EN BANC

G.R. No. 107487 September 29, 1997

THE MANILA BANKING CORPORATION (“Manilabank”) and ARNULFO B. AURELLANO in his capacity as Statutory Receiver of Manilabank, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES and 14 other Senior Mangers similarly situated; AURORA VILLACERAN and 34 others Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents.

G.R. No. 107902 September 29, 1997

THE MANILA BANKING CORPORATION (“Manilabank”) and ARNULFO B. AURELIANO in his capacity as Statutory Receiver of Manilabank, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION-NCR, LABOR ARBITER FELIPE PATI and VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES, JOSE BELMONTE and 14 other Senior Managers and 53 Managers similarly situated; AURORA VILLACERAN and 34 other Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents.

DISSENTING/SEPARATE OPINION

HERMOSISIMA, JR., J., dissenting and separate opinion:

With all due respect, I believe that the majority opinion has oversimplified and overlooked some of the various issues posited in the consolidated cases of G.R. Nos. 107487 & 107902. It is very convenient to put up the argument that, since Manilabank is insolvent, it should not be made to pay its just obligations to its employees and that it is simply unjust, nay absurd, to compel it to pay the money claims of its employees consisting of unpaid wage increases and mid-year and Christmas bonuses.

Truth to tell:

(1) The Manilabank is not bankrupt;

(2) Its obligations to its 343 employees are legally demandable; and

(3) The money for payment in the amount of P212 million has already been set aside.

In G.R No. 107487 , petitioners Manila Banking Corporation (Manilabank for short) and Arnulfo B. Aurellano, in his capacity as Statutory Receiver of Manilabank, assail the Order dated October 22, 1992 of public respondent National Labor Relations Commission (NLRC for short) Manila in NLRC-NCR Case No. 00-11-04624-88 which required petitioner Manilabank to renew its Certificate of Time Deposit in place of the appeal bond and to deposit the same with the NLRC cashier.

In G.R No. 107902, petitioners assail: (1) the Order dated November 26, 1992 of public respondent NLRC in the same NLRC-NCR Case No. 00-11-04624-88 which denied petitioners’ motion for reconsideration of the Resolution dated September 9, 1992 and which ordered petitioners to post an additional bond to cover the public respondent’s award of interest; and (2) the Resolution dated September 9, 1992 of respondent NLRC, which affirmed with slight modifications the Labor Arbiter’s decision of November 14, 1989, granting private respondents’ money claims amounting to P193 million plus 10% attorney’s fees.

In a Resolution dated December 16, 1992, this Court issued an order “restraining public respondent NLRC from enforcing and/or carrying out the Decision dated September 9, 1992 and the Order dated November 26, 1992 . . . until otherwise ordered by this Honorable Court.”

A review of the following material facts:

On May 22, 1987, the Monetary Board of the Central Bank of the Philippines (the Monetary Board for short) issued Resolution No. 505 prohibiting Manilabank from doing business in the Philippines and placing its assets and affairs under receivership pursuant to Section 29 of Republic Act No. 265 , as amended, otherwise known as the Central Bank Act.

The then Receiver of Manilabank, Mr. Feliciano L. Miranda, Jr., for and in behalf of Manilabank, terminated the employment of approximately 343 officers of Manilabank, the private respondents herein. All these employees were paid separation/retirement pay.

On November 11, 1988, the Monetary Board then issued Resolution No. 1003 ordering the liquidation of Manilabank on the ground that its financial condition continued to be one of insolvency and that it could no longer resume business with safety to its depositors. Actual liquidation had been deferred, however, pending the outcome of Civil Case No. 87-40659 in the Regional Trial Court of Manila, Branch 23, instituted by the petitioner bank on May 28, 1987 where the validity of the Monetary Board’s action placing Manilabank under receivership on account of insolvency was challenged.

On the same date, private respondents fried a complaint against Manilabank and its Receiver with the Arbitration Branch of the NLRC,1 which was assigned to Labor Arbiter Felipe Pati, claiming entitlement to additional compensation/termination benefits such as regular wage increases, profit sharing bonuses, various allowances and other benefits accruing from 1984 to their effective date of termination. These money claims were based on the fact that private respondents were previously given by petitioner these benefits as a matter of practice, policy and tradition for several years such that they had ripened into vested property rights in favor of private respondents.

On November 14, 1989, Labor Arbiter Felipe Pati ordered the Receiver of Manilabank to pay in full the claims of private respondents. The dispositive portion of his decision reads:

WHEREFORE, judgment is hereby rendered in favor of the complainants and against the respondents, ordering and authorizing the Receiver RENAN V. SANTOS to pay pursuant to the provisions of Article 110 of the Labor Code, as amended:

1) The complainants the net amount of claims due appearing opposite the name of each complainant listed in the Computation of Net Claim consisting of six (6) pages hereto attached and made part of this Decision;

2) The complainants’ counsel the amount equal to 10% of the total amount awarded to complainants in this action as attorney’s fees.

SO ORDERED.2

On November 25, 1989, petitioners appealed, and posted an appeal bond in the form of a certification from the Central Bank to the effect that a portion of Manilabank’s funds, in an amount equal to that of the total award of the Labor Arbiter, has been reversed and set aside by the Central Bank to answer for the private respondents’ claims should they finally be adjudged to be entitled thereto.

On December 8, 1989, private respondents filed an opposition to the appeal and a motion for the issuance of a writ of execution of the Labor Arbiter’s judgment on the ground that the Central Bank certification cannot be considered as an appeal bond. Thereafter, the NLRC, on June 21, 1991, issued an Order requiring petitioners, within ten (10) days from receipt thereof, to deposit with the Cashier of the NLRC a cash bond or its equivalent in treasury bills, warrant and/or other government securities in the amount of P193,000,000.00 plus ten percent (10%) thereof as attorney’s fees.

On July 5, 1991, petitioners sought a reconsideration of the Order. However, pending resolution of said Motion for Reconsideration, petitioners submitted to the NLRC a Certificate of Time Deposit issued by the Philippine National Bank (PNB for short) in the amount of P212,700,000.00, payable to the Receiver of Manilabank.

On January 16, 1992, the NLRC called the parties to a hearing where they agreed that the certificate of time deposit deposited by Manilabank with the NLRC be considered a substantial compliance with the requirement of an appeal bond, on the condition that it will be periodically renewed and redeposited with the NLRC Cashier upon its maturity, and that the securities deposited should be free from any other claims or liens.

On September 9, 1992, the NLRC issued its Resolution on the merits of the case affirming, with slight modifications, the decision of the Labor Arbiter. The dispositive portion of said Resolution provides:

WHEREFORE, except for the modification we provided on the manner “medical, dental and optical benefits” should be claimed/paid, and our awarding annual interest of 12% to whatever has been awarded below, the appealed decision is hereby affirmed and respondents’ appeal is hereby dismissed.3

Petitioners filed a Motion for Reconsideration from the aforequoted Resolution.

On October 14, 1992, private respondents filed an ex-parte motion for the issuance of a writ of execution. Petitioners opposed on the grounds that: (i) the assets of Manilabank are exempt from execution; and (ii) the NLRC Resolution had not become final and executory, a motion for reconsideration having been seasonably filed.

On October 22, 1992, the NLRC issued an Order directing petitioners, under pain of contempt, to renew the certificate of time deposit and to have it issued in the name of and deposited with the cashier of the NLRC.

From the foregoing Order, petitioners filed a petition for certiorari before this Court, docketed as G.R No. 107487 , arguing that:

1. The NLRC gravely abused its discretion in ordering petitioners to violate an existing statute.4

2. The NLRC is arbitrarily compelling the Receiver to violate his statutory duty to preserve Manilabank’s assets for the benefit of all creditors.5

3. The NLRC whimsically deprived petitioners of their right to file a motion for reconsideration of the Order.6

4. The NLRC has no cogent reason for issuing the questioned Order other than to preempt petitioners from invoking the corrective powers of this Honorable Court of last report.7

On November 26, 1992, petitioners’ earlier Motion for Reconsideration of the NLRC Decision dated September 9, 1992 was denied for lack of merit. The NLRC likewise ordered petitioners to file an additional bond to cover the additional award on legal interest detailed in its September 9, 1992 Resolution. The decretal portion of this Order reads:

Wherefore, premises considered, order is hereby issued:

1). denying respondents’ motion for reconsideration;

2). directing the NLRC Cashier to hold in her custody re-submitted Certificate of Time Deposit No. 890530-D dated October 27, 1992 with maturity date on December 28, 1992;

3). directing the respondents to post an additional bond, either in cash, surety or certificate of time deposit drawn in the name of the Cashier, NLRC, in the amount of “P76,572,000.00” to cover the additional award detailed in our September 9, 1992 resolution;

4). directing, accordingly, the Executive Clerk to cause the personal service of this Order upon the parties, particularly the respondents and their counsel; and

5). holding in abeyance the execution of our September 9, 1992 resolution (despite its finality now) for a period of ten (10) calendar days from respondents’ receipt of this Order, with the warning, however, that should this Commission not receive a restraining order from the Supreme Court within said period of ten (10) calendar days, then a writ of execution will be issued to enforce our now final judgment.

SO ORDERED.8

Hence, petitioners filed another petition for certiorari before this Court, docketed as G.R No. 107902, alleging that:

1. Public respondents, in grave abuse of discretion, effectively violated petitioners’ right to due process.9

2. Public respondents unlawfully arrogated unto themselves the jurisdiction to pass upon the question of Manilabank’s insolvency, despite the pleaded pendency of that prejudicial question before the RTC of Manila which had acquired exclusive jurisdiction to rule on the issue to the exclusion of all others.10

3. The money award adjudged against the insolvent Manilabank violates all notions of justice and equity, considering that the beneficiaries thereof are former officers and top managers of Manilabank who, being part of management, were partly to blame for the bank’s financial decline.11

4. A statutory receiver has the power to adopt and implement prudent policies aimed at preserving the assets of an insolvent bank including regulating, according to his own discretion and judgment, all aspects of employment.12

5. Public respondents’ arbitrary finding that salary increases, Christmas and mid-year bonuses and other benefits have been regularly and unconditionally paid by Manilabank to private respondents, and that Manilabank earned profits in 1984, 1985 and 1986, are contrary to the evidence on record and are based on pure unsubstantiated guesswork.13

6. The award of attorney’s fees is unconscionable, especially in light of its dissipative effect on the remaining assets of the insolvent Manilabank and its prejudicial consequences on Manilabank’s stockholders and creditors.14

7. The NLRC’s award of legal interest on the amount awarded by the labor arbiter and its order to deposit an additional bond to cover such interest have no legal basis and give an undue advantage to other creditors of the insolvent Manilabank.15

8. The NLRC’s threat to execute the judgment would be unlawful if carried out, because Manilabank’s assets are legally exempt from execution.16

On December 9, 1992,17 we ordered G.R No. 107902 to be consolidated with G.R No. 107487 .

It is regrettable that the majority failed to discuss a critical point of contention made by the petitioners. According to petitioners, the money award given by Labor Arbiter Felipe Pati, as affirmed by the public respondent NLRC, in favor of the private respondents pursuant to Article 110 of the Labor Code is erroneous on the ground that Article 110 conditions the preference given by law to workers on the happening of the event of bankruptcy or liquidation, which condition does not yet obtain up to the present. The issue of Manilabank’s insolvency is still pending before the Regional Trial Court of Manila, Branch 23, docketed as Civil Case No. 87-40659. Thus, until such issue is resolved, any reference to Article 110 as basis of any monetary award in favor of the private respondents is premature.

I find this contention antenable.

Article 110 of the Labor Code, as originally worded, provides:

Worker Preference in case of bankrupcy. — In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.

The old Section 10, Rule VIII, Book III of the Revised Rules and Regulations Implementing the Labor Code reads:

Payment of wages in case of bankruptcy. — Unpaid wages earned by the employees before the declaration of bankruptcy or judicial liquidation of the employer’s business shall be given first preference and shall be paid in full before other creditors may establish any claim or a share in the assets of the employer.

In Development Bank of the Phils. v. Santos,18 we found occasion to interpret the foregoing provisions in this wise:

It is quite clear from the provisions that a declaration of bankruptcy or a judicial liquidation must be present before the worker’s preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order. . . .

Republic Act No. 6715 which took effect on March 21, 1989, however, introduced certain amendments to Article 110 which now reads:

Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid.

As can be gleaned therefrom, the amendment expanded the concept of “worker preference” to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. Section 10, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code was likewise amended by the Rules and Regulations Implementing RA 6715, approved May 24, 1989, and now provides:

Payment of wages and other monetary claims in case of bankruptcy. — In case of bankruptcy or liquidation of the employer’s business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid.

It is significant to note that the terms “declaration” of bankruptcy or “judicial” liquidation have been eliminated, thus giving rise to the question: Is declaration of bankruptcy or judicial liquidation still required before the worker’s preference may be invoked under Article 110 of the Labor Code?

Unequivocably, this Court has consistently resolved this issue in the affirmative beginning with the case of Development Bank of the Philippines v. NLRC,19 followed by Bolinao, Jr. v. Padolina,20 Development Bank of the Phils. v. NLRC,21 Hautea v. Notional Labor Relations Commission,22 and Development Bank of the Philippines v. NLRC.23

In those cases, we ruled that despite the elimination of the terms “declaration” of bankruptcy or “judicial” liquidation, liquidation proceedings have not been done away with. In the event of insolvency, there must be some proceeding where notice to all of the insolvent’s creditors may be given and where the claims of preferred creditors may be bindingly adjudicated.24

The raison d’etre for the rule is that Article 110 must not be viewed in isolation but must always be reckoned with the pertinent provisions of the Civil Code on concurrence and preference of credits and the Insolvency Law, under the principle that seemingly conflicting laws must be harmonized as much as possible, and more importantly as in this case, so that piece-meal distribution of the assets of the debtor is avoided.25

As held in DBP v. NLRC:26

. . . [F]or an orderly settlement of a debtor’s assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which leave for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors’ claims is assured (Philippine Savings Bank v. Lantin, 124 SCRA 476 [1983]); the adjudication made will be binding on all parties-in-interest, since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law and the Labor Code is preserved in harmony.

Be that as it may, petitioners cannot raise the absence of a formal declaration of bankruptcy or a judicial liquidation in this case to thwart the money claims of private respondents based on the following considerations:

First. Petitioner Manilabank is not the proper party to raise the issue of failure to comply with the requirement of Article 110 of the Labor Code on the declaration of bankruptcy or judicial liquidation, it being the debtor in this case. Assuming that private respondents are lawfully entitled to the monetary claims awarded by the Labor Arbiter and the NLRC, to which they are as will be discussed later, and that the assets of petitioner bank are indeed insufficient to pay all its liabilities, it is the other creditors of Manilabank, if any there be, who possess the personality to oppose the claims of the private respondents on the ground of the non-happening of the condition sine qua non under Article 110 (declaration of bankruptcy or judicial liquidation). This is as it should be considering that it is the other creditors of Manilabank, and not Manilabank itself, who stand to be prejudiced by a premature payment of the private respondents’ claims, for they may be left with no other assets or with too little assets of the petitioner at the end of the day with which to satisfy their own claims. The protective mantle of Article 110 (on the requirement of declaration of bankruptcy or judicial liquidation) cannot be claimed by the petitioner-debtor Manilabank in behalf of the other creditors for they do not share a community of interest with each other. I am not unmindful, however, of Banco Filipino Savings and Mortgage Bank v. NLRC,27 where the debtor-employer itself opposed the money claims of its employee, Fortunato Dizon, Jr., and raised as one of its defenses Article 110. The Court in said case, nevertheless, dismissed the petition of Banco Filipino but ordered the money due the employee therein to be presented to the liquidators for processing.28 It is deplorable, however, that the Court then, by mere in advertence or plain oversight, failed to see that petitioner-debtor in that case was not the proper party to seek refuge behind Article 110. It is the other creditors of the petitioner who should have invoked Article 110 of the Labor Code in opposing the early award of the employee’s claims prior to a declaration of bankruptcy or judicial liquidation of the debtor-employer. It is simply tragic that the majority opinion failed to see this angle, and thus missed a rare opportunity to rectify this unfortunate fruit of inattention made in the Banco Filipino case.

Second. Petitioners are taking a duplicitous stance. On the one hand, petitioners maintain that the peculiar circumstances of this case demanded a more circumspect handling thereof by the public respondents not only because the claims add up to an enormous amount of about P200 million, but more so because the claims are directed against an insolvent bank and pertain to periods when said bank was already in financial straits.29 Yet, on the other, petitioners instituted on May 28, 1987 Civil Case No. 87-4065930 before the Regional Trial Court of Manila, Branch 23 seeking to strike down Monetary Board Resolution No. 505 which placed Manilabank under receivership upon a finding that it is insolvent. What kind of message is Manilabank sending here? The clear message is that Manilabank is not insolvent and it is fit to do business as a banking institution, then as now. This duplicity must be taken against the petitioners, at least for the purpose of resolving the present controversy. Perforce, Article 110 of the Labor Code becomes irrelevant for the purpose of disposing of the case at bench. In Development Bank of the Philippines v. Secretary of Labor,31 we made the following pertinent observation:

The rationale for making the application of Article 110 of the Labor Code contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer is of a preferential right of credit. A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtor are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale of the debtor’s specific property? . . . {Kuenzle & Streiff (Ltd.) v. Villanueva, 41 Phil. 611 [1916]; Barretto v. Villanueva, 6 SCRA 928 [1962]; Philippine Savings Bank v. Lantin 124 SCRA 476 [1983]}.

The foregoing finds truism in the case before us. Indeed, there is no longer any necessity to resort to Article 110, as well as the Civil Code provisions on classification, concurrence and preference of credits under Articles 2241, 2242, 2244, and 2245 to determine which of petitioners’ creditors shall be paid first. Needless to say, the only thing left for Manilabank to do is to pay all its legal and demandable obligations to its creditors, particularly the private respondents, without the need of awaiting the happening of a definitive declaration of bankruptcy or a judicial liquidation as required under Article 110. This is what petitioner Manilabank ought to do in this case, at least with respect to the adjudged money claims of the 343 dismissed Manilabank employees.

Petitioners next assiduously submit that they were denied due process by the Labor Arbiter when the latter proceeded to decide the case based only on the pleadings filed before him by the parties, despite the enormity of the money claims, totalling to about P190 million, and their repeated demands for a full-dress trial.

This contention must necessarily fail. Article 221 of the Labor Code, as amended by Section 11 of RA No. 6715 , provides in part:

Technical rules not binding and prior resort to amicable settlement. — In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts law or equity shall not be controlling and a it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. In any proceeding before the Commission or any Labor Arbiter, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceeding at all stages.

x x x x x xx x x

In labor cases, the regulations promulgated by the National Labor Relations Commission govern the hearing and disposition of cases before it and its regional branches. The Revised Rules of Court and prevailing jurisprudence may be applied to labor cases only under quite stringent limits, i.e., in the absence of any applicable provision in the Rules of the Commission, in order to effectuate the objectives of the Labor Code, in the interest of expeditious labor justice, and whenever practicable and convenient, by analogy or in a suppletory character and effect.32 In this regard, Section 4, Rule V of the NLRC Rules of Procedure provides:

Determination of Necessity of Hearing. — Immediately after the submission by the parties of their position papers/memorandum, the Labor Arbiter shall motu proprio determine whether there is need for a formal trial or hearing. At this stage, be may, at his discretion and for the purpose of making such determination, ask clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant documentary evidence, if any from any patty or witness.

Evidently, under the aforequoted Rule, the labor arbiter is given the discretion to determine the necessity for a formal hearing or investigation,33 once the position papers and other documentary evidences of the parties have been submitted before him. The parties may ask for a hearing but such hearing is not a matter of right of the parties. The labor arbiter, in the exercise of his discretion, may deny such request and proceed to decide the case on the basis of the position papers and other documents brought before him without resorting to technical rules of evidence as observed in regular courts of justice.34 Such a procedure has been sanctioned by this Court as not violative of due process,35 considering that proceedings before a labor arbiter are summary and non-litigious in nature. In the present case, a careful examination of the records reveals that the labor arbiter did not abuse his discretion, bestowed upon him by the Rules, in not conducting a formal hearing.

Ample jurisprudential pronouncements there had been in support of this rule. In fact, in several cases, the rule laid down is that the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings such as the case at bench, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of.36 A formal or trial-type hearing is not at all times and in all instances essential. The requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand.37 What due process contemplates is freedom from arbitrariness, and what it requires is fairness or justice, the substance rather than the form being paramount.38

In the present case, the petitioners cannot deny the fact that position papers and other documentary evidences were submitted by both parties to the office of Labor Arbiter Felipe Pati. Thus, it was within the competence of the labor arbiter to determine if there was a need for a hearing. However, the labor arbiter, in the end, did not deem it necessary to conduct a hearing and proceeded to decide the case on the merits based on the position papers before him. There is no irregularity in this procedure. In fact, this procedure is well within the NLRC Rules of Procedure as well as settled jurisprudence on the matter. At any rate, the records show that petitioners were given additional opportunity to argue their case on appeal before public respondent NLRC. Such appeal to the NLRC and the petitions now before us have afforded the petitioners more than ample opportunity to be heard. Procedural flaws that may have marred the proceedings before the Labor Arbiter — although there is none in this case — should be deemed rectified in the subsequent proceedings39 in the NLRC.

I am not unaware of the practice of some lawyers who, lacking plausible support for their position, simply claim a denial of due process as if it were a universal absolution. The ground will prove unavailing, and not surprisingly since it is virtually only a pro forma argument. Due process is not to be bandied like a slogan. It is not a mere catch-phrase. As the highest hallmark of the free society, its name should not be invoked in vain but only when justice has not been truly served.40

Now, as to the money claims awarded by the public respondents Labor Arbiter and NLRC in favor of the 343 private respondents in this case, the majority submits that the award given by the public respondents consisting of salary increases, Christmas and mid-year bonuses and other benefits to the private respondents pertain exclusively to what is called, in labor law, as “management prerogatives.” Thus, these cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses especially so if it is incapable of doing so.

I do not agree.

The Labor Arbiter, as affirmed by the NLRC, found that:

. . . . The evidence on record (Annexes “D,” “D-1,” “D-2” and “D-3” of complainants’ position paper) consisting of the action of the Board of Directors of Manilabank granting the complainant officers and rank-and file employees two-months pay Christmas Bonus for 1980, 1981, 1982 and 1983, respectively, clearly shows that the grant of Christmas bonus was “in keeping with the bark’s practice and tradition.” The grant of one-month pay Mid-Year Bonus for 1980, 1981, 1982, and 1983 is shown by Annexes “E,” “E-1,” “E-2” and “E-3,” respectively, of complainants’ position paper, is also so clearly a grant “in keeping with the bank’s practice and tradition.” As early as 1980, the respondent Manilabank already recognized and considered the yearly grant of two-months pay Christmas Bonus and one-month pay Mid-Year Bonus as regular and fixed benefits enjoyed by the complainants “in keeping with the bank’s practice and tradition“ already for several years prior to 1980.

We also find that the grant of yearly wage increases, a part from merit increases granted to deserving complainants, was “in line with the bank’s practice and tradition.” Like the grant of bonuses, the respondent Manilabank regularly and automatically gave and the complainants enjoyed at a fixed period of each year wage increases already for several years prior to 1984 as shown by respondent’s own evidence (see Annexes “A,” “B” and “C” complainant’s position paper; also see Annex “F” of respondents’ position paper; and Annexes “A,” “B,” “B-1,” “B-2,” “B-3” and “B-4” of respondents’ rejoinder dated August 24, 1989) granting wage increases of complainants for 1983, 1978, 1977, 1976, 1974 and 1973, respectively, not to mention the yearly wage increases from the middle sixties when Manilabank started rapidly picking up success.

x x x x x xx x x

. . . The respondents who are in possession of the completed records of the individual claims of the complainants, failed to controvert the evidence of complainants that established the fact that the grant of two-months pay Christmas Bonus and one-month pay Mid-Year Bonus and Wage Increase yearly of at least 25% average had been “in line with the bank’s practice and tradition” already for several years prior to 1980; that the complainants had regularly and unconditionally enjoyed each year for already twenty (20) years the fixed amount of two-months pay Christmas Bonus and one-month pay Mid-Year Bonus and the at least 25% of gross pay average yearly Wage Increase; and that the particular aforesaid claims of complainants were granted regularly and automatically every year for the last twenty years without regard to any guidelines and irrespective of whether Manilabank made big profit, or small profit or no profit at all.

Considering the foregoing established facts, we hold that the yearly grant of two-months pay Christmas Bonus, the one-month pay Mid-Year Bonus and the at least 25% of gross pay Wage increases, which we find to have been regularly and unconditionally paid by respondent Manilabank and received by the complainants at fixed amount and on the due date of the year for already twenty years, had become part of the wages or compensation of the complainants for services they have rendered, in accordance with the ruling of the Supreme Court in the following cases it decided; Atok Big Wedge Mining Co. v. Atok Big Wedge Mutual Benefits (92 Phil. 754, 1953); Almonte v. National Development Co. (106 Phil. 137, 1959); Philippine Education Co. v. Court of Industrial Relations, et al. (92 Phil. 381, 1952); Luzon Stevedoring Corporations v. Court of Industrial Relations (15 SCRA 66, 1965); Claparols v. Court of Industrial Relations (65 SCRA 613, 1965).

x x x x x xx x x

The claim of complainants for recovery of profit sharing is granted, There is sufficient evidence on record that shows that Manilabank earned net profit in 1984, 1985, and 1986 (see Annexes “G,” “G-1,” “G-2,” “H,” “H-1” and “I” of complainant’s position paper). Furthermore, the Monetary Board declared Manilabank in the state of insolvency only in May 1987. The contention of the Receiver that Manilabank was in the state of insolvency cannot deprived the complainants of their lawful benefits for services they have rendered. The Receiver/Liquidator is ordered to pay the complainants the proper amount of profit sharing for the 1985 and 1986 net profit the Manilabank earned.41

These findings of the public respondent Labor Arbiter ought to be sustained. Uniform wage increases, Christmas and mid-year bonuses as well as the profit-sharing scheme and the other benefits being given by petitioner Manilabank to the private respondents can be couched under one encompassing word in labor standards parlance — that of “bonuses.”

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. It is an act of generosity of the employer for which the employee ought to be thankful and grateful. It is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.42

The general rule is that a bonus is a gratuity or an act of liberality which the recipient has no right to demand as a matter of right.43 A bonus, however, is a demamdable or enforceable obligation when it is made part of the wage or salary or compensation of the employee.44 Whether or not a bonus forms part of wages depends upon the circumstances or conditions for its payment. If it is an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or a certain amount of productivity achieved, it cannot be considered part of the wages.45

In the case at bench, I am not inclined to disturb the finding of both the Labor Arbiter and the NLRC that private respondents’ claims for salary increases, Christmas and mid-year bonuses had been given “in line with the bank’s practice and tradition already for several years prior to 1980; . . . and that the aforesaid claims of complainants were granted regularly and automatically every year for the last twenty years without regard to any guidelines and irrespective of whether Manilabank made big profit, or small profit or no profit at all.”46 Public respondents likewise found, and not without basis, that, in respect to the profit-sharing claims of private respondents, petitioner Manilabank earned net profit in 1984, 1985, and 1986,47 thus warranting the award in favor of the private respondents. In fact, in the RTC case where Manilabank prays for the annulment of Monetary Board Resolution No. 505 which placed it under receivership, petitioner bank manifested to the trial court, by virtue of its Annexes G, G-1 & G-2, that it realized millions in gross earnings in 1984, 1985 and 1986. Per Manilabank exhibits, bank external auditor, Carlos J. Valdes & Company, reveals that petitioner bank had, as of April 11, 1986, total resources amounting to P8,093,047,525.00.

These are, on the main, factual findings over which the Labor Arbiter and the NLRC are most equipped to determine having acquired expertise in the specific matters entrusted to their jurisdiction. It is worth repeating here that the jurisdiction of the Supreme Court to review decisions of the NLRC in a petition for certiorari under Rule 65 of the Rules of Court is confined to issues of jurisdiction or grave abuse of discretion.48 Findings of facts of quasi-judicial agencies like the NLRC are accorded by this Court not only with respect but even finality if they are supported by substantial evidence,49 or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.50 This quantum of proof has been satisfied in this case.

It is well worth to remind this Court that it cannot arrogate unto itself the exclusive power of the labor tribunals to receive, analyze, evaluate, scrutinize, and finally make factual determinations based on the evidences submitted before them absent any showing of grave, capricious and whimsical exercise of its jurisdiction, which, after careful weighing of the arguments of both parties and a conscientious evaluation of the records, I find wanting in the case under consideration.

Thus, based on the foregoing findings of both the Labor Arbiter and the NLRC, a company practice favorable to the private respondents employees had been established, and the payments made pursuant thereto ripened into benefits enjoyed by the private respondents. Hence, these benefits can no longer be withdrawn by petitioner Manilabank as they have formed part of the wage or compensation of the private respondents.

Lastly, petitioners asseverate that the NLRC’s threat to execute the judgment would be unlawful, if carried out, because Manilabank’s assets are legally exempt from execution under Section 29 of Republic Act No. 265 or the Central Bank Act, as amended, which provides, inter alia:

The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver or liquidator and shall, from the moment of such receivership or liguidation, be exempt from any order of garnishment, levy, attachment, or execution.

I except. Nothing in the above provision suggests that the jurisdiction of the liquidation court to adjudicate claims against the insolvent bank is exclusive. Contrarily, Article 217 of the Labor Code clearly provides that labor arbiters have original and exclusive jurisdiction over money claims of employees exceeding P5,000.00 which arise from employer-employee relations, viz:

Jurisdiction of Labor Arbiters and the Commission — (a) Except as otherwise provided under this Code, the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide . . . the following cases involving all workers, whether agricultural or non-agricultural:

x x x x x xx x x

6). Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, . . . , involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

This jurisdiction conferred upon labor arbiters and the NLRC would not be lost simply because the assets of a former employer had been placed under receivership or liquidation. Moreover, this jurisdiction would be rendered inutile without the concomitant power to execute their decisions. Since the legislature deemed it wise to confer jurisdiction over labor disputes to a body exclusively of others, I am not prepared to divest such authority from the labor arbiter and the NLRC absent any clear provision of law to that effect.51

PRECIS

(1) There has yet been no official declaration of bankruptcy of petitioner Manilabank by any competent court in the country. Whether or not Manilabank is insolvent is still an issue awaiting determination in Civil Case No. 87-4065952 before Branch 23, Regional Trial Court of Manila. What is to be noted with significance, however, is that it was Manilabank itself, and no other, that instituted the said civil case on May 28, 1987 praying for the annulment of Monetary Board Resolution No. 505 which placed Manilabank under receivership. In its complaint before the trial court, Manilabank vehemently insists that it is not insolvent, that it is making money, and that the Monetary Board gravely erred in placing the bank under receivership. If Manilabank maintains that it is not bankrupt, why should this Court rule otherwise and deprive the 343 Manilabank employees the unpaid benefits which they have already earned? There is simply no rhyme nor reason for this stance taken by the majority.

(2) The coffers of Manilabank are not, at all, empty. On July 5, 1991, a Certificate of Time Deposit, in the amount of P212,700,000.00, had been submitted by Manilabank to the NLRC to cover all the money claims of its employees in the event the case is finally decided in the latter’s favor. Thus, the fund is already there waiting to be distributed to the 343 Manilabank employees. Such display of liquidity cannot at all be made if the bank’s coffers were empty.

(3) Granting, nevertheless, that Manilabank, indeed, did not make profits for the years 1984, 1985, and 1986, the money claims of the respondent employees should just the same be awarded. Although the point made by the majority is well-taken that a “bonus” is basically a management prerogative which cannot be forced upon the employer, jurisprudence is settled that a bonus becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the employee.53 If the bonus constitutes an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage,54 and thus a demandable or enforceable obligation on the part of the employer. Here, petitioner Manilabank has not presented any substantial evidence that would belie the findings of both the Labor Arbiter and the NLRC, amply substantiated, that respondent employees’ claims, at least, for salary increases and Christmas and mid-year bonuses, had been given “in line with the bank’s practice and tradition already for several years prior to 1980; . . . and that the aforesaid claims of complainants were granted regularly and automatically every year for the last twenty years without regard to any guidelines and irrespective of whether Manilabank made big profit, or small profit or no profit at all.”55 Henceforth, while normally discretionary, the grant of “bonus” in this case has, by reason of its long and regular concession, become part of regular compensation and, therefore, ripened into a demandable and enforceable obligation on the part of petitioner Manilabank towards its employees.

In closing, the majority opinion, while it deleted the award of unpaid wage increases (P74,462,377.46),56 mid-year and Christmas bonuses (P29,517,925.00),57 profit-sharing (P3,086,173.53),58 differentials on accrued leaves (P9,079,023.19),59 and retirement benefits (P64,576,865.96)60 on the ground of the bank’s alleged dire financial status in the years 1984, 1985, and 1986, nonetheless affirmed the claim for travel plans, car plans and claims for longevity pay. The latter group of benefits only accrues in favor of senior officers and senior managers of Manilabank. The lowly managers, assistant managers and other junior officers are not entitled to these benefits. The award given by the majority, therefore, appears to unduly favor only the top officers and managers of Manilabank. If the basis for the denial of the award for unpaid wage increases, et al., is Manilabank’s supposed insolvency, then all the other unpaid claims should, in like manner, have been denied.

WHEREFORE, premises considered, I vote to AFFIRM the September 9, 1992 Resolution nod the November 26, 1992 Order of the public respondent NLRC insofar as it awarded the unpaid benefits claimed by herein respondent employees and hold that the December 16, 1992 temporary restraining order be LIFTED.

SO ORDERED.

_________________________________

Footnotes

1 Docketed as NLRC-NCR Case No. 00-11-04624-88.

2 Rollo [ G.R. No. 107487 ], pp. 67-68.

3 Rollo [ G.R. No. 107487 ], pp. 134-135.

4 Petition, p. 11; Rollo [ G.R No. 107487 ], p. 12.

5 Petition, p. 13; Rollo [ G.R No. 107487 ], p. 14.

6 Petition, p. 15; Rollo [ G.R No. 107487 ], p. 16.

7 Petition, p. 16; Rollo [ G.R No. 107487 ], p. 17.

8 Rollo [ G.R. No. 107487 ], pp. 248-249.

9 Petition, p. 28; Rollo [G.R No. 107902], p. 29.

10 Petition, p. 49; Rollo [G.R. No. 107902], p. 50.

11 Petition, p. 58; Rollo [G.R No. 107902], p. 59.

12 Petition, p. 59; Rollo [G.R No. 107902], p. 60.

13 Petition, p. 60; Rollo [G.R. No. 107902], p. 61.

14 Petition, p. 80; Rollo [G.R No. 107902], p. 81.

15 Petition, p. 81; Rollo [G.R No. 107902], p. 82.

16 Petition, p. 85; Rollo [G.R No. 107902], p. 86.

17 Rollo [G.R No. 107902], p. 633.

18 171 SCRA 138, 144 [1989].

19 183 SCRA 328 [1990].

20 186 SCRA 368 [1990].

21 186 SCRA 841 [1990].

22 230 SCRA 119 [1994].

23 242 SCRA 59 [1995].

24 Hautea v. National Labor Relations Commission, supra., at 125.

25 Development Bank of the Philippines v. NLRC, supra., at 64.

26 Supra, note 19 at 339.

27 188 SCRA 700 [1990].

28 Ibid., at 709.

29 Rollo [G.R No. 107902], pp. 34-35; p. 729.

30 Rollo [G.R No. 107902], pp. 373-424.

31 179 SCRA 630, 634-635 [1989].

32 Shoemart, Inc. v. National Labor Relations Commission, 225 SCRA 311, 318 [1993], citing the New Rules of Procedure of the National Labor Relations Commission, August 31, 1990, effective “fifteen (15) days after their publication in two (2) newspapers of general circulation:” SEC. 3, Rule I.

33 Robusta Agro Marine Products, Inc. v. Gorombalem, 175 SCRA 93, 99 [1989].

34 Ibid., citing Manila Doctors Hospital v. NLRC, 135 SCRA 262, 265-267 [1985].

35 Shoemart, Inc. v. NLRC, supra., citing Commando Security Agency v. NLRC, 211 SCRA 645 [1992].

36 Stayfast Philippines Corp. v. NLRC, 218 SCRA 596, 601 [1993], citing Bautista v. Secretary of Labor, 196 SCRA 470 [1991].

37 Ibid., citing Llora Motors, Inc. v. Drilon, 179 SCRA 175 [1989].

38 Tajonera v. Lamaroza, 110 SCRA 438, 448 [1981].

39 Pacific Timber Export Corp. v. NLRC, 224 SCRA 860, 864 [1993], citing T.M. Valderama & Sons v. Drilon, 181 SCRA 308; PNOC Energy Development Corp. v. NLRC, 201 SCRA 487; Manila Resources Development Corporation v. NLRC, 213 SCRA 296.

40 Ibid.

41 Rollo [ G.R No. 107487 ], pp. 58 -60; 62.

42 Philippine Education Co., Inc. v. Court of Industrial Relations, et al., 92 Phil. 381, 385 [1952].

43 Metro Transit Organization, Inc. v. National Labor Relations Commission, 245 SCRA 767, 774 [1995], citing Traders Royal Bank v. National Labor Relations Commission, 189 SCRA 274 [1990]; Luzon Stevedoring Corp. v. Court of Industrial Relations, 15 SCRA 660 [1965]; Kamaya Point Hotel v. National Labor Relations Commission, 177 SCRA 160 [1989].

44 Ibid., citing Luzon Stevedoring Corp. v. Court of Industrial Relations, 15 SCRA 660 [1965].

45 Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association, 92 Phil. 754, 757 [1953], cited in Philippine Duplicators, Inc. v. NLRC, 241 SCRA 380, 388-389 [1995].

46 Decision, pp. 11-12; Rollo [ G.R No. 107487 ], pp. 59-60.

47 Decision, p.14; Rollo [ G.R No. 107487 ], p. 62.

48 Reno Foods, Inc. v. National Labor Relations Commission, 249 SCRA 379, 385 [1995], citing Sajonas v. NLRC, 183 SCRA 182 [1990]; Patna-an v. NLRC, 207 SCRA 106 [1992]; Canlubang Security Agency v. NLRC, 216 SCRA 280 [1992].

49 Falguera v. Linsangan, 251 SCRA 364, 373 [1995], citing Aboitiz Shipping Corp. v. Dela Serna, 199 SCRA 568 [1991]; Rabago v. NLRC, 200 SCRA 158 [1991]; Tiu v. NLRC, 215 SCRA 540 [1992]; Five J Taxi v. NLRC, 235 SCRA 556 [1994].

50 Section 5, Rule 133, Revised Rules of Court.

51 See Banco Filipino Savings and Mortgage Bank, supra. at 704-705.

52 Rollo [G.R No. 107902], pp. 373-424.

53 Metro Transit Organization, Inc. v. NLRC, 245 SCRA 767, 774 [1995]; Luzon Stevedoring Corp. v. CIR, 15 SCRA 660, 675 [1965].

54 Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association, 92 Phil. 754, 757 [1953], cited in Philippine Duplicators, Inc. v. NLRC, 241 SCRA 380, 388-389 [1995].

55 Rollo [ G.R. No. 107487 ], pp. 59-60.

56 See attached Annex “A.”

57 Ibid.

58 Ibid.

59 Ibid.

60 Ibid.

_________________________________

ANNEX “A”

_________________________________

SUMMARY OF CLAIMS MANILA BANK SENIOR AND JUNIOR OFFICERS
	UNPAID WAGE INCREASES	UNPAID MID-YEAR & CHRISTMAS BONUS	UNPAID PROFIT SHARING	UNPAID CAR PLAN BENEFIT	UNPAID TRAVEL BENEFITS	UNPAID RETIREMENT DIFFERENTIALS	UNPAID ACCRUED LEAVES DIFFERENTIALS	UNPAID LONGEVITY PAY	UNPAID MISCELLANEOUS BENEFITS	GRAND TOTAL
	I	II	III	IV	V	VI	VII	VIII	IX
	NET CLAIMS	NET CLAIMS	NET CLAIMS	TOTAL CLAIMS	TOTAL CLAIMS	TOTAL CLAIMS	NET CLAIMS	NET CLAIMS	TOTAL CLAIMS
SENIOR OFFICERS[N]	17,141,929.65	8,660,005.13	1,075,944.44	2,362,532.34	5,176,815.00	25,348,423.19	3,266,959.57	53,336.80	834,579.44	63,920,525.56
SENIOR MANAGERS[O]	6,588,573.14	3,315,731.29	417,886.93	1,284,129.33	—	10,134,395.67	1,257,062.47	36,366.00	338,520.00	23,372,664.83
MANAGERS[P]	16,214,437.72	6,679,635.95	553,917.32	—	—	13,137,047.22	1,608,121.54	—	986,620.44	39,179,780.19
ASSISTANT MANAGERS[Q]	7,561,809.66	2,232,655.71	230,333.73	—	—	5,155,049.28	637,285.78	—	413,582.78	16,230,716.94
OTHER JUNIOR OFFICERS[R]	26,955,627.29_________________________________	8,629,896.92_________________________________	808,091.11_________________________________	—_________________________________	—_________________________________	10,801,950.60_________________________________	2,309,593.83_________________________________	—_________________________________	1,129,365.01_________________________________	50,634,524.81_________________________________
TOTAL	74,462,377.46 ============	29,517,925.00 ============	3,086,173.53 ============	3,646,661.67 ============	5,176,815.00 ============	64,576,865.96 ============	9,079,023.19 ============	89,702.80 ============	3,702,667.67 ============	193,338,212.28 ============
[%] TO TOTAL	38.51%	15.27%	1.60%	1.89%	2.68%	33.40%	4.70%	0.04%	1.91%	100.00%

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