappellants to report for work
because there are orders to be
done and the latter refused. What
respondents-appellees are merely
saying is that complainants-

appellants had voluntarily failed to

go to the premises. Clearly, the
reason
why
complainantsappellants do not appear at the
work premises is the fact that they
are not called upon to do work
pursuant
to
their
alleged
agreement of paying by payment
rate basis. It is undisputed that
since early 2000, complainantappellant Ernesto Tayag was not
given work while complainantsappellants Antonio and Rodolfo
Tayag were not also given work
since
May,
2000.
Hence,
complainants-appellants believed
and concluded that they were laid

off. Having worked for more than

thirty (30) years with respondentsappellees, Antonio Tayag and
Ernesto Tayag are both fifty-five (55)
years of age while Rodolfo Tayag is
forty-six (46) years old. We can thus
safely conclude that another reason
why respondents-appellants do not
call upon them to work is because of
their having become old. Verily,
respondents-appellees assertion
that
complainants-appellants
abandoned their work have no
factual basis. We note that even
during the hearing of this case
until the Decision was issued,
there has been no offer of work

made by respondents-appellees to
complainants-appellants.
Viewed in this light, the relief
available
to
complainantsappellants
is
reinstatement
without backwages there being no
showing also that there was illegal
dismissal. However, it is clear that
respondents-appellees are no longer
interested in calling complainantsappellants back to work because of
the financial difficulty of the business
and that complainants-appellants on
the other hand, are asking for
separation pay. Such being the case,
separation
pay
in
lieu
of

reinstatement without backwages is

the proper relief in the instant case.21
Reading the entire Resolution, it is
beyond doubt that the NLRC
concluded that Velasco had failed to
establish that the Tayags had
abandoned their employment. Such
conclusion is crucial, Velascos
defense against the charge of illegal
dismissal being that the Tayags had
actually
abandoned
their
employment, which is recognized in
jurisprudence as a form of neglect of
duty one of the just causes for
dismissal under Article 282 of the
Labor Code.22 The disquisition is also
relevant, as it debunks the Labor

Arbiters contention that it fell upon

the Tayags to establish that they had
been illegally dismissed. Instead, the
NLRC correctly held that the burden
was upon Velasco to substantiate his
claim that the Tayags had abandoned
their employment.
Further, the NLRC concluded that the
Tayags had stopped reporting to the
premises of Modern Furniture
because Velasco and Modern
Furniture had stopped assigning
them work. Considering that the
Tayags were paid on a per-piece
basis, it necessarily followed that
they stopped receiving income as
well. The NLRC even hazarded a

theory that Velasco had stopped

giving the Tayags work because of
their age. Thus, the NLRC stated:
"Verily,
respondents-appellees
assertion
that
complainantsappellants abandoned their work
have no factual basis."23
Given the context of the preceding
discussion, which illustrated that the
Tayags
were
not
guilty
of
abandonment, there is no legal basis
whatsoever for the conclusion that
"there was no showing x x x that
there was illegal dismissal." It is not
clear why the NLRC stated that there
was "no showing also that there was
illegal dismissal" when its preceding

discussion so obviously pointed to

the contrary. Yet when it is clear that
the cited passage cannot stand with
the rest of the decision, including the
dispositive portion, the Court cannot
obviously confer binding effect on the
conclusion that there was no illegal
dismissal, as it runs contrary against
the grain of the rest of the Resolution.
Indeed, the dispositive portion of the
Resolution clearly supports the
premise that the Tayags were illegally
dismissed, there being an award of
separation
pay
in
lieu
of
reinstatement.

WHEREFORE, premises considered,

the appeal is partly GRANTED and
the Decision dated 15 September
2000 finding that complainantsappellants simply did not report for
work or were the ones who
abandoned their work is hereby
ordered SET ASIDE. A new Decision
is
hereby
issued
ordering
respondents-appellees
to
award
complainants-appellants separation
pay in lieu of reinstatement computed
at one-half (1/2) month pay for every
year of service computed as follows:
1) Antonio Tayag
Separation Pay:

From 1970 to May 2000 = 30 yrs.

P1,200.00 x 4 wks x 30 yrs. x
mo. P72,000.00
2) Ernesto Tayag
Separation Pay:
From 1968 to Dec. 1999 31 yrs.
P1,500.00 x 4 wks. X 31 yrs. x
mo. P93,000.00
3) Rodolfo Tayag
Separation Pay:
From 1970 to May 2000 = 30 yrs.
P1,500.00 x 4 wks. x 30 yrs. x
mo. P90,000.00

GRAND TOTAL P255,000.00

SO ORDERED.24
Under Article 279 of the Labor Code,
an employee unjustly dismissed from
work is entitled to reinstatement and
backwages, among others. However,
it has long been recognized that if
reinstatement is no longer possible or
practicable, the employer may be
made instead to pay separation pay
to the employee in lieu of
reinstatement.25The
dispositive
portion of the Resolution is consistent
with the premise that the Tayags
were entitled to reinstatement by
reason of their illegal dismissal, but

they could receive instead separation

pay in lieu of reinstatement if
reinstatement
is
no
longer
practicable. The dispositive portion
does not hew to a mindset that the
Tayags were not illegally dismissed,
the thinking which Velasco wishes to
ascribe on the NLRC. It is derived
instead from the conclusion that the
Tayags were illegally dismissed, a
conclusion that may contradict the
cited passage of the NLRC
Resolution, but not the tenor and
findings of the Resolution in its
entirety.
Other than the erroneous contention
that the NLRC had concluded that

there was no illegal dismissal,

Velascos only remaining argument is
that the payment of separation pay
was "misplaced, since no evidence
as to the necessity thereof was
presented." Velasco cites the Courts
comment in Quijano v. Mercury Drug
Corp.26 that "the doctrine of strained
relations should be strictly construed
x x x Every labor dispute almost
always results in strained relations,
and the phrase cannot be given an
over-arching interpretation x x x x27
In Quijano, it was the employer who
was seeking that the employee be
granted separation pay instead of
reinstatement, while in this case

Velasco consistently argued against

the award of separation pay. Of
course, following Velascos logic, the
Tayags should instead be reinstated.
Nonetheless, the Court finds no
reason to disturb the ruling that the
Tayags
should
be
awarded
separation
pay
in
lieu
of
reinstatement. The cited remarks of
the Court in Quijano were made in
the context of pointing out that
"[s]ome unscrupulous employers x x
x have taken advantage of the
overgrowth of this doctrine of
strained relations by using it as a
cover to get rid of its employees and

thus defeat
security."28

their

right

to

job

The accepted doctrine is that

separation pay may avail in lieu of
reinstatement if reinstatement is no
longer practical or in the best interest
of the parties.29 Separation pay in lieu
of reinstatement may likewise be
awarded if the employee decides not
to
be
reinstated.30 It
is
not
controverted that Modern Furniture
has undergone financial hardship,
and that the Tayags had opted to
seek separation pay in lieu of
reinstatement. We defer to the
findings of the NLRC, as affirmed by
the Court of Appeals and authorized

under jurisprudence, that separation

pay in lieu of reinstatement is
warranted in this case.
Finally, the Tayags argue in their
Memorandum before this Court that
the NLRC and Court of Appeals had
erred in not awarding them full
backwages.31 The
NLRC,
while
awarding separation pay to the
Tayags, held that they had failed to
establish sufficient factual basis for
their other monetary claims.32 The
Court of Appeals remained silent on
that aspect.
The Tayags are correct in pointing
out that they are entitled to full

backwages by reason of their illegal

dismissal, notwithstanding the award
of separation pay. The Court made
this point clear in Santos v. NLRC.33
The normal consequences of a
finding that an employee has been
illegally dismissed are, firstly, that the
employee becomes entitled to
reinstatement to his former position
without loss of seniority rights and,
secondly, the payment of backwages
corresponding to the period from his
illegal dismissal up to actual
reinstatement. The statutory intent on
this matter is clearly discernible.
Reinstatement restores the employee
who was unjustly dismissed to the

position from which he was removed,

that is, to his status quo ante
dismissal, while the grant of
backwages
allows
the
same
employee to recover from the
employer that which he had lost by
way of wages as a result of his
dismissal. These twin remedies
reinstatement and payment of
backwagesmake the dismissed
employee whole who can then look
forward to continued employment.
Thus do these two remedies give
meaning and substance to the
constitutional right of labor to security
of tenure. The two forms of relief
are distinct and separate, one from

the other. Though the grant of

reinstatement commonly carries
with it an award of backwages, the
inappropriateness
or
nonavailability of one does not carry
with it the inappropriateness or
non-availability
of
the
other. Separation pay was awarded
in favor of petitioner Lydia Santos
because the NLRC found that her
reinstatement was no longer feasible
or appropriate. As the term suggests,
separation pay is the amount that an
employee receives at the time of his
severance from the service and, as
correctly noted by the Solicitor
General in his Comment, is designed

to provide the employee with "the

wherewithal during the period that he
is
looking
for
another
employment." In the instant case,
the grant of separation pay was a
substitute for immediate and
continued re-employment with the
private
respondent Bank. The grant of
separation pay did not redress the
injury that is intended to be
relieved by the second remedy of
backwages, that is, the loss of
earnings that would have accrued
to the dismissed employee during
the period between dismissal and
reinstatement.
Put
a
little

differently, payment of backwages

is a form of relief that restores the
income that was lost by reason of
unlawful dismissal; separation
pay, in contrast, is oriented
towards the immediate future, the
transitional period the dismissed
employee must undergo before
locating a replacement job. It was
grievous error amounting to grave
abuse of discretion on the part of the
NLRC to have considered an award
of separation pay as equivalent to the
aggregate relief constituted by
reinstatement plus payment of
backwages under Article 280 of the
Labor
Code. The
grant
of

separation pay was a proper

substitute only for reinstatement;
it could not be an adequate
substitute both for reinstatement
and for backwages. In effect, the
NLRC in its assailed decision failed
to give to petitioner the full relief to
which she was entitled under the
statute.34 (Emphasis supplied)
The Santos rule has been repeatedly
affirmed by this Court, and must be
applied to this case.35 Even assuming
that the Tayags had not adduced any
evidence to establish the amount of
backwages to be paid, it cannot be
denied that under the law, particularly
Article 279 of the Labor Code, they

are entitled to backwages as a matter

of right, owing to their illegal
dismissal. Hence, the NLRC and the
Court of Appeals erred in not
awarding backwages as well.
However, the Court recognizes that
there may be some difficulty in
ascertaining the proper amount of
backwages, considering that the
Tayags were apparently paid on a
piece-rate basis. In Labor Congress
of the Philippines v. NLRC,36 the
Court was confronted with a situation
wherein several workers paid on a
piece-rate basis were entitled to back
wages by reason of illegal dismissal.

However, the Court noted that as the

piece-rate workers had been paid by
the piece, "there [was] a need to
determine the varying degrees of
production and days worked by each
worker," and that "this issue is best
left to the [NLRC]."37 We believe the
same result should obtain in this
case, and the NLRC be tasked to
conduct the proper determination of
the
appropriate
amount
of
backwages due to each of the
Tayags.38
Nonetheless, even as the case
should be remanded to the NLRC for
the
proper
determination
of
backwages, nothing in this decision

should be construed in a manner that

would impede the award of
separation pay to the Tayags as
previously rendered by the NLRC,
and affirmed by the Court of Appeals.
WHEREFORE, the Petition is
DENIED. The Resolution of the
National
Labor
Relations
Commission dated 26 March 2002
and the Decision of the Court of
Appeals dated 30 September 2003
are
AFFIRMED,
with
the
MODIFICATION that backwages
shall be awarded to respondents in
such amounts as shall be determined
by the National Labor Relations
Commission. In this regard, the case

is hereby REMANDED to the

National
Labor
Relations
Commission for the determination of
the back wages due respondents,
conformably with this Decision. Said
Commission is further DIRECTED TO
RESOLVE the issue of backwages
within sixty (60) days from its receipt
of a copy of this Decision and of the
records of the case and to submit to
this Court a report of its compliance
herewith within ten (10) days from the
rendition of its resolution. Costs
against petitioner.
SO ORDERED.

G.R. No. 191281

5, 2012

December

BEST WEAR GARMENTS and/or

WARREN PARDILLA, Petitioners,
vs.
ADELAIDA B. DE LEMOS and
CECILE
M.
OCUBILLO, Respondents.
DECISION
VILLARAMA, J.:
This is a petition for review on
certiorari under Rule 45 assailing the
Decision1 dated February 24, 2009
and Resolution2 dated February 10,
2010 of the Court of Appeals (CA) in
CA-G.R. SP No. 102002. TheCA

reversed the Decision3 dated August

28, 2007 of the National Labor
Relations Commission (NLRC) and
reinstated the September 5, 2005
Decision 4 of the Labor Arbiter.
Petitioner Best Wear Garments is a
sole proprietorship represented by its
General Manager Alex Sitosta.
Respondents Cecile M. Ocubillo and
Adelaida B. De Lemos were hired as
sewers on piece-rate basis by
petitioners on October 27, 1993
andJuly 12, 1994, respectively.
On May 20, 2004, De Lemos filed a
complaint5 for illegal dismissal with
prayer for backwages and other

accrued benefits, separation pay,

service incentive leave pay and
attorneys
fees.
A
similar
complaint6 was filed by Ocubillo on
June 10, 2004. Both alleged in their
position paper that in August 2003,
Sitosta arbitrarily transferred them to
other
areas
of
operation
of
petitioners garments company, which
they said amounted to constructive
dismissal as it resulted in less
earnings for them.
De Lemos claimed that after two
months in her new assignment, she
was able to adjust but Sitosta again
transferred her to a "different
operation where she could not earn

[as] much as before because byproducts require long period of time

to finish." She averred that the
reason for her transfer was her
refusal "to render [overtime work] up
to 7:00 p.m." Her request to be
returned to her previous assignment
was
rejected
and
she
was
"constrained not to report for work as
Sitosta had become indifferent to her
since said transfer of operation." She
further alleged that her last salary
was withheld by petitioner company.7
On her part, Ocubillo alleged that her
transfer was precipitated by her
having "incurred excessive absences
since 2001." Her absences were due

to the fact that her father became

very sick since 2001 until his untimely
demise on November 9, 2003; aside
from this, she herself became very
sickly. She claimed that from
September to October 2003, Sitosta
assigned her to different machines
"whichever is available" and that
"there were times, she could not earn
for a day because there was no
available machine to work for [sic]."
Sitosta also allegedly required her to
render overtime work up to 7:00 p.m.
which she refused "because she was
only paid up to 6:25 p.m."8
Petitioners denied having terminated
the employment of respondents who

supposedly committed numerous

absences without leave (AWOL).
They claimed that sometime in
February 2004, De Lemos informed
Sitosta that due to personal problem,
she intends to resign from the
company. She then demanded the
payment of separation pay. In March
2004, Ocubillo likewise intimated her
intention to resign and demanded
separation pay. Sitosta explained to
both De Lemos and Ocubillo that the
company had no existing policy on
granting separation pay, and hence
he could not act on their request. De
Lemos never reported back to work
since March 2004, while Ocubillo

failed to report for work from October

2004 to the present.
As to the allegation of respondents
that the reason for their transfer was
their refusal to render overtime work
until 7:00 p.m., petitioners asserted
that respondents are piece-rate
workers and hence they are not paid
according to the number of hours
worked.
On September 5, 2005, Labor Arbiter
Arden S. Anni rendered a Decision
granting respondents claims, as
follows:

WHEREFORE,
ALL
THE
FOREGOING
CONSIDERED,
judgment is rendered, as follows:
1. Declaring that complainants
were constructively, nay, illegally
dismissed from employment;
2. Ordering respondents to pay
each
of
the
complainants
SEPARATION PAY equivalent to
one-month salary for every year of
service, a fraction of at least six
(6) months being considered as
one (1) whole year;
3. Ordering respondents to pay
each
of
the
complainants
BACKWAGES computed from the

time of their dismissal up to the

finality of this decision.
For this purpose, both parties are
directed to submit their respective
computations of the total amount
awarded for approval by this office.
All other claims are dismissed for
lack of merit.
SO ORDERED.9
Labor Arbiter Anni ruled that since
respondents neither resigned nor
abandoned their jobs, the ambiguities
in the circumstances surrounding
their dismissal are resolved in favor
of the workers. It was emphasized
that respondents could no longer be

deemed terminated for reason of

AWOL because this prerogative
should have been exercised before
the dismissals have been effected.
Moreover, it would have been illogical
for respondents to resign and then
file a complaint for illegal dismissal.
Petitioners appealed to the NLRC
which reversed the Labor Arbiters
decision and dismissed respondents
complaints. The NLRC found no
basis for the charge of constructive
dismissal, thus:
Complainants alleged demotion is
vague. They simply allege that by
reason of their transfer in August

2003, they did not earn as much as

they earned in their previous
assignments. They failed to state
how much they earned before and
after their transfer, if only to
determine whether or not there was
indeed a diminution in their earnings.
Further, it is to be stressed that
complainants were paid on a piece
rate basis, which simply means that
the more output, they produced the
more earnings they will have. In other
words, the earning is dependent
upon complainants.
We find more credible respondents
assertion
that complainants
transfer was a valid exercise of

management
prerogative.
Respondent company points out that
it is engaged in the business of
garments manufacturing as a subcontractor. That, the kind of work it
performs is dependent into with its
client which specifies the work it
has to perform. And, that corollary
thereto, the work to be performed
by its employees will depend on
the work specifications in the
contract. Thus, if complainants
have been assigned to different
operations, it was pursuant to the
requirements of its contracts. x x x.
In furtherance of their defense that
complainants were not dismissed,

either actual or constructive in August

2003, respondents allege that
complainants continued to report for
work until February 2004 for
complainant De Lemos and August
2004 for complainant Ocubillo. We
lend credence to this allegation of
respondents because it remains
unrebutted by complainants.
It is to be noted that it was
only [on] May 20, 2004 and June
10,
2004
that
the
instant
consolidated cases were filed by
complainant De Lemos and Ocubillo,
respectively. It may not be amiss to
state that the date of filing jibe with
respondents
allegation
that

sometime in February and March

2004, complainants intimated their
intention to resign and demanded for
payment of separation pay but was
not favorably acted upon by
management.
Be that as it may, considering that
complainants were not dismissed by
respondents, they should be ordered
to report back to work without
backwages and for the respondents
to accept them.
WHEREFORE, premises considered,
the Decision dated September 5,
2005 is hereby SET ASIDE and a
new
one
entered
dismissing

complainants charge of illegal

dismissal for lack of merit. However,
there
being
no
dismissal,
complainants Adelaida B. De Lemos
and Cecile M. Ocubillo are hereby
directed to report back to work
without backwages within ten (10)
days from receipt of this Resolution
and for the respondent Company to
accept them under the same terms
and conditions at the time of their
employment.
SO ORDERED.10 (Italics in
original; emphasis supplied)
Respondents filed a
reconsideration which

the

motion for
the NLRC

denied. Thus, they elevated the case

to the CA alleging grave abuse of
discretion on the part of the NLRC.
By Decision dated February 24,
2009, the CA granted the petition for
certiorari, reversed the ruling of the
NLRC and reinstated the Labor
Arbiters decision with modification
that the service incentive leave pay
shall be excluded in the computation
of the monetary award. The CA found
no valid and legitimate business
reason for the transfer order which
entailed the reduction of respondents
earnings. Because respondents plea
to be returned to their former posts
was not heeded by petitioners, no

other conclusion "is discernible from

the attendant circumstances except
the fact that [respondents] transfer
was unreasonable, inconvenient and
prejudicial to them which [is]
tantamount
to
a
constructive
dismissal."11 Moreover,
the
unauthorized
absences
of
respondents did not warrant a finding
of abandonment in view of the length
of their service with petitioner
company and the difficulty in finding
similar employment. The CA further
invoked the rule that an employee
who forthwith takes steps to protest
his layoff cannot by any logic be said
to have abandoned his work.

Petitioners filed a motion for partial

reconsideration which was denied by
the CA.
Hence, this petition alleging that the
CA has glaringly overlooked and
clearly erred in its findings of fact and
in applying the law on constructive
dismissal.
At the outset, it must bestated that
the main issue in this case involves a
question of fact. It is an established
rule that the jurisdiction of the
Supreme Court in cases brought
before it from the CA via Rule 45 of
the 1997 Rules of Civil Procedure is
generally limited to reviewing errors

of law. This Court is not a trier of

facts. In the exercise of its power of
review, the findings of fact of the CA
are conclusive and binding and
consequently, it is not our function to
analyze or weigh evidence all over
again.12
There are, however, recognized
exceptions13 to this rule such as when
there is a divergence between the
findings of facts of the NLRC and that
of the CA.14 In this case, the CAs
findings are contrary to those of the
NLRC. There is, therefore, a need to
review the records to determine
which of them should be preferred as

more conformable
facts.15

to

evidentiary

The right of employees to security of

tenure does not give them vested
rights to their positions to the extent
of depriving management of its
prerogative
to
change
their
assignments or to transfer them.
Thus, an employer may transfer or
assign employees from one office or
area of operation to another, provided
there is no demotion in rank or
diminution of salary, benefits, and
other privileges, and the action is not
motivated by discrimination, made in
bad faith, or effected as a form of

punishment or demotion
sufficient cause.16

without

In Blue
Dairy
Corporation
NLRC,17 we held that:

v.

x x x. The managerial prerogative to

transfer personnel must be exercised
without grave abuse of discretion,
bearing in mind the basic elements of
justice and fair play. Having the right
should not be confused with the
manner in which that right is
exercised. Thus, it cannot be used as
a subterfuge by the employer to rid
himself of an undesirable worker. In
particular, the employer must be able
to show that the transfer is not

unreasonable,
inconvenient
or
prejudicial to the employee; nor does
it involve a demotion in rank or a
diminution of his salaries, privileges
and other benefits. Should the
employer fail to overcome this burden
of proof, the employees transfer shall
be tantamount to constructive
dismissal, which has been defined as
a
quitting
because
continued
employment is rendered impossible,
unreasonable or unlikely; as an offer
involving a demotion in rank and
diminution
in
pay.
Likewise,
constructive dismissal exists when an
act
of
clear
discrimination,
insensibility or disdain by an

employer has become so unbearable

to the employee leaving him with no
option but to forego with his
continued employment.18
With the foregoing as guidepost, we
hold that the CA erred in reversing
the NLRCs ruling that respondents
were not constructively dismissed.
Being piece-rate workers assigned to
individual
sewing
machines,
respondents earnings depended on
the quality and quantity of finished
products. That their work output
might have been affected by the
change in their specific work
assignments does not necessarily

implythat any resultingreduction in

payis tantamount to constructive
dismissal. Workers under piece-rate
employment have no fixed salaries
and their compensation is computed
on the basis of accomplished tasks.
As admitted by respondent De
Lemos, some garments or byproducts took a longer time to finish
so they could not earn as much as
before. Also,the type of sewing jobs
available would depend on the
specifications made by the clients of
petitioner company. Under these
circumstances, it cannot be said that
the transfer was unreasonable,
inconvenient or prejudicial to the

respondents. Such deployment of

sewers to work on different types of
garments as dictated by present
business necessity is within the ambit
of management prerogative which, in
the absence of bad faith, ill motive or
discrimination,
should
not
be
interfered with by the courts.
The records are bereft of any
showing of clear discrimination,
insensibility or disdain on the part of
petitioners
in
transferring
respondents to perform a different
type of sewing job.It is unfair to
charge petitioners with constructive
dismissal
simply
because
the
respondents insist that their transfer

to a new work assignment was

against their will. We have long
stated that "the objection to the
transfer being grounded on solely
upon the personal inconvenience or
hardship that will be caused to the
employee by reason of the transfer is
not a valid reason to disobey an
order of transfer."19 That respondents
eventually discontinued reporting for
work after their plea to be returned to
their former work assignment was
their personal decision, for which the
petitioners should not be held liable
particularly as the latter did not, in
fact, dismiss them.

Indeed, there was no evidence that

respondents were dismissed from
employment.1wphi1 In
fact,
petitioners expressed willingness to
accept them back to work. There
being no termination of employment
by the employer, the award of
backwages cannot be sustained. It is
well settled that backwages may be
granted only when there is a finding
of illegal dismissal.20 In cases where
there is no evidence of dismissal, the
remedy is reinstatement but without
backwages.21
The constitutional policy of providing
full protection to labor is not intended
to
oppress
or
destroy

management.22While the Constitution

is committed to the policy of social
justice and the protection of the
working class, it should not be
supposed that every labor dispute will
be automatically decided in favor of
labor. Management also has its rights
which are entitled to respect and
enforcement in the interest of simple
fair play.23 Thus, where management
prerogative to transfer employees is
validly exercised, as in this case,
courts will decline to interfere.
WHEREFORE, the petition for review
on
certiorari
is GRANTED. The
Decision dated February 24, 2009
and Resolution dated February 10,

2010 of the Court of Appeals in CAG.R. SP No. 102002 are SET

ASIDE. The Decision dated August
28, 2007 of the National Labor
Relations
Commission
is
hereby REINSTATED and UPHELD.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 192558
15, 2012

February

BITOY
JAVIER
(DANILO
P.
JAVIER), Petitioner,
vs.
FLY
ACE
CORPORATION/FLORDELYN
CASTILLO, Respondents.

DECISION
MENDOZA, J.:
This is a petition under Rule 45 of the
Rules of Civil Procedure assailing the
March 18, 2010 Decision1 of the
Court of Appeals (CA) and its June 7,
2010 Resolution,2 in CA-G.R. SP No.
109975, which reversed the May 28,
2009 Decision3 of the National Labor
Relations Commission (NLRC) in the
case entitled Bitoy Javier v. Fly
Ace/Flordelyn Castillo,4 holding that
petitioner Bitoy Javier (Javier) was
illegally dismissed from employment
and
ordering
Fly
Ace
Corporation (Fly
Ace) to
pay

backwages and separation pay in lieu

of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a
complaint before the NLRC for
underpayment of salaries and other
labor standard benefits. He alleged
that he was an employee of Fly Ace
since September 2007, performing
various tasks at the respondents
warehouse such as cleaning and
arranging the canned items before
their delivery to certain locations,
except in instances when he would
be ordered to accompany the
companys
delivery
vehicles,

as pahinante; that he reported for

work from Monday to Saturday from
7:00 oclock in the morning to 5:00
oclock in the afternoon; that during
his employment, he was not issued
an identification card and payslips by
the company; that on May 6, 2008,
he reported for work but he was no
longer allowed to enter the company
premises by the security guard upon
the instruction of Ruben Ong (Mr.
Ong), his superior;5 that after several
minutes of begging to the guard to
allow him to enter, he saw Ong whom
he approached and asked why he
was being barred from entering the
premises; that Ong replied by saying,

"Tanungin mo anak mo;" 6 that he

then went home and discussed the
matter with his family; that he
discovered that Ong had been
courting his daughter Annalyn after
the two met at a fiesta celebration in
Malabon City; that Annalyn tried to
talk to Ong and convince him to
spare her father from trouble but he
refused to accede; that thereafter,
Javier was terminated from his
employment without notice; and that
he was neither given the opportunity
to refute the cause/s of his dismissal
from work.
To support his allegations, Javier
presented an affidavit of one Bengie

Valenzuela who alleged that Javier

was a stevedore or pahinante of Fly
Ace from September 2007 to January
2008. The said affidavit was
subscribed
before
the
Labor
Arbiter (LA).7
For its part, Fly Ace averred that it
was engaged in the business of
importation and sales of groceries.
Sometime in December 2007, Javier
was contracted by its employee, Mr.
Ong,
as
extra
helper
on
a pakyaw basis at an agreed rate
of P 300.00 per trip, which was later
increased to P 325.00 in January
2008. Mr. Ong contracted Javier
roughly 5 to 6 times only in a month

whenever
the
vehicle
of
its
contracted hauler, Milmar Hauling
Services, was not available. On April
30, 2008, Fly Ace no longer needed
the services of Javier. Denying that
he was their employee, Fly Ace
insisted that there was no illegal
dismissal.8 Fly Ace submitted a copy
of its agreement with Milmar Hauling
Services
and
copies
of
acknowledgment receipts evidencing
payment to Javier for his contracted
services bearing the words, "daily
manpower (pakyaw/piece rate pay)"
and the latters signatures/initials.
Ruling of the Labor Arbiter

On November 28, 2008, the LA

dismissed the complaint for lack of
merit on the ground that Javier failed
to present proof that he was a regular
employee of Fly Ace. He wrote:
Complainant has no employee ID
showing his employment with the
Respondent nor any document
showing that he received the benefits
accorded to regular employees of the
Respondents. His contention that
Respondent failed to give him said ID
and payslips implies that indeed he
was not a regular employee of Fly
Ace considering that complainant
was a helper and that Respondent
company has contracted a regular

trucking for
products.

the

delivery

of

its

Respondent Fly Ace is not engaged

in trucking business but in the
importation and sales of groceries.
Since there is a regular hauler to
deliver its products, we give credence
to
Respondents
claim
that
complainant was contracted on
"pakiao" basis.
As to the claim for underpayment of
salaries, the payroll presented by the
Respondents showing salaries of
workers on "pakiao" basis has
evidentiary weight because although
the signature of the complainant

appearing thereon are not uniform,

they appeared to be his true
signature.
xxxx
Hence, as complainant received the
rightful salary as shown by the above
described payrolls, Respondents are
not liable for salary differentials. 9
Ruling of the NLRC
On appeal with the NLRC, Javier was
favored. It ruled that the LA skirted
the argument of Javier and
immediately concluded that he was
not a regular employee simply
because he failed to present proof. It
was of the view that apakyaw-basis

arrangement did not preclude the

existence of employer-employee
relationship. "Payment by result x x x
is a method of compensation and
does not define the essence of the
relation. It is a mere method of
computing compensation, not a basis
for determining the existence or
absence of an employer-employee
relationship.10" The NLRC further
averred that it did not follow that a
worker was a job contractor and not
an employee, just because the work
he was doing was not directly related
to the employers trade or business
or the work may be considered as
"extra" helper as in this case; and

that the relationship of an employer

and an employee was determined by
law and the same would prevail
whatever the parties may call it. In
this case, the NLRC held that
substantial evidence was sufficient
basis for judgment on the existence
of
the
employer-employee
relationship. Javier was a regular
employee of Fly Ace because there
was reasonable connection between
the particular activity performed by
the employee (as a "pahinante") in
relation to the usual business or trade
of the employer (importation, sales
and delivery of groceries). He may
not be considered as an independent

contractor because he could not

exercise any judgment in the delivery
of company products. He was only
engaged as a "helper."
Finding Javier to be a regular
employee, the NLRC ruled that he
was entitled to a security of tenure.
For failing to present proof of a valid
cause for his termination, Fly Ace
was found to be liable for illegal
dismissal of Javier who was likewise
entitled to backwages and separation
pay in lieu of reinstatement. The
NLRC thus ordered:
WHEREFORE, premises considered,
complainants appeal is partially

GRANTED. The assailed Decision of

the labor arbiter is VACATED and a
new one is hereby entered holding
respondent
FLY
ACE
CORPORATION guilty of illegal
dismissal and non-payment of 13th
month pay. Consequently, it is hereby
ordered to pay complainant DANILO
"Bitoy" JAVIER the following:
1. Backwages -P 45,770.83
2. Separation pay, in lieu of
reinstatement - 8,450.00
3. Unpaid 13th month
(proportionate) - 5,633.33
TOTAL -P 59,854.16

pay

All other claims are dismissed for

lack of merit.
SO ORDERED.11
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled
the NLRC findings that Javier was
indeed a former employee of Fly Ace
and reinstated the dismissal of
Javiers complaint as ordered by the
LA. The CA exercised its authority to
make its own factual determination
anent the issue of the existence of an
employer-employee
relationship
between the parties. According to the
CA:
xxx

In an illegal dismissal case the onus

probandi rests on the employer to
prove that its dismissal was for a
valid cause. However, before a case
for illegal dismissal can prosper, an
employer-employee relationship must
first be established. x x x it is
incumbent upon private respondent
to prove the employee-employer
relationship by substantial evidence.
xxx
It is incumbent upon private
respondent to prove, by substantial
evidence, that he is an employee of
petitioners, but he failed to discharge
his burden. The non-issuance of a

company-issued identification card to

private
respondent
supports
petitioners contention that private
respondent was not its employee.12
The CA likewise added that Javiers
failure to present salary vouchers,
payslips, or other pieces of evidence
to bolster his contention, pointed to
the inescapable conclusion that he
was not an employee of Fly Ace.
Further, it found that Javiers work
was not necessary and desirable to
the business or trade of the company,
as it was only when there were
scheduled deliveries, which a regular
hauling service could not deliver, that
Fly Ace would contract the services

of Javier as an extra helper. Lastly,

the CA declared that the facts alleged
by Javier did not pass the "control
test."
He contracted work outside the
company premises; he was not
required to observe definite hours of
work; he was not required to report
daily; and he was free to accept other
work elsewhere as there was no
exclusivity of his contracted service
to the company, the same being coterminous with the trip only.13 Since
no
substantial
evidence
was
presented to establish an employeremployee relationship, the case for
illegal dismissal could not prosper.

The
petitioners
moved
reconsideration, but to no avail.

for

Hence, this appeal anchored on the

following grounds:
I.
WHETHER THE HONORABLE
COURT OF APPEALS ERRED IN
HOLDING
THAT
THE
PETITIONER WAS NOT A
REGULAR EMPLOYEE OF FLY
ACE.
II.
WHETHER THE HONORABLE
COURT OF APPEALS ERRED IN
HOLDING
THAT
THE

PETITIONER IS NOT ENTITLED

TO HIS MONETARY CLAIMS.14
The petitioner contends that other
than its bare allegations and selfserving affidavits of the other
employees, Fly Ace has nothing to
substantiate its claim that Javier was
engaged
on
a pakyaw basis.
Assuming that Javier was indeed
hired on a pakyaw basis, it does not
preclude his regular employment with
the
company.
Even
the
acknowledgment receipts bearing his
signature and the confirming receipt
of his salaries will not show the true
nature of his employment as they do
not reflect the necessary details of

the commissioned task. Besides,

Javiers
tasks
as pahinante are
related, necessary and desirable to
the line of business by Fly Ace which
is engaged in the importation and
sale of grocery items. "On days when
there were no scheduled deliveries,
he worked in petitioners warehouse,
arranging and cleaning the stored
cans for delivery to clients."15 More
importantly, Javier was subject to the
control and supervision of the
company, as he was made to report
to the office from Monday to
Saturday, from 7:00 oclock in the
morning until 5:00 oclock in the
afternoon. The list of deliverable

goods,
together
with
the
corresponding clients and their
respective purchases and addresses,
would
necessarily
have
been
prepared by Fly Ace. Clearly, he was
subjected
to
compliance
with
company rules and regulations as
regards working hours, delivery
schedule and output, and his other
duties in the warehouse.16
The
petitioner
chiefly
relied
on Chavez v. NLRC,17 where the
Court ruled that payment to a worker
on a per trip basis is not significant
because "this is merely a method of
computing compensation and not a
basis for determining the existence of

employer-employee
relationship."
Javier likewise invokes the rule that,
"in controversies between a laborer
and his master, x x x doubts
reasonably arising from the evidence
should be resolved in the formers
favour. The policy is reflected is no
less than the Constitution, Labor
Code and Civil Code."18
Claiming to be an employee of Fly
Ace, petitioner asserts that he was
illegally dismissed by the latters
failure to observe substantive and
procedural due process. Since his
dismissal was not based on any of
the causes recognized by law, and
was implemented without notice,

Javier is entitled to separation pay

and backwages.
In its Comment,19 Fly Ace insists that
there was no substantial evidence to
prove
employer-employee
relationship. Having a service
contract with Milmar Hauling Services
for the purpose of transporting and
delivering company products to
customers, Fly Ace contracted Javier
as an extra helper or pahinante on a
mere "per trip basis." Javier, who was
actually a loiterer in the area, only
accompanied and assisted the
company driver when Milmar could
not deliver or when the exigency of
extra deliveries arises for roughly five

to six times a month. Before making

a delivery, Fly Ace would turn over to
the driver and Javier the delivery
vehicle with its loaded company
products. With the vehicle and
products in their custody, the driver
and Javier "would leave the company
premises using their own means,
method, best judgment and discretion
on how to deliver, time to deliver,
where and [when] to start, and
manner of delivering the products."20
Fly Ace dismisses Javiers claims of
employment as baseless assertions.
Aside from his bare allegations, he
presented nothing to substantiate his
status as an employee. "It is a basic

rule of evidence that each party must

prove his affirmative allegation. If he
claims a right granted by law, he
must prove his claim by competent
evidence, relying on the strength of
his own evidence and not upon the
weakness
of
his
opponent."21 Invoking
the
case
of Lopez v. Bodega City,22 Fly Ace
insists that in an illegal dismissal
case, the burden of proof is upon the
complainant who claims to be an
employee. It is essential that an
employer-employee relationship be
proved by substantial evidence.
Thus, it cites:

In an illegal dismissal case, the onus

probandi rests on the employer to
prove that its dismissal of an
employee was for a valid cause.
However, before a case for illegal
dismissal can prosper, an employeremployee relationship must first be
established.
Fly Ace points out that Javier merely
offers factual assertions that he was
an employee of Fly Ace, "which are
unfortunately not supported by proof,
documentary or otherwise."23 Javier
simply assumed that he was an
employee of Fly Ace, absent any
competent or relevant evidence to
support it. "He performed his

contracted work outside the premises

of the respondent; he was not even
required to report to work at regular
hours; he was not made to register
his time in and time out every time he
was contracted to work; he was not
subjected to any disciplinary sanction
imposed to other employees for
company violations; he was not
issued a company I.D.; he was not
accorded the same benefits given to
other employees; he was not
registered with the Social Security
System (SSS) as
petitioners
employee; and, he was free to leave,
accept and engage in other means of
livelihood as there is no exclusivity of

his contracted services with the

petitioner, his services being coterminus with the trip only. All these
lead to the conclusion that petitioner
is not an employee of the
respondents."24
Moreover, Fly Ace claims that it had
"no right to control the result, means,
manner and methods by which Javier
would perform his work or by which
the same is to be accomplished."25 In
other words, Javier and the company
driver were given a free hand as to
how they would perform their
contracted services and neither were
they subjected to definite hours or
condition of work.

Fly Ace likewise claims that Javiers

function as a pahinante was not
directly related or necessary to its
principal business of importation and
sales of groceries. Even without
Javier, the business could operate its
usual course as it did not involve the
business of inland transportation.
Lastly, the acknowledgment receipts
bearing Javiers signature and words
"pakiao rate," referring to his earned
salaries on a per trip basis, have
evidentiary weight that the LA
correctly considered in arriving at the
conclusion that Javier was not an
employee of the company.

The Court affirms the assailed CA

decision.
It must be noted that the issue of
Javiers alleged illegal dismissal is
anchored on the existence of an
employer-employee
relationship
between him and Fly Ace. This is
essentially a question of fact.
Generally, the Court does not review
errors that raise factual questions.
However, when there is conflict
among the factual findings of the
antecedent deciding bodies like the
LA, the NLRC and the CA, "it is
proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate
the factual issues and to look into the

records of the case and re-examine

the questioned findings."26 In dealing
with factual issues in labor cases,
"substantial evidence that amount
of relevant evidence which a
reasonable mind might accept as
adequate to justify a conclusion is
sufficient."27
As the records bear out, the LA and
the CA found Javiers claim of
employment with Fly Ace as wanting
and
deficient.
The
Court
is
constrained to agree. Although
Section 10, Rule VII of the New
Rules
of
Procedure
of
the
NLRC28 allows a relaxation of the
rules of procedure and evidence in

labor cases, this rule of liberality does

not mean a complete dispensation of
proof. Labor officials are enjoined to
use reasonable means to ascertain
the facts speedily and objectively with
little regard to technicalities or
formalities but nowhere in the rules
are they provided a license to
completely discount evidence, or the
lack of it. The quantum of proof
required, however, must still be
satisfied. Hence, "when confronted
with conflicting versions on factual
matters, it is for them in the exercise
of discretion to determine which party
deserves credence on the basis of
evidence received, subject only to the

requirement that their decision must

be
supported
by
substantial
evidence."29 Accordingly,
the
petitioner needs to show by
substantial evidence that he was
indeed an employee of the company
against which he claims illegal
dismissal.
Expectedly, opposing parties would
stand poles apart and proffer
allegations as different as chalk and
cheese. It is, therefore, incumbent
upon the Court to determine whether
the party on whom the burden to
prove lies was able to hurdle the
same. "No particular form of evidence
is required to prove the existence of

such
employer-employee
relationship. Any competent and
relevant evidence to prove the
relationship
may
be
admitted.http://www.lawphil.net/judjuri
s/juri2009/may2009/gr_179652_2009
.html - fnt31 Hence, while no
particular form of evidence is
required, a finding that such
relationship exists must still rest on
some
substantial
evidence.
Moreover, the substantiality of the
evidence depends on its quantitative
as
well
as
its qualitative aspects."30Although
substantial evidence is not a function
of quantity but rather of quality, the x

x x circumstances of the instant case

demand that something more should
have been proffered. Had there been
other proofs of employment, such as
x x x inclusion in petitioners payroll,
or a clear exercise of control, the
Court would have affirmed the finding
of employer-employee relationship."31
In sum, the rule of thumb remains:
the onus probandi falls on petitioner
to establish or substantiate such
claim by the requisite quantum of
evidence.32 "Whoever
claims
entitlement to the benefits provided
by law should establish his or her
right thereto x x x."33 Sadly, Javier

failed to adduce substantial evidence

as basis for the grant of relief.
In this case, the LA and the CA both
concluded that Javier failed to
establish his employment with Fly
Ace. By way of evidence on this
point, all that Javier presented were
his
self-serving
statements
purportedly showing his activities as
an employee of Fly Ace. Clearly,
Javier failed to pass the substantiality
requirement to support his claim.
Hence, the Court sees no reason to
depart from the findings of the CA.
While Javier remains firm in his
position that as an employed

stevedore of Fly Ace, he was made to

work in the company premises during
weekdays arranging and cleaning
grocery items for delivery to clients,
no other proof was submitted to
fortify his claim. The lone affidavit
executed by one Bengie Valenzuela
was unsuccessful in strengthening
Javiers cause. In said document, all
Valenzuela attested to was that he
would frequently see Javier at the
workplace where the latter was also
hired as stevedore.34 Certainly, in
gauging the evidence presented by
Javier, the Court cannot ignore the
inescapable conclusion that his mere
presence at the workplace falls short

in proving employment therein. The

supporting affidavit could have, to an
extent, bolstered Javiers claim of
being tasked to clean grocery items
when there were no scheduled
delivery trips, but no information was
offered in this subject simply because
the witness had no personal
knowledge of Javiers employment
status in the company. Verily, the
Court
cannot
accept
Javiers
statements, hook, line and sinker.
The Court is of the considerable view
that on Javier lies the burden to pass
the well-settled tests to determine the
existence of an employer-employee
relationship, viz: (1) the selection and

engagement of the employee; (2) the

payment of wages; (3) the power of
dismissal; and (4) the power to
control the employees conduct. Of
these elements, the most important
criterion is whether the employer
controls or has reserved the right to
control the employee not only as to
the result of the work but also as to
the means and methods by which the
result is to be accomplished.35
In this case, Javier was not able to
persuade the Court that the above
elements
exist
in
his
case.1avvphi1 He could not submit
competent proof that Fly Ace
engaged his services as a regular

employee; that Fly Ace paid his

wages as an employee, or that Fly
Ace could dictate what his conduct
should be while at work. In other
words, Javiers allegations did not
establish that his relationship with Fly
Ace had the attributes of an
employer-employee relationship on
the basis of the above-mentioned
four-fold test. Worse, Javier was not
able to refute Fly Aces assertion that
it had an agreement with a hauling
company to undertake the delivery of
its goods. It was also baffling to
realize that Javier did not dispute Fly
Aces denial of his services
exclusivity to the company. In short,

all that Javier laid down were bare

allegations without corroborative
proof.
Fly Ace does not dispute having
contracted Javier and paid him on a
"per trip" rate as a stevedore, albeit
on apakyaw basis. The Court cannot
fail to note that Fly Ace presented
documentary proof that Javier was
indeed paid on a pakyaw basis per
the
acknowledgment
receipts
admitted as competent evidence by
the LA. Unfortunately for Javier, his
mere denial of the signatures affixed
therein cannot automatically sway us
to ignore the documents because
"forgery cannot be presumed and

must be proved by clear, positive and

convincing evidence and the burden
of proof lies on the party alleging
forgery."36
Considering the above findings, the
Court does not see the necessity to
resolve the second issue presented.
One final note. The Courts decision
does not contradict the settled rule
that "payment by the piece is just a
method of compensation and does
not define the essence of the
relation."37 Payment on a piece-rate
basis does not negate regular
employment. "The term wage is
broadly defined in Article 97 of the

Labor Code as remuneration or

earnings, capable of being expressed
in terms of money whether fixed or
ascertained on a time, task, piece or
commission basis. Payment by the
piece is just a method of
compensation and does not define
the essence of the relations. Nor
does the fact that the petitioner is not
covered by the SSS affect the
employer-employee
relationship.
However, in determining whether the
relationship is that of employer and
employee or one of an independent
contractor, each case must be
determined on its own facts and all
the features of the relationship are to

be considered."38 Unfortunately for

Javier, the attendant facts and
circumstances of the instant case do
not provide the Court with sufficient
reason to uphold his claimed status
as employee of Fly Ace.
While the Constitution is committed
to the policy of social justice and the
protection of the working class, it
should not be supposed that every
labor dispute will be automatically
decided
in
favor
of
labor.
Management also has its rights which
are
entitled
to
respect
and
enforcement in the interest of simple
fair play. Out of its concern for the
less privileged in life, the Court has

inclined, more often than not, toward

the worker and upheld his cause in
his conflicts with the employer. Such
favoritism, however, has not blinded
the Court to the rule that justice is in
every case for the deserving, to be
dispensed in the light of the
established facts and the applicable
law and doctrine.39
WHEREFORE,
the
petition
is DENIED. The March 18, 2010
Decision of the Court of Appeals and
its June 7, 2010 Resolution, in CAG.R.
SP
No.
109975,
are
hereby AFFIRMED.
SO ORDERED.