THIRD DIVISION

[G.R. No. 133215. July 15, 1999]

PAGPALAIN HAULERS, INC., petitioner, vs. The HONORABLE CRESENCIANO B.
TRAJANO, in his official capacity as Secretary of Labor and Employment, the
HONORABLE RENATO D. PARUNGO, in his official capacity as the Med-Arbiter in
DOLE Case No. NCR-OD-M-9705-006, and the INTEGRATED LABOR
ORGANIZATION
(ILO-PHILS)
PAGPALAIN
WORKERS
UNION-ILOPHILS. respondents.
DECISION
ROMERO, J.:
On May 14, 1997, respondent Integrated Labor Organization-Pagpalain Haulers Workers
Union (hereafter referred to as ILO-PHILS), in a bid to represent the rank-and-file drivers and
helpers of petitioner Pagpalain Haulers, Inc. (hereafter referred to as Pagpalain), filed a petition
for certification election with the Department of Labor and Employment. ILO-PHILS attached
to the petition copies of its charter certificate, its constitution and by-laws, its books of account,
and a list of its officers and their addresses.
On July 10, 1997, Pagpalain filed a motion to dismiss the petition, alleging that ILOPHILS was not a legitimate labor organization due to its failure to comply with the
requirements for registration under the Labor Code. Specifically, it claimed that the books of
account submitted by ILO-PHILS were not verified under oath by its treasurer and attested to
by its president, a required by Rule II, Book V of the Omnibus Rules Implementing the Labor
Code.
In a reply dated August 4, 1997, ILO-PHILS dismissed Pagpalains claims, saying that
Department Order No. 9, Series of 1997 had dispensed with the requirement that a local or
chapter of a national union submit books of account in order to be registered with the
Department of Labor and Employment.
Finding in favor of ILO-PHILS, the Med-Arbiter, on August 27, 1997, ordered the
holding of certification elections among the rank-and-file of Pagpalain Haulers. Pagpalain
promptly appealed the decision to the Secretary of Labor and Employment. It claimed that the
Med-Arbiter had gravely abused his discretion in allowing Department Order No. 9 to take
precedence over a ruling of the Supreme Court. Pagpalain cited Protection Technology v.
Secretary, Department of Labor and Employment [1] and Progressive Development Corporation
v. Secretary of Labor[2] in support of its contention.

Declaring Protection and Progressive to be inapplicable to the case before him, the
Secretary, on February 27, 1998, issued a resolution dismissing Pagpalains appeal. In his own
words, [I]n these aforementioned cases, the Supreme Court premised its ruling on the previous
rules implementing the Labor Code, particularly Book V, that provides the requirements for the
registration of a local or chapter of a federation or national union. With the issuance of
Department Order No. 09 amending the rules implementing Book V of the Code, the
requirement on books of account no longer exists.[3]
Aggrieved by said resolution, Pagpalain now comes to this Court for relief claiming that
the Secretary of Labor acted without jurisdiction in issuing the questioned resolution. In
support of its proposition, it claims that:
1. DEPARTMENT ORDER NO. 9, SERIES OF 1997, ISSUED BY PUBLIC
RESPONDENT SECRETARY OF LABOR IS NULL AND VOID FOR
BEING CONTRARY TO PUBLIC POLICY LAID DOWN BY THE
SUPREME COURT IN PROTECTION TECHNOLOGY, INC. V. SECRETARY
OF LABOR (G.R. NO. 117211, 1 MARCH 1995) AND PROGRESSIVE
DEVELOPMENT CORP. V. SECRETARY OF LABOR (G.R. NO. 96425, 4
FEBRUARY 1992);
2. DEPARTMENT ORDER NO. 9, SERIES OF 1997, OF PUBLIC
RESPONDENT SECRETARY OF LABOR CANNOT ALTER THE
REQUIREMENTS OF ARTICLES 241(H) AND (J) OF THE LABOR CODE
OF THE PHILIPPINES, NOR CAN IT PREVAIL OVER THE RULINGS OF
THE SUPREME COURT, WHICH FORM PART OF THE LAW OF THE
LAND.
Pagpalains contentions are without merit.
Under Article 234 of the Labor Code, the requirements for registration of a labor
organization is as follows:
Art. 234. Requirements of registration. Any applicant labor organization, association or group
of unions or workers shall acquire legal personality and shall be entitled to the rights and
privileges granted by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the labor organization,
the minutes of the organizational meetings and the list of the workers who participated in such
meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees
in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies of its annual
financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its
adoption or ratification, and the list of the members who participated in it.
As can be gleaned from the above, the Labor Code does not require the submission of
books of account in order for a labor organization to be registered as a legitimate labor
organization. The requirement that books of account be submitted as a requisite for a
registration can be found only in Book V of the Omnibus Rules Implementing the Labor
Code, prior to its amendment by Department Order No. 9, Series of 1997. Specifically, the old
Section 3(e), Rule II, of Book V provided that [t]he local or chapter of a labor federation or
national union shall have and maintain a constitution and by-laws, set of officers and books of
accounts. For reporting purposes, the procedure governing the reporting of independently
registered unions, federations or national unions shall be observed.
In Progressive Development Corporation, cited by Pagpalain, this Court held that the
above-mentioned procedure governing the reporting of independently registered unions refers
to the certification and attestation requirements contained in Article 235, paragraph 2. Article
235, paragraph 2 provides that [a]ll requisite documents and papers shall be certified under
oath by the secretary or the treasurer of the organization, as the case may be, and attested to by
its president; hence, in the above-mentioned case, we ruled that in applications for registration
by a local or chapter of a federation or national union, the constitution and by-laws, set of
officers and books of account submitted by said local or chapter must be certified under oath
by the secretary or treasurer and attested to by its president.
Three years later, in Protection Technology v. Secretary of Labor, we amplified our ruling
in Progressive, saying that the non-submission of books of account certified by and attested to
by the appropriate officer is a ground for an employer to legitimately oppose a petition for
certification election filed by a local or chapter of a national union.
By virtue of Department Order No. 9, Series of 1997, however, the documents needed to
be submitted by a local or chapter have been reduced to the following:
(a) A charter certificate issued by the federation or national union indicating the
creation or establishment of the local/chapter;
(b) The names of the local/chapters officers, their addresses, and the principal
office of the local/chapter;

(c) The local/chapters constitution and by-laws; provided that where the
local/chapters constitution and by-laws is the same as that of the federation or
national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the Secretary or
Treasurer of the local/chapter and attested by its President. [4]
Since the Department Order No. 9 has done away with the submission of books of
account as a requisite for registration, Pagpalains only recourse now is to have said order
declared null and void. It premises its case on the principles laid down
in Progressive and Protection Technology. First, Pagpalain maintains that Department Order
No. 9 is illegal, allegedly because it contravenes the above-mentioned rulings of this
Court. Citing Article 8 of the Civil Code, which provides that [j]udicial decisions applying or
interpreting the laws or the Constitution shall form a part of the legal system of the Philippines,
Pagpalain declares the two cases part of the law of the land which, under the third paragraph of
Article 7 of the Civil Code,[5] may not be supplanted by mere regulation.
Second, it claims that dispensing with books of account contravenes public policy,
citing Protection Technology, as follows:
It is immaterial that the Union, having been organized for less than a year before the
application for registration with the BLR, would have had no real opportunity to levy and
collect dues and fees from its members which need to be recorded in the books of
account. Such accounting books can and must be submitted to the BLR, even if they contain no
detailed or extensive entries as yet. The point to be stressed is that the applicant local or
chapter must demonstrate to the BLR that it is entitled to registered status because it has in
place a system for accounting for members contributions to its fund even before it actually
receives dues and fees from its members. The controlling intention is to minimize the risk of
fraud and diversion in the course of the subsequent formation and growth of the Union fund.
[Underscoring petitioners]
To buttress its argument, Pagpalain also cites Progressive, thus:
The employer naturally needs assurance that the union it is dealing with is a bona fide
organization, one which has not submitted false statements or misrepresentations to the
Bureau. The inclusion of the certification and attestation requirements will in a marked degree
allay these apprehensions of management. Not only is the issuance of any false statement and
misrepresentation a ground for cancellation of registration (See Article 239(a), (c) and (d)); it is
also a ground for a criminal charge of perjury.
The certification and attestation requirements are preventive measures against the commission
of fraud. They likewise afford a measure of protection to unsuspecting employees who may be
lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control union
funds or to use the union for dubious ends. [Underscoring petitioners]

Finally, Pagpalain cites as indicative of public policy, the following sections of Article
241 of the Labor Code:
The following are the rights and conditions of membership in a labor organization:
xxx xxx xxx
(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a
receipt signed by the officer or agent making the collection and entered into the record of the
organization to be kept and maintained for that purpose;
xxx xxx xxx
(j) Every income or revenue of the organization shall be evidenced by a record showing its
source, and every expenditure of its funds shall be evidenced by a receipt from the person to
whom the payment is made, which shall state the date, place and purpose of such
payment. Such record or receipt shall form part of the financial records of the
organization. [Underscoring petitioners]
Under Article 8 of the Civil Code, [j]udicial decisions applying or interpreting the laws
or the Constitution shall form a part of the legal system of the Philippines. This does not mean,
however, that courts can create law. The courts exist for interpreting the law, not for enacting
it. To allow otherwise would be violative of the principle of separation of powers, inasmuch as
the sole function of our courts is to apply or interpret the laws, particularly where gaps
or lacunae exist or where ambiguities becloud issues, but it will not arrogate unto itself the task
of legislating.
Consequently, Progressive and Protection Technology are not to be deemed as laws on
the registration of unions. They merely interpret and apply the implementing rules of the Labor
Code as to registration of unions. It is this interpretation that forms part of the legal system of
the Philippines, for the interpretation placed upon the written law by a competent court has the
force of law.[6] Progressiveand Protection Technology, however, applied and interpreted the
then existing Book V of the Omnibus Rules Implementing the Labor Code. Since Book V of
the Omnibus Rules, as amended by Department Order No. 9, no longer requires a local or
chapter to submit books of accounts as a prerequisite for registration, the doctrines enunciated
in the above-mentioned cases, with respect to books of account, are already passe and
therefore, no longer applicable. Hence, Pagpalain cannot insist that ILO-PHILS comply with
the requirements prescribed in said rulings, for the current implementing rules have deleted the
same.
Neither can Pagpalain contend that Department Order No. 9 is an invalid exercise of
rule-making power by the Secretary of Labor. For an administrative order to be valid, it must
(i) be issued on the authority of law and (ii) it must not be contrary to the law and Constitution.
[7]

Department Order No. 9 has been issued on authority of law. Under the law, the
Secretary is authorized to promulgate rules and regulations to implement the Labor
Code. Specifically, Article 5 of the Labor Code provides that [t]he Department of Labor and
other government agencies charged with the administration and enforcement of this Code or
any of its parts shall promulgate the necessary implementing rules and regulations. Consonant
with this article, the Secretary of Labor and Employment promulgated the Omnibus Rules
Implementing the Labor Code. By virtue of this self-same authority, the Secretary amended the
above-mentioned omnibus rules by issuing Department Order No. 9, Series of 1997.
Moreover, Pagpalain has failed to show that Department Order No. 9 is contrary to the
law or the Constitution. At the risk of being repetitious, the Labor Code does not require a local
or chapter to submit books of account in order for it to be registered as a legitimate labor
organization. There is, thus, no inconsistency between the Labor Code and Department Order
No. 9. Neither has Pagpalain shown that said order contravenes any provision of the
Constitution.
Pagpalain cannot also allege that Department Order No. 9 is violative of public
policy. As adverted to earlier, the sole function of our courts is to apply or interpret the laws.
[8]
It does not formulate public policy, which is the province of the legislative and executive
branches of government. It cannot, thus, be said that the principles laid down by the court
in Progressive and Protection Technologyconstitute public policy on the matter. They do,
however, constitute the Courts interpretation of public policy, as formulated by the executive
department through its promulgation of rules implementing the Labor Code. However, this
public policy has itself been changed by the executive department, through the amendments
introduced in Book V of the Omnibus Rules by Department Order No. 9. It is not for us to
question this change in policy, it being a well-established principle beyond question that it is
not within the province of the courts to pass judgment upon the policy of legislative or
executive action.[9]Notwithstanding the expanded judicial power under Section 1, Article VIII
of the Constitution, an inquiry on the above-stated policy would delve into matters of wisdom
not within the powers of this Court.
Furthermore, the controlling intention in requiring the submission of books of account is
the protection of labor through the minimization of the risk of fraud and diversion in the
handling of union funds.As correctly pointed out by the Solicitor General, this intention can
still be realized through other provisions of the Labor Code. Article 241 of the Labor Code, for
instance:
Art. 241. Rights and conditions of membership in a labor organization The following are the
rights and conditions of membership in a labor organization:
xxx xxx xxx

(b) The members shall be entitled to full and detailed reports from their officers and
representatives of all financial transactions as provided for in the constitution and by-laws of
the organization;

(m) The books of account and other records of the financial activities of any labor organization
shall be open to inspection by any officer or member thereof during office hours;
xxx xxx xxx

xxx xxx xxx

(g) No officer, agent or member of a labor organization shall collect any fees, dues, or other
contributions in its behalf or make any disbursement of its funds unless he is duly authorized
pursuant to its constitution and by-laws;
(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a
receipt signed by the officer or agent making the collection and entered into the record of the
organization to be kept and maintained for the that purpose;
(i) The funds of the organization shall not be applied for any purpose or object other than those
expressly provided by its constitution or by-laws or those expressly authorized by written
resolution adopted by the majority of the members at a general meeting duly called for the
purpose;
(j) Every income or revenue of the organization shall be evidenced by a record showing its
source, and every expenditure of its funds shall be evidenced by a receipt from the person to
whom the payment is made, which shall state the date, place and purpose of such
payment. Such record or receipt shall form part of the financial records of the organization.
xxx xxx xxx
(l) The treasurer of any labor organization and every officer thereof who is responsible for the
account of such organization or for the collection, management, disbursement, custody or
control of the fund, moneys and other properties of the organization, shall render to the
organization and to its members a true and correct account of all the moneys received and paid
by him since he assumed office or since the last day on which he rendered such account, and of
all bonds, securities and other properties of the organization entrusted to his custody or under
his control. The rendering of such account shall be made:
(1) At least once a year within 30 days after the close of its fiscal year;
(2) At such other times as may be required by a resolution of the majority of the
members of the organization;
(3) Upon vacating his office.
The account shall be duly audited and verified by affidavit and a copy thereof shall be
furnished the Secretary of Labor.

Furthermore, Article 274 of the Labor Code empowers the Secretary of Labor or his duly
authorized representative to inquire into the financial activities of legitimate labor
organizations upon the filing of a complaint under oath duly supported by the written consent
of 20% of the total membership of the labor organization concerned, as well as to examine
their books of accounts and other records to determine compliance or non-compliance with the
law. All of these provisions are designed to safeguard the funds of a labor organization that
they may not be squandered or frittered away by its officers or by third persons to the detriment
of its members.
Lastly, Department Order No. 9 only dispenses with books of account as a requirement
for registration of a local or chapter of a national union or federation. As provided by Article
241 (h) and (j), a labor organization must still maintain books of account, but it need not
submit the same as a requirement for registration. Given the foregoing disquisition, we find no
cogent reason to declare Department Order No. 9 null and void, as well as to reverse the
assailed resolution of the Secretary of Labor.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED for
lack of merit and the resolution of the Secretary of Labor dated February 27, 1998
AFFIRMED. Costs against petitioner.
SO ORDERED.
Vitug, Panganiban, Purisima, and Gonzaga_Reyes, JJ., concur.

FIRST DIVISION
THE HON. SECRETARY OF
LABOR AND EMPLOYMENT,
EDGARDO M. AGAPAY and
SAMILLANO A. ALONSO, JR.,
Petitioners, Present:

G.R. No. 167708

Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the
labor employment officers findings. Thus, in his May 10, 2001 order, the Regional Director of
the DOLE-NCR adopted the findings and computation of Cayabyab as to the unpaid benefits
due to petitioners Agapay and Alonso, Jr. The dispositive portion of the order read:
WHEREFORE, premises considered, Panay Veterans Security
and Investigation Agency, Inc. and/or Julius Jaleco [are/]is hereby ordered
to pay Edgardo Agapay, [et al.] the aggregate amount of P206,569.20
representing 13th month, overtime and legal holiday [pay] & [underpaid]
wages within ten (10) days from receipt hereof.

PUNO, C.J., Chairperson,

CARPIO,
- v e r s u s - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

Otherwise, a [w]rit of [e]xecution shall be issued for the

enforcement of [this] order.
SO ORDERED.[6]

PANAY VETERANS SECURITY

AND INVESTIGATION AGENCY,
INC. and JULITO JALECO,[1]
Respondents. Promulgated:

Respondents moved for reconsideration but the DOLE-NCR Regional Director

denied it.
August 22, 2008

x---------------------------------------------------x
DECISION
CORONA, J.:
This is a petition for review[2] of the November 25, 2004 amended decision [3] of the
Court of Appeals (CA) in CA-G.R. SP No. 72713.
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr.[4] were hired by
respondent Panay Veterans Security and Investigation Agency, Inc. as security guards
sometime in 1988. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta.
Rosa, Laguna until FII terminated its contract with respondent security agency on July 6, 2000.
They were not given new assignments and their benefits (including 13 th month pay, overtime
pay and holiday pay as well as wage differentials due to underpayment of wages) were
withheld by respondent security agency. This prompted them to file a complaint for violation
of labor standards in the regional office of the Department of Labor and Employment in the
National Capital Region (DOLE-NCR).
Acting on the complaint, Manuel M. Cayabyab, a labor employment officer of the
DOLE-NCR, conducted an inspection of respondent security agency on October 30, 2000.
During the inspection, respondent security agency failed to present its payroll as well as the
daily time records submitted by petitioners Agapay and Alonso, Jr. Such failure was noted as a
violation.
After conducting his inspection, Cayabyab issued a notice of inspection to
respondent security agency through its authorized representative, respondent Julito Jaleco.
[5]
Cayabyab explained the contents and significance of the notice to respondent Jaleco. He
emphasized the need for respondents either to comply with labor standards by paying the
claims of petitioners Agapay and Alonso, Jr. (as computed by Cayabyab) or to raise any
question regarding the notice to the DOLE-NCR within five days.

Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond)
to the Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary of Labor
and Employment found that respondents failed to perfect their appeal since they did not post a
cash or surety bond equivalent to the monetary award. Thus, the appeal was dismissed and the
DOLE-NCR Regional Directors May 10, 2001 order was declared final and executory. The
Secretary of Labor and Employment denied reconsideration.
Respondents assailed the Secretary of Labor and Employments July 9, 2002 order via
a petition for certiorari in the CA. The CA initially dismissed the petition for lack of merit and
ordered respondents to pay a total recomputed amount of P224,603.26.[7] However, the CA
granted reconsideration by applying the following ruling in Star Angel Handicraft v. National
Labor Relations Commission[8] (NLRC) by analogy:
Inasmuch as in practice, the NLRC allows the reduction of the
appeal bond upon motion of appellant and on meritorious grounds, it
follows that a motion to that effect may be filed within the reglementary
period for appealing. Such motion may be filed in lieu of a bond which
amount is being contested. In the meantime, the appeal is not deemed
perfected and the Labor Arbiter retains jurisdiction over the case until the
NLRC has acted on the motion and appellant has filed the bond as fixed by
the NLRC.
Thus, the CA amended its decision and allowed respondents to pursue their appeal.
The Secretary of Labor and Employment moved for reconsideration but it was denied. Thus,
this petition.
The Secretary of Labor and Employment contends that respondents failed to perfect
their appeal in the manner prescribed by the Labor Code. He further asserts that a motion to
reduce the appeal bond is not allowed by the Labor Code and the Rules of Disposition of Labor
Standards Cases in the Regional Offices (Rules on the Disposition of Labor Standards Cases)
and does not suspend the period of appeal. Moreover, the rules of procedure of the NLRC do
not apply in this case.
[9]

We uphold the Secretary of Labor and Employment.

RESPONDENTS FAILED TO PERFECT THEIR APPEAL

Article 128 of the Labor Code provides:

ART. 128. Visitorial and enforcement power.
(a) The Secretary of Labor or his duly authorized representatives,
including labor regulation officers, shall have access to employers records
and premises at any time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and regulations issued
pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217 of
this Code to the contrary, and in cases where the relationship of employeremployee exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders
to give effect to the labor standards provisions of this Code and other labor
legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the finding of the labor
employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.
An order issued by the duly authorized representative of the
Secretary of Labor and Employment under this Article may be appealed to
the latter. In case said order involves 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 Secretary of Labor and Employment in the amount equivalent
to the monetary award in the order appealed from. (emphasis
supplied)
In this connection, this Court ruled in Guico, Jr. v. Hon. Quisumbing:[10]
Article 128(b) of the Labor Code clearly provides that the appeal
bond must be in the amount equivalent to the monetary award in the order
appealed from. The records show that petitioner failed to post the required
amount of the appeal bond. His appeal was therefore not perfected.
The rule is that, to perfect an appeal of the Regional Directors order involving a
monetary award in cases which concern the visitorial and enforcement powers of the Secretary
of Labor and Employment, the appeal must be filed and the cash or surety bond equivalent to
the monetary award must be posted within ten calendar days from receipt of the order.
[11]
Failure either to file the appeal or post the bond within the prescribed period renders the
order final and executory.
The legislative intent to make the bond an indispensable requisite for the perfection
of an appeal by the employer is underscored by the provision that an appeal by the employer
may be perfected only upon the posting of a cash or surety bond. [12] The word only makes it

clear that the lawmakers intended the posting of a cash or surety bond by the employer to be
the exclusive means by which an employers appeal may be perfected. [13] In one case, we held
that:
Anent the issue of whether or not the respondent Secretary of
Labor acted with grave abuse of discretion in dismissing petitioners
appeal on the ground that petitioner failed to post the required cash or
surety bond, we rule in the negative.
Article 128 of the Labor Code likewise explicitly provides that in
case an order issued by the duly authorized representative of
the Secretary of Labor and Employment involves a monetary award,
an appeal by the employer may be perfected only upon posting of a
cash or surety bond in an amount equivalent to the monetary award in
the order appealed from.
As correctly noted by the Office of the Solicitor General, since
the Order appealed from involves a monetary award, an appeal by
petitioner may be perfected only upon posting of a cash or surety bond
issued by a reputable bonding company duly accredited by respondent
Secretary of Labor in the amount equivalent to the monetary award in
the Order appealed from.
It is undisputed that petitioner herein did not post a cash or surety
bond when it filed its appeal with the Office of respondent Secretary of
Labor. Consequently, petitioner failed to perfect its appeal on time and the
Order of respondent Regional Director became final and executory.
Thus, the Secretary of Labor and Employment thru
Undersecretary Cresenciano B. Trajano correctly dismissed petitioners
appeal.[14] (emphasis supplied)
In this case, respondents admit that they failed to post the required bond when they filed their
appeal to the Secretary of Labor and Employment. Because of such failure, the appeal was
never perfected and the May 10, 2001 order of the DOLE-NCR Regional Director attained
finality.
MOTION TO REDUCE APPEAL BOND IS NOT ALLOWED IN APPEALS TO THE
SECRETARY OF LABOR
The jurisdiction of the NLRC is separate and distinct from that of the Secretary of
Labor and Employment. In the exercise of their respective jurisdictions, each agency is
governed by its own rules of procedure. In other words, the rules of procedure of the NLRC are
different from (and do not apply in) cases cognizable by the Secretary of Labor and
Employment.
Unlike the New Rules of Procedure of the NLRC, [15] no provision in the Rules on the
Disposition of Labor Standards Cases governs the filing of a motion for the reduction of the
amount of the bond. However, on matters that are not covered by the Rules on the Disposition
of Labor Standards Cases, the suppletory application of the Rules of Court is authorized. [16] In
other words, the Rules on the Disposition of Labor Standards Cases does not sanction the
suppletory resort to the rules of procedure of the NLRC.

By ruling that the rules of procedure of the NLRC should be applied suppletorily to
respondents appeal to the Secretary of Labor of Employment, the CA effectively amended the
Rules on the Disposition of Labor Standards Cases. In the process, it encroached on the rulemaking power of the Secretary of Labor and Employment.
The CAs amended decision also contradicted the spirit that animates all labor laws, the
promotion of social justice and the protection of workers. The posting of a cash or surety bond
to perfect an appeal of an order involving a monetary award has a two-fold purpose: (1) to
assure the employee that, if he finally prevails in the case, the monetary award will be given to
him upon dismissal of the employers appeal and (2) to discourage the employer from using the
appeal to delay or evade payment of his obligations to the employee. [17] The CA disregarded
these pro-labor objectives when it treated respondents failure to post the required bond with
undue leniency. The CA should have resolved any doubt in the implementation and
interpretation of the Labor Code and its implementing rules in favor of labor. [18] For like all
laws which govern industrial relations (assuming all things are equal), the rules governing the
proceedings in labor disputes should be interpreted in favor of the worker.
Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the
appeal bond because the Court recognized the NLRCs existing practice at that time to allow the
reduction of the appeal bond upon motion of appellant and on meritorious grounds. In fact, the
practice was subsequently institutionalized in the rules of procedure of the NLRC which now
allow the reduction of the amount of the bond in justifiable cases and upon motion of the
appellant.[19] On the contrary, no such practice ever existed in cases taken cognizance of by the
Secretary of Labor and Employment in the exercise of his visitorial and enforcement powers.
Hence, Star Angel Handicraft cannot be applied in labor standards cases appealed to the
Secretary of Labor and Employment.
In ruling that Star Angel Handicraft was applicable by analogy to appeals to the
Secretary of Labor and Employment in cases involving his visitorial and enforcement powers,
the CA effectively reversed Guico, Jr. and Allied Investigation Bureau, Inc. v. Secretary of
Labor,[20] thus arrogating to itself a power that it did not possess, a power only this Court
sitting en banc may exercise.[21] For this reason, the amended decision was invalid as it was
rendered by the CA in excess of its jurisdiction.
MONETARY AWARD ISSUBJECT TO LEGAL INTEREST
In Eastern Shipping Lines, Inc. v. Court of Appeals,[22] the Court laid down the
following guidelines:
I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts, is breached, the contravenor can be held
liable for damages. The provisions under Title XVIII on Damages of the
Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows: a
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of money,
the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of

stipulation, the rate of interest shall be 12% per annum to be

computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169 of the
Civil Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate
of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. Accordingly, where
the demand is established with reasonable certainty, the interest
shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification
of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether
the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit.
The obligation of respondents to pay the lawful claims of petitioners Agapay and
Alonso, Jr. was established with reasonable certainty on October 30, 2000 when respondents
received the notice of inspection from the labor employment officer. Since such obligation did
not constitute a loan or forbearance of money, it was subject to legal interest at the rate of 6%
per annum from that date until the May 10, 2001 order of the DOLE-NCR Regional Director
attained finality. From the time the May 10, 2001 order of the DOLE-NCR Regional Director
became final and executory, petitioners Agapay and Alonso, Jr. were entitled to 12% legal
interest per annum until the full satisfaction of their respective claims.
WHEREFORE, the petition is hereby GRANTED. The November 25, 2004
amended decision of the Court of Appeals in CA-G.R. SP No. 72713 is REVERSED andSET
ASIDE. The July 9, 2002 order of the Secretary of Labor and Employment affirming the May
10, 2001 order of the DOLE-NCR Regional Director is herebyREINSTATED with the
modification that the monetary award shall earn 6% legal interest per annum from October 30,
2000 until the finality of the May 10, 2001 order of the DOLE-NCR Regional Director and,
thereafter, 12% legal interest per annum until the full satisfaction thereof.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 101279

August 6, 1992

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,

vs.
HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment,
and JOSE N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION,respondents.
De Guzman, Meneses & Associates for petitioner.

GRIO-AQUINO, J.:
This petition for prohibition with temporary restraining order was filed by the Philippine
Association of Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the
Department of Labor and Employment (DOLE) and the Administrator of the Philippine
Overseas Employment Administration (or POEA) from enforcing and implementing DOLE
Department Order No. 16, Series of 1991 and POEA Memorandum Circulars Nos. 30 and 37,
Series of 1991, temporarily suspending the recruitment by private employment agencies of
Filipino domestic helpers for Hong Kong and vesting in the DOLE, through the facilities of the
POEA, the task of processing and deploying such workers.
PASEI is the largest national organization of private employment and recruitment agencies
duly licensed and authorized by the POEA, to engaged in the business of obtaining overseas
employment for Filipino landbased workers, including domestic helpers.
On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino
housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department
Order No. 16, Series of 1991, temporarily suspending the recruitment by private employment
agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo). The DOLE itself,
through the POEA took over the business of deploying such Hong Kong-bound workers.

In view of the need to establish mechanisms that will enhance the

protection for Filipino domestic helpers going to Hong Kong, the
recruitment of the same by private employment agencies is hereby
temporarily suspended effective 1 July 1991. As such, the DOLE through
the facilities of the Philippine Overseas Employment Administration shall
take over the processing and deployment of household workers bound for
Hong Kong, subject to guidelines to be issued for said purpose.
In support of this policy, all DOLE Regional Directors and the Bureau of
Local Employment's regional offices are likewise directed to coordinate
with the POEA in maintaining a manpower pool of prospective domestic
helpers to Hong Kong on a regional basis.
For compliance. (Emphasis ours; p. 30, Rollo.)
Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series
of 1991, dated July 10, 1991, providing GUIDELINES on the Government processing and
deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong
recruitment agencies intending to hire Filipino domestic helpers.
Subject: Guidelines on the Temporary Government Processing and
Deployment of Domestic Helpers to Hong Kong.
Pursuant to Department Order No. 16, series of 1991 and in order to
operationalize the temporary government processing and deployment of
domestic helpers (DHs) to Hong Kong resulting from the temporary
suspension of recruitment by private employment agencies for said skill
and host market, the following guidelines and mechanisms shall govern the
implementation of said policy.
I. Creation of a joint POEA-OWWA Household Workers Placement Unit
(HWPU)
An ad hoc, one stop Household Workers Placement Unit [or HWPU] under
the supervision of the POEA shall take charge of the various operations
involved in the Hong Kong-DH industry segment:
The HWPU shall have the following functions in coordination with
appropriate units and other entities concerned:
1. Negotiations with and Accreditation of Hong Kong Recruitment
Agencies

2. Manpower Pooling

processed by the POEA Employment Contracts Processing Branch up to 15

August 1991 only.

3. Worker Training and Briefing

Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs
from the Philippines shall recruit under the new scheme which requires
prior accreditation which the POEA.

4. Processing and Deployment

5. Welfare Programs
II. Documentary Requirements and Other Conditions for Accreditation of
Hong Kong Recruitment Agencies or Principals
Recruitment agencies in Hong Kong intending to hire Filipino DHs for
their employers may negotiate with the HWPU in Manila directly or
through the Philippine Labor Attache's Office in Hong Kong.
xxx xxx xxx
X. Interim Arrangement
All contracts stamped in Hong Kong as of June 30 shall continue to be
processed by POEA until 31 July 1991 under the name of the Philippine
agencies concerned. Thereafter, all contracts shall be processed with the
HWPU.
Recruitment agencies in Hong Kong shall submit to the Philippine
Consulate General in Hong kong a list of their accepted applicants in their
pool within the last week of July. The last day of acceptance shall be July
31 which shall then be the basis of HWPU in accepting contracts for
processing. After the exhaustion of their respective pools the only source of
applicants will be the POEA manpower pool.
For strict compliance of all concerned. (pp. 31-35, Rollo.)
On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series
of 1991, on the processing of employment contracts of domestic workers for Hong Kong.
TO: All Philippine and Hong Kong Agencies engaged in the recruitment of
Domestic helpers for Hong Kong
Further to Memorandum Circular No. 30, series of 1991 pertaining to the
government processing and deployment of domestic helpers (DHs) to
Hong Kong, processing of employment contracts which have been attested
by the Hong Kong Commissioner of Labor up to 30 June 1991 shall be

Recruitment agencies in Hong Kong may apply for accreditation at the

Office of the Labor Attache, Philippine Consulate General where a POEA
team is posted until 31 August 1991. Thereafter, those who failed to have
themselves accredited in Hong Kong may proceed to the POEA-OWWA
Household Workers Placement Unit in Manila for accreditation before their
recruitment and processing of DHs shall be allowed.
Recruitment agencies in Hong Kong who have some accepted applicants in
their pool after the cut-off period shall submit this list of workers upon
accreditation. Only those DHs in said list will be allowed processing
outside of the HWPU manpower pool.
For strict compliance of all concerned. (Emphasis supplied, p. 36, Rollo.)
On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the
aforementioned DOLE and POEA circulars and to prohibit their implementation for the
following reasons:
1. that the respondents acted with grave abuse of discretion and/or in
excess of their rule-making authority in issuing said circulars;
2. that the assailed DOLE and POEA circulars are contrary to the
Constitution, are unreasonable, unfair and oppressive; and
3. that the requirements of publication and filing with the Office of the
National Administrative Register were not complied with.
There is no merit in the first and second grounds of the petition.
Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate
recruitment and placement activities.
Art. 36. Regulatory Power. The Secretary of Labor shall have the
power to restrict and regulatethe recruitment and placement activities of all
agencies within the coverage of this title [Regulation of Recruitment and
Placement Activities] and is hereby authorized to issue orders and

promulgate rules and regulations to carry out the objectives and

implement the provisions of this title. (Emphasis ours.)
On the other hand, the scope of the regulatory authority of the POEA, which was created by
Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas
Employment Development Board, the National Seamen Board, and the overseas employment
functions of the Bureau of Employment Services, is broad and far-ranging for:
1. Among the functions inherited by the POEA from the defunct Bureau of
Employment Services was the power and duty:
"2. To establish and maintain a registration and/or
licensing system to regulate private sector
participation in the recruitment and placement of
workers, locally and overseas, . . ." (Art. 15, Labor
Code, Emphasis supplied). (p. 13, Rollo.)
2. It assumed from the defunct Overseas Employment Development Board
the power and duty:
3. To recruit and place workers for overseas
employment of Filipino contract workers on a
government to government arrangement and in such
other sectors as policy may dictate . . . (Art. 17, Labor
Code.) (p. 13, Rollo.)
3. From the National Seamen Board, the POEA took over:
2. To regulate and supervise the activities of agents or
representatives of shipping companies in the hiring of
seamen for overseas employment; and secure the best
possible terms of employment for contract seamen
workers and secure compliance therewith. (Art. 20,
Labor Code.)
The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not
unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing
complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More
and more administrative bodies are necessary to help in the regulation of society's ramified
activities. "Specialized in the particular field assigned to them, they can deal with the problems
thereof with more expertise and dispatch than can be expected from the legislature or the courts
of justice" (Ibid.).

It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the
recruitment and deployment of Filipino landbased workers for overseas employment. A careful
reading of the challenged administrative issuances discloses that the same fall within the
"administrative and policing powers expressly or by necessary implication conferred" upon the
respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred
by Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of
Appeals, 24 SCRA 898). To "restrict" means "to confine, limit or stop" (p. 62, Rollo) and
whereas the power to "regulate" means "the power to protect, foster, promote, preserve, and
control with due regard for the interests, first and foremost, of the public, then of the utility and
of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218).
The Solicitor General, in his Comment, aptly observed:
. . . Said Administrative Order [i.e., DOLE Administrative Order No. 16]
merely restricted the scope or area of petitioner's business operations by
excluding therefrom recruitment and deployment of domestic helpers for
Hong Kong till after the establishment of the "mechanisms" that will
enhance the protection of Filipino domestic helpers going to Hong Kong.
In fine, other than the recruitment and deployment of Filipino domestic
helpers for Hongkong, petitioner may still deploy other class of Filipino
workers either for Hongkong and other countries and all other classes of
Filipino workers for other countries.
Said administrative issuances, intended to curtail, if not to end, rampant
violations of the rule against excessive collections of placement and
documentation fees, travel fees and other charges committed by private
employment agencies recruiting and deploying domestic helpers to
Hongkong. [They are reasonable, valid and justified under the general
welfare clause of the Constitution, since the recruitment and deployment
business, as it is conducted today, is affected with public interest.
xxx xxx xxx
The alleged takeover [of the business of recruiting and placing Filipino
domestic helpers in Hongkong] is merely a remedial measure, and expires
after its purpose shall have been attained. This is evident from the tenor of
Administrative Order No. 16 that recruitment of Filipino domestic helpers
going to Hongkong by private employment agencies are hereby
"temporarily suspendedeffective July 1, 1991."
The alleged takeover is limited in scope, being confined to recruitment of
domestic helpers going to Hongkong only.
xxx xxx xxx

. . . the justification for the takeover of the processing and deploying of

domestic helpers for Hongkong resulting from the restriction of the scope
of petitioner's business is confined solely to the unscrupulous practice of
private employment agencies victimizing applicants for employment as
domestic helpers for Hongkong and not the whole recruitment business in
the Philippines. (pp. 62-65,Rollo.)

. . . Administrative rules and regulations must also be published if their

purpose is to enforce or implement existing law pursuant also to a valid
delegation. (p. 447.)
Interpretative regulations and those merely internal in nature, that is,
regulating only the personnel of the administrative agency and not the
public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning
the rules or guidelines to be followed by their subordinates in the
performance of their duties. (p. 448.)

The questioned circulars are therefore a valid exercise of the police power as delegated to the
executive branch of Government.
Nevertheless, they are legally invalid, defective and unenforceable for lack of power
publication and filing in the Office of the National Administrative Register as required in
Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2,
Book VII of the Administrative Code of 1987 which provide:
Art. 2. Laws shall take effect after fifteen (15) days following the
completion of their publication in the Official Gazatte, unless it is
otherwise provided. . . . (Civil Code.)
Art. 5. Rules and Regulations. The Department of Labor and other
government agencies charged with the administration and enforcement of
this Code or any of its parts shall promulgate the necessary implementing
rules and regulations. Such rules and regulations shall become effective
fifteen (15) days after announcement of their adoption in newspapers of
general circulation. (Emphasis supplied, Labor Code, as amended.)
Sec. 3. Filing. (1) Every agency shall file with the University of the
Philippines Law Center, three (3) certified copies of every rule adopted by
it. Rules in force on the date of effectivity of this Code which are not filed
within three (3) months shall not thereafter be the basis of any sanction
against any party or persons. (Emphasis supplied, Chapter 2, Book VII of
the Administrative Code of 1987.)
Sec. 4. Effectivity. In addition to other rule-making requirements
provided by law not inconsistent with this Book, each rule shall become
effective fifteen (15) days from the date of filing as above provided unless a
different date is fixed by law, or specified in the rule in cases of imminent
danger to public health, safety and welfare, the existence of which must be
expressed in a statement accompanying the rule. The agency shall take
appropriate measures to make emergency rules known to persons who may
be affected by them. (Emphasis supplied, Chapter 2, Book VII of the
Administrative Code of 1987).
Once, more we advert to our ruling in Taada vs. Tuvera, 146 SCRA 446 that:

We agree that publication must be in full or it is no publication at all since

its purpose is to inform the public of the content of the laws. (p. 448.)
For lack of proper publication, the administrative circulars in question may not be enforced and
implemented.
WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE
Department Order No. 16, Series of 1991, and POEA Memorandum Circulars Nos. 30 and 37,
Series of 1991, by the public respondents is hereby SUSPENDED pending compliance with
the statutory requirements of publication and filing under the aforementioned laws of the land.
SO ORDERED.
Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Medialdea, Regalado, Davide,
Jr., Romero, Nocon and Bellosillo, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and
NESTL PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday pay award and
the change of the divisor in the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling
on its rights and obligations respecting claims of its monthly paid employees for holiday pay in
the light of the Court's decision in Chartered Bank Employees Association v. Ople (138
SCRA 273 [1985]).

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay,
and (3) deduction from the holiday pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity
of the Labor Code, that their sales personnel are not field personnel and are therefore entitled to
holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot
be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of
the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor
Code. He adjudged, however, that the company's sales personnel are field personnel and, as
such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday
pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which
issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the
ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to
Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as
implemented by Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of
the case reasoning that he had no more jurisdiction to continue as arbitrator because he had
resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in Article 82
and such other legal restrictions as are provided for in the Code. (Rollo,
p. 31)

1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed
from 251 to 261 days and whether or not the previous use of 251 as divisor resulted in
overpayment for overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82
of the Labor Code. The respondent company controverts this assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agritultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty."

Moreover, the requirement that "actual hours of work in the field cannot be determined with
reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing
Rules which provides:
Rule IV Holidays with Pay

The controversy centers on the interpretation of the clause "whose actual hours of work in the
field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having
reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makatibased.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the
sales personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be
reasonably ascertained. The company has no way of determining whether or not these sales
personnel, even if they report to the office before 8:00 a.m. prior to field work and come back
at 4:30 p.m, really spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to
report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is
not within the realm of work in the field as defined in the Code but an
exercise of purely management prerogative of providing administrative
control over such personnel. This does not in any manner provide a
reasonable level of determination on the actual field work of the employees
which can be reasonably ascertained. The theoretical analysis that salesmen
and other similarly-situated workers regularly report for work at 8:00 a.m.
and return to their home station at 4:00 or 4:30 p.m., creating the
assumption that their field work is supervised, is surface projection. Actual
field work begins after 8:00 a.m., when the sales personnel follow their
field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they
report back to their office. The period between 8:00 a.m. and 4:00 or 4:30
p.m. comprises their hours of work in the field, the extent or scope and
result of which are subject to their individual capacity and industry and
which "cannot be determined with reasonable certainty." This is the reason
why effective supervision over field work of salesmen and medical
representatives, truck drivers and merchandisers is practically a physical
impossibility. Consequently, they are excluded from the ten holidays with
pay award. (Rollo, pp. 36-37)

Sec. 1. Coverage This rule shall apply to all employees except:

xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the
petitioner nevertheless attempted to show that its affected members are not covered by the
abovementioned rule. The petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular
dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not
add another element to the Labor Code definition of field personnel. The clause "whose time
and performance is unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be determined with
reasonable certainty." The former clause is still within the scope and purview of Article 82
which defines field personnel. Hence, in deciding whether or not an employee's actual working
hours in the field can be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly supervised by the
employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales
personnel's time and performance are supervised. The purpose of this schedule is merely to
ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the
office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent
in field work by an employee through the imposition of sanctions on absenteeism contained in
the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every
quarter based on their performance is proof that their actual hours of work in the field can be
determined with reasonable certainty.
The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on
sales target; (2) good collection performance; (3) proper compliance with good market
hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck
maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely
because of the difficulty in measuring their actual hours of field work. These employees are
evaluated by the result of their work and not by the actual hours of field work which are hardly
susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the
Court had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little,
within the range of his ability, as his ambition dictates. In lieu of overtime
he ordinarily receives commissions as extra compensation. He works away
from his employer's place of business, is not subject to the personal
supervision of his employer, and his employer has no way of knowing the
number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the
same rationale for their exclusion as field personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the
award of holiday pay, the divisor should be changed from 251 to 261 days to include the
additional 10 holidays and the employees should reimburse the amounts overpaid by Filipro
due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten
holidays certainly adds to or accelerates the basis of conversion and
computation by ten days. With the inclusion of ten holidays as paid days,
the divisor is no longer 251 but 261 or 262 if election day is counted. This
is indeed an extremely difficult legal question of interpretation which
accounts for what is claimed as falling within the concept of "solutio
indebti."
When the claim of the Union for payment of ten holidays was granted,
there was a consequent need to abandon that 251 divisor. To maintain it
would create an impossible situation where the employees would benefit

with additional ten days with pay but would simultaneously enjoy higher
benefits by discarding the same ten days for purposes of computing
overtime and night time services and considering sick and vacation leave
credits. Therefore, reimbursement of such overpayment with the use of 251
as divisor arises concomitant with the award of ten holidays with pay.
(Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already
included in the monthly paid employee's salary and in the computation of his daily rate. This is
the thrust of our pronouncement in Chartered Bank Employees Association v. Ople (supra). In
that case, We held:
It is argued that even without the presumption found in the rules and in the
policy instruction, the company practice indicates that the monthly salaries
of the employees are so computed as to include the holiday pay provided
by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the
Chartered Bank, in computing overtime compensation for its employees,
employs a "divisor" of 251 days. The 251 working days divisor is the result
of subtracting all Saturdays, Sundays and the ten (10) legal holidays from
the total number of calendar days in a year. If the employees are already
paid for all non-working days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by
respondent Filipro indicates that holiday pay is not yet included in the employee's salary,
otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and night differential pay and
commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the
same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a
lower daily rate which is violative of the prohibition on non-diminution of benefits found in

Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261
days, then the dividend, which represents the employee's annual salary, should correspondingly
be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the
employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is
P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday
pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still
P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and
night differential pay and sick and vacation leave benefits, the computation of which are all
based on the daily rate, since the daily rate is still the same before and after the grant of holiday
pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251
days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1,
1980, when the company was on a 6-day working schedule, the divisor used by the company
was 303, indicating that the 10 holidays were likewise not paid. When Filipro shifted to a 5-day
working schebule on September 1, 1980, it had the chance to rectify its error, if ever there was
one but did not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed
from November 1, 1974. This ruling was not questioned by the petitioner union as obviously
said decision was favorable to it. Technically, therefore, respondent Nestle should have filed a
separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled
that an appellee who is not an appellant may assign errors in his brief where his purpose is to
maintain the judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate
Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine
Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle
the issues so that the execution of the Court's decision in this case may not be needlessly
delayed by another petition, the Court resolved to take up the matter of effectivity of the
holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985
when the Chartered Bank decision, promulgated on August 28, 1985, became final and
executory, and not from the date of effectivity of the Labor Code. Although the Court does not
entirely agree with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663
[1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV,
Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary
of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly
paid employees from holiday pay benefits, are null and void. The Court therein reasoned that,
in the guise of clarifying the Labor Code's provisions on holiday pay, the aforementioned

implementing rule and policy instruction amended them by enlarging the scope of their
exclusion. The Chartered Bank case reiterated the above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy
instruction enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday
benefit up to the promulgation of the IBAA case on October 23, 1984 was in compliance with
these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court
discussed the effect to be given to a legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to
be complied with. This is so as until after the judiciary, in an appropriate
case, declares its invalidity, it is entitled to obedience and respect. Parties
may have acted under it and may have changed their positions. What could
be more fitting than that in a subsequent litigation regard be had to what
has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a fact must be reckoned with.
This is merely to reflect awareness that precisely because the judiciary is
the government organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have elapsed
before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired
prior to such adjudication.
In the language of an American Supreme Court decision: "The actual
existence of a statute, prior to such a determination of [unconstitutionality],
is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects, with respect to particular relations,
individual and corporate, and particular conduct, private and official."
(Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374
[1940]). This language has been quoted with approval in a resolution
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision inManila Motor
Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is
the opinion of Justice Zaldivar speaking for the Court in Fernandez
v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435)

The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue
harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To
require various companies to reach back to 1975 now and nullify acts done in good faith is
unduly harsh. 1984 is a fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying
on the implicit validity of the implementing rule and policy instruction before this Court
nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly
paid employees, may have been moved to grant other concessions to its employees, especially
in the collective bargaining agreement. This possibility is bolstered by the fact that respondent
Nestle's employees are among the highest paid in the industry. With this consideration, it would
be unfair to impose additional burdens on Nestle when the non-payment of the holiday benefits
up to 1984 was not in any way attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code,
but from October 23, 1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be
used in computing holiday pay shall be 251 days. The holiday pay as above directed shall be
computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is
hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin, Medialdea, Grio-Aquino,
Regalado, Davide, Jr. and Romero, JJ., concur.
Cruz and Nocon, JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila

On May 31, 1994, a pre-arbitration conference of the cases took place before the Labor Arbiter.
It was agreed therein: (1) that both labor cases should be consolidated; and (2) that the parties
would file their respective position papers within thirty days from said date or until June 30,
1994, after which the cases would be deemed submitted for resolution (Rollo, p. 14).

FIRST DIVISION
On June 29, petitioners filed their position paper. On July 7, they inquired from the NLRC
whether private respondents had filed their position paper. The receiving clerk of the NLRC
confirmed that as of said date private respondents had not yet filed their position paper.
G.R. Nos. 117442-43 January 11, 1995
FEM'S ELEGANCE LODGING HOUSE, FENITHA SAAVEDRA and IRIES
ANTHONY SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional Arbitration Branch,
Region X, National Labor Relations Commission, Cagayan de Oro City, ALFONSO
GALLETO, GEORGE VEDAD, ROLAND PANTONIAL, REYNALDO DELAORAO,
FELICISIMO BAQUILID, CECILIO SAJOL, ANNABEL CASTRO, BENJAMIN
CABRERA, RHONDEL PADERANGA, ZENAIDA GUTIB, AIDA IMBAT and MARIA
GRACE ATUEL,respondents.
RESOLUTION

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of court with temporary
restraining order to reverse and set aside the Order dated September 21, 1994 of the Labor
Arbiter in the NLRC RAB X Cases Nos. 10-04-00232 (-00233)-94.
Petitioner FEM's elegance Lodging House is a business enterprise engaged in providing
lodging accommodations. It is owned by petitioner Fenitha Saavedra and managed by
petitioner Iries Anthony Saavedra. Private respondents are former employees of petitioners
whose services were terminated between March and April, 1994.
Sometime after their dismissal from the employment of petitioners, private respondents
separately filed two cases against petitioners before the National Labor Relations Commission
(NLRC), Regional Arbitration Branch No. X, Cagayan de Oro City, docketed as NLRC RAB X
Cases Nos. 10-04-00232-(0023)-94. Private respondents sought for unpaid benefits such as
minimum wage, overtime pay, rest day pay, holiday pay, full thirteenth-month pay and
separation pay (Rollo, pp. 40-42).

The following events then transpired: on July 8, petitioners filed a Motion to dismiss for failure
of private respondents to file their position paper within the agreed period (Rollo, p. 38); on
July 15, private respondents belatedly filed their position paper; on July 18, petitioners filed a
Motion to Expunge [private respondents'] Position Paper from the records of the case (Rollo, p.
45); and on August 23, the Labor Arbiter issued a notice of clarificatory hearing, which was set
for September 7 (Rollo, p. 47). Prior to the hearing, petitioners filed a Motion to Resolve
[petitioners'] Motion to dismiss and Motion to Expunge [private respondent'] Position Paper
from the Records of the Case (Rollo, p. 48).
On September 21, the Labor Arbiter issued the order denying the motions filed by petitioners.
He held that a fifteen-day delay in filing the position paper was not unreasonable considering
that the substantive rights of litigants should not be sacrificed by technicality. He cited Article
4 of the Labor Code of the Philippines, which provides that all doubts in the interpretation
thereof shall be resolved in favor of labor. He said that even under Section 15, Rule 5 of the
Revised Rules of Court, a delay in the filing of a position paper is not a ground for a motion to
dismiss under the principle of exclusio unius est excludio alterius (Rollo, pp. 51-52).
Hence, the present petition where petitioners charged the Labor Arbiter with grave abuse of
discretion for issuing the order in contravention of Section 3, Rule V of The New Rules of
Procedure of the NLRC, Said section provides:
Submission of Position Papers/Memorandum. . . . Unless otherwise
requested in writing by both parties, the Labor Arbiter shall direct both
parties to submit simultaneously their position papers/memorandum with
the supporting documents and affidavits within fifteen (15) calendar days
from the date of the last conference, with proof of having furnished each
other with copies thereof (Emphasis supplied).
Petitioners claimed that they were denied due process and that the Labor Arbiter should have
cited private respondents in contempt for their failure to comply with their agreement in the
pre-arbitration conference.
We dismiss the petition for failure of petitioners to exhaust their remedies, particularly in
seeking redress from the NLRC prior to the filing of the instant petition. Article 223 of the

Labor code of the Philippines provides that decisions, awards or orders of the Labor Arbiter are
appealable to the NLRC. Thus, petitioners should have first appealed the questioned order of
the Labor Arbiter to the NLRC, and not to this court. their omission is fatal to their cause.
However, even if the petition was given due course, we see no merit in petitioners' arguments.
The delay of private respondents in the submission of their position paper is a procedural flaw,
and the admission thereof is within the discretion of the Labor Arbiter.
Well-settled is the rule that technical rules of procedure are not binding in labor cases, for
procedural lapses may be disregarded in the interest of substantial justice, particularly where
labor matters are concerned (Ranara v. National Labor Relations commission, 212 SCRA 631
[1992]).
The failure to submit a position paper on time is not on of the grounds for the dismissal of a
complaint in labor cases (The New Rules of procedure of the NLRC, Rule V, Section 15). It
cannot therefore be invoked by petitioners to declare private respondents as non-suited. This
stance is in accord with Article 4 of the Labor Code of the Philippines, which resolves that all
doubts in the interpretation of the law and its implementing rules and regulations shall be
construed in favor of labor. Needless to state, our jurisprudence is rich with decisions adhering
to the State's basic policy of extending protection to Labor where conflicting interests between
labor and management exist (Aquino v. National Labor Relations Commission, 206 SCRA 118
[1992]).
Petitioners cannot claim that they were denied due process inasmuch as they were able to file
their position paper. The proper party to invoke due process would have been private
respondents, had their position paper been expunged from the records for mere technicality.
Since petitioners assert that their defense is meritorious, it is to their best interest that the cases
be resolved on the merits. In this manner, the righteousness of their cause can be vindicated.
IN VIEW OF THE FOREGOING, the Court Resolved to DISMISS the petition for lack of
merit.
SO ORDERED.
Davide, Jr., Bellosillo and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

The petition in this case should be dismissed because petitioners did not exhaust their remedies
in the National Labor Relations Commission (NLRC) before coming to this Court.
It is clear from Article 223 of the Labor Code that decisions, awards or orders of the labor
arbiter are appealable to the National Labor Relations Commission. The proper remedy which
petitioners should have taken was to appeal to the NLRC the labor arbiter's order denying their
motion to dismiss and motion to expunge private respondents' position paper. The present
petition is therefore clearly premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters, even in the form of a
petition for certiorari for alleged grave abuse of discretion under Rule 65 of the Rules of
Court, we will be opening the flood gates to petitions for certiorari against orders (including
interlocutory ones) of labor arbiters when the clear intent of the law is to subject the decisions,
awards and orders of labor arbiters to review by the NLRC before they are brought to this
Court.

Separate Opinions
PADILLA, J., concurring:
The petition in this case should be dismissed because petitioners did not exhaust their remedies
in the National Labor Relations Commission (NLRC) before coming to this Court.
It is clear from Article 223 of the Labor Code that decisions, awards or orders of the labor
arbiter are appealable to the National Labor Relations Commission. The proper remedy which
petitioners should have taken was to appeal to the NLRC the labor arbiter's order denying their
motion to dismiss and motion to expunge private respondents' position paper. The present
petition is therefore clearly premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters, even in the form of a
petition for certiorari for alleged grave abuse of discretion under Rule 65 of the Rules of
Court, we will be opening the flood gates to petitions for certiorari against orders (including
interlocutory ones) of labor arbiters when the clear intent of the law is to subject the decisions,
awards and orders of labor arbiters to review by the NLRC before they are brought to this
Court.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-48605 December 14, 1981

DOMNA N. VILLAVERT, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE
INSURANCE SYSTEM (Philippine Constabulary), respondents.

FERNANDEZ, J.:
This is a petition to review the decision of the Employees' Compensation Commission in ECC
Case No. 0692, entitled "Domna N. Villavert, appellant versus Government Service Insurance
System (Philippine Constabulary), respondents," affirming the decision of the Government
Service Insurance System denying the claim for death benefits. 1
The petitioner, Domna N. Villavert, is the mother of the late, Marcelino N. Villavert who died
of acute hemorrhagic pancreatitis on December 12, 1975 employed as a Code Verifier in the
Philippine Constabulary. She filed a claim for income benefits for the death of her son under
P.D. No. 626 as amended with the Government Service Insurance System on March 18, 1976.
The said claim was denied by the Government Service Insurance System on the ground that
acute hemorrhagic pancreatitis is not an occupational disease and that the petitioner had failed
to show that there was a causal connection between the fatal ailment of Marcelino N. Villavert
and the nature of his employment.
The petitioner appealed to the Employees' Compensation Commission which affirmed on May
31, 1978 the decision of the respondent, Government Service Insurance System, denying the
claim.
The record shows that in addition to his duties as Code Verifier, Marcelino N. Villavert also
performed the duties of a computer operator and clerk typist. In the morning of December 11,
1975, Marcelino reported as usual to the Constabulary Computer Center at Camp Crame,
Quezon City. He performed his duties not only as code verifier but also handled administrative
functions, computer operation and typing jobs due to shortage of civilian personnel. Although

he was complaining of chest pain and headache late in the afternoon of December 11, 1975,
after a whole day of strenuous activities, Marcelino was still required to render overtime
service until late in the evening of the same day, typing voluminous classified communications,
computing allowances and preparing checks for the salary of Philippine Constabulary and
Integrated National Police personnel throughout the country for distribution on or before
December 15, 1975. He went home late at night and due to fatigue, he went to bed as soon as
he arrived without taking his meal. Shortly thereafter, Marcelino was noticed by his mother, the
herein petitioner, gasping for breath, perspiring profusely, and mumbling incoherent words.
The petitioner tried to wake him up and after all efforts to bring him to his senses proved futile,
she rushed Marcelino to the UE Ramon Magsaysay Memorial Hospital where he was
pronounced dead at 5:30 o'clock in the morning of December 12, 1975 without regaining
consciousness. The case of death was acute hemorrhagic pancreatitis.
To support the claim that Marcelino N. Villavert died of acute hemorrhagic pancreatitis as a
result of his duties as a code verifier, computer operator and typist of the Philippine
Constabulary, the petitioner submitted the following certification of Lt. Colonel Felino C.
Pacheco Jr., commanding officer, of the Philippine Constabulary, which reads:
THIS IS TO CERTIFY that MARCELINO N. VILLAVERT, a regular
employee of the Constabulary Computer Center, had been performing the
following duty assignments in this office in addition to his appointment as
Coder Verifier before his death;
a. Computer Operator As computer operator he was subject to excessive
heat and cold;
b. Clerk TypistAs typist he was responsible for typing important
communications not only for the office of the Constabulary Computer
Center but also for other posts, including engagement speeches of the
Chief of Constabulary and other ranking officers of the Command;
c. Due to the shortage of qualified civilian personnel to handle the task, he
was given excessive work responsibilities in the office which could have
aggravated his ailment.
d. That more often he took his meals irregularly late in view of the nature
of his work especially during the preparation of checks for the salary of the
Philippine Constabulary and the National Integrated Police personnel
throughout the country;
e. He used to perform rotation duties, thereby leaving him in sufficient
time to consult the Constabulary Medical Dispensary for routine physical
check up about his health.

f. That subject employee never drinks alcoholic liquor, neither smokes nor
engages on immoral habits during his lifetime.

to the rotation of his duties and therefore no record of his physical

examination could be found in this Headquarters;

g. That he died in line of duty after retiring from his night shift.

e. That the death of late Marcelino N. Villavert was service connected in

view of the fact that he died while in the performance of his official duties.

This certification is being issued in behalf of legal heirs in order to justify

their claim for payment of benefits from the Employees' Compensation to
reciprocate the services rendered by the late Marcelino N. Villavert, a loyal
and dedicated public servant. 2
The foregoing certification of Lt. Col. Felino C. Pacheco, Jr. was corroborated by the affidavit
of Rustico P. Valenzuela, Chief Clerk of the Constabulary Computer Center, which reads:
I, RUSTICO P. VALENZUELA, Master Sergeant, Philippine Constabulary,
Filipino of legal age, married and presently Chief Clerk of the
Constabulary Computer Center, Camp Crame, Quezon City after having
been duly sworn to in accordance to law hereby depose and say:
a. That as Chief Clerk I am responsible to my Commanding Officer about
the accounting, detail, duties, etc. of all military and civilian personnel in
the office and therefore the duties of the late Marcelino N. Villavert are
personally known to me prior to his death;
b. That the late Marcelino N. Villavert although was appointed as Coder
Verifier, still he was instructed to perform extra additional workload due to
shortage of qualified civilian personnel to handle administrative function,
he being a graduate of the Computer Operator and an expert typist which is
seldom found among the qualities of civilian personnel assigned in the
Constabulary Computer Center;
c. That the late Marcelino N. Villavert was complaining of chest pain and
headache prior to his death but because of an urgent call to the service,
although it necessitated his rest; he was obliged to go on strenuous duty on
the night of December 11, 1975, typing voluminous classified
communications, compute allowances and prepare checks for the salary of
Philippine Constabulary and Integrated National Police personnel
throughout the country for distribution on or before December 15, 1975,
scheduled payday, thereby aggravating his ailment due to excessive work,
disposed to heat and cold, operating computer machine and over fatigue
that caused his sudden death;
d. That the late Marcelino N. Villavert before his death have insufficient
time to consult the Medical Dispensary for routine physical check-up due

Affiant further sayeth none.

IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of
August 1977 at Quezon City.
(SGD) RUSTICO P. VALENZUEL
Affiant
SUBSCRIBED AND SWORN to before me this 22nd day of August 1977
at Quezon City, Metro Manila. Affiant exhibited his Residence Certificate
No. A-1183510 issued at Taguig, Metro Manila on January 10, 1977.
(SGD) ENRIQUE C VILLANUEVA JR
1Lt. PC Administrative Officer 3
The Government Service Insurance System and the Employees' Compensation Commission
denied the claim for compensation on the ground that the petitioner did not present evidence
that the illness of Marcelino N. Villavert, acute hemorrhagic pancreatitis, was caused or
aggravated by the nature of his duties as employee of the Philippine Constabulary.
The Employees' Compensation Commission, citing a book on medicine, said:
In medical science, acute hemorrhagic pancreatitis is "acute inflammation
with hemorrhagic necrosis of the pancreas." It occurs most commonly in
association with alcoholism. The onset of the symptoms often occurs
during or shortly after bouts of alcoholic intoxication. It also occurs in
association with biliary tract disease. Occasionally, it occurs as a
complication of peptic ulcer, mumps, viral hepatitis or following the use of
drugs such as glucocorticoids, or chlorothiazide. It is sometimes associated
with metabolic disorders such as hyperpidemia and hyperparathyroidism. It
may also be associated with a genetic type of pancreatitis with onset in
childhood. Trauma is a relatively frequent cause of pancreatitis; it may
result from a severe blow to the abdomen, a penetrating injury from a
bullet or knife wound, inadvertent trauma from surgical procedures in the
upper abdomen or rarely, electric shock. Approximately 20% of the

patients have no apparent underlying or predisposing cause. (Principles of

Internal Medicine by Harrison, 7th Edition, pp. 157) 4
However, the Medico Legal Officer of the National Bureau of Investigation stated that the
exact cause of acute hemorrhagic pancreatitis is still unknown despite extensive researches in
this field, although most research data are agreed that physical and mental stresses are strong
causal factors in the development of the disease. 5
From the foregoing facts of record, it is clear that Marcelino N. Villavert died of acute
hemorrhagic pancreatitis which was directly caused or at least aggravated by the duties he
performed as coder verifier, computer operator and clerk typist of the Philippine Constabulary.
There is no evidence at all that Marcelino N. Villavert had a "bout of alcoholic intoxication"
shortly before he died. Neither is there a showing that he used drugs.
It should be noted that Article 4 of the Labor Code of the Philippines, as amended, provides
that "All doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations shall be resolved in favor of labor."
WHEREFORE, the decision of the Employees' Compensation Commission sought to be
reviewed is set aside and judgment is hereby rendered ordering the Government Service
Insurance System to pay the petitioner death benefits in the amount of SIX THOUSAND
PESOS (P6,000.00).

satisfied; otherwise, proof must be shown that the risk of contracting the
disease is increased by the working conditions (emphasis supplied).
The cause of death of petitioner's son was acute hemorrhagic pancreatitis. This disease is not
one of those listed, even under the additional listing, as an occupational disease in Annex "A"
of the Amended Rules on Employees Compensation. Neither did petitioner present evidence to
prove that the risk of contracting hemorrhagic pancreatitis was increased by the working
conditions surrounding her son's employment as code verifier, computer operator and typist of
the Philippine Constabulary. For which reasons, the Government Service Insurance System and
the Employees' Compensation Commission denied the claim for compensation.
That physical and mental stresses are strong causal factors in the development of the disease,
as stated by the Medico Legal Officer of the National Bureau of Investigation is not
scientifically confirmed "research data." Medical science still associates the disease with
alcoholism, binary tract disease, the use of drugs, or trauma, among others. In fact, the exact
cause is still unknown. Medical reports indicate that approximately 20% of the patients
suffering from that disease have no apparent underlying or predisposing cause.
The illness of petitioner's son not having been caused nor aggravated by the nature of his duties
as an employee of the Philippine Constabulary, petitioner's claim is not compensable under
explicit provisions of existing laws.

SO ORDERED.
Teehankee (Chairman), Makasiar, Guerrero and Plana, JJ., concur.
Separate Opinions

Separate Opinions
MELENCIO-HERRERA, J., dissenting.
Section 1 (b), Rule III of the Amended Rules on Employees' Compensation explicitly provides:

MELENCIO-HERRERA, J., dissenting.

Section 1 (b), Rule III of the Amended Rules on Employees' Compensation explicitly provides:
SECTION 1.
xxxxxxxxx
(b) For the sickness and the resulting disability or death to be compensable,
the sickness must be the result of an occupational disease annotated under
Annex "A" of these rules with the conditions set therein

SECTION 1.
xxxxxxxxx
(b) For the sickness and the resulting disability or death to be compensable, the
sickness must be the result of an occupational disease annotated under Annex "A" of
these rules with the conditions set therein satisfied; otherwise, proof must be shown
that the risk of contracting the disease is increased by the working
conditions (emphasis supplied).
The cause of death of petitioner's son was acute hemorrhagic pancreatitis. This disease is not one of those
listed, even under the additional listing, as an occupational disease in Annex "A" of the Amended Rules on
Employees Compensation. Neither did petitioner present evidence to prove that the risk of contracting

hemorrhagic pancreatitis was increased by the working conditions surrounding her son's employment as
code verifier, computer operator and typist of the Philippine Constabulary. For which reasons, the
Government Service Insurance System and the Employees' Compensation Commission denied the claim
for compensation.
That physical and mental stresses are strong causal factors in the development of the disease, as stated by
the Medico Legal Officer of the National Bureau of Investigation is not scientifically confirmed "research
data." Medical science still associates the disease with alcoholism, binary tract disease, the use of drugs, or

trauma, among others. In fact, the exact cause is still unknown. Medical reports indicate that approximately
20% of the patients suffering from that disease have no apparent underlying or predisposing cause.
The illness of petitioner's son not having been caused nor aggravated by the nature of his duties as an
employee of the Philippine Constabulary, petitioner's claim is not compensable under explicit provisions of
existing laws.