THIRD DIVISION

1990, Guidelines on the Implementation of Compressed

Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m.,
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as
from Monday to Friday, shall be considered as the regular
Union President, JOSELITO LARIO, VIVENCIO B. BARTE,
working hours, and no overtime pay shall be due and
SATURNINO EGERA and SIMPLICIO AYA-AY,
payable to the employee for work rendered during those
Petitioners,
hours. The MOA specifically stated that the employee
waives the right to claim overtime pay for work rendered
- versus after 5:00 p.m. until 6:12 p.m. from Monday to Friday
considering that the compressed workweek schedule is
NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMAadopted in lieu of the regular workweek schedule which
CORPORATION, and/or WILFREDO C. RIVERA,
also consists of 46 hours. However, should an employee
Respondents.
be permitted or required to work beyond 6:12 p.m., such
employee shall be entitled to overtime pay.

x-----------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

This petition seeks a review of the Decision [1] of

the Court of Appeals (CA) dated July 24, 2001 and
Resolution dated December 20, 2001, which affirmed the
finding of the National Labor Relations Commission
(NLRC) that the petitioners transfer to another workplace
did not amount to a constructive dismissal and an unfair
labor practice.
The pertinent factual antecedents are as follows:
Tryco Pharma Corporation (Tryco) is a
manufacturer of veterinary medicines and its principal office
is located in Caloocan City. Petitioners Joselito Lario,
Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are
its regular employees, occupying the positions of helper,
shipment helper and factory workers, respectively,
assigned to the Production Department. They are members
of Bisig Manggagawa sa Tryco (BMT), the exclusive
bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed separate
Memorand[a] of Agreement[2] (MOA), providing for a
compressed workweek schedule to be implemented in the
company effective May 20, 1996. The MOA was entered
into pursuant to Department of Labor and Employment
Department Order (D.O.) No. 21, Series of

Tryco informed the Bureau of Working Conditions

of the Department of Labor and Employment of the
implementation of a compressed workweek in the
company.[3]
In January 1997, BMT and Tryco negotiated for
the renewal of their collective bargaining agreement (CBA)
but failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March
26, 1997 from the Bureau of Animal Industry of the
Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not
in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer
at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License
to Operate as Veterinary Drug and
Product Manufacturer is addressed
at San Rafael, Bulacan, and so,
therefore, your production should be
done at the above mentioned address
only. Further, production of a drug
includes propagation, processing,
compounding,
finishing,
filling,
repacking,
labeling,
advertising,
storage, distribution or sale of the
veterinary drug product. In no instance,
therefore, should any of the above be
done at your business office at 117 M.
Ponce St., EDSA, Caloocan City.
Please be guided accordingly.

Thank you.
Very truly yours,
(sgd.)
EDNA ZENAIDA V. VILLACORTE,
D.V.M.
Chief, Animal Feeds Standard Division[4]
Accordingly,
Tryco
issued
a
Memorandum[5] dated April 7, 1997 which directed
petitioner Aya-ay to report to the companys plant site in
Bulacan. When petitioner Aya-ay refused to obey, Tryco
reiterated the order on April 18, 1997.[6] Subsequently,
through a Memorandum[7] dated May 9, 1997, Tryco also
directed petitioners Egera, Lario and Barte to report to the
companys plant site in Bulacan.
BMT opposed the transfer of its members to San
Rafael, Bulacan, contending that it constitutes unfair labor
practice. In protest, BMT declared a strike on May 26,
1997.
In August 1997, petitioners filed their separate
complaints[8] for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave,
and refusal to bargain against Tryco and its President,
Wilfredo C. Rivera. In their Position Paper, [9] petitioners
alleged that the company acted in bad faith during the CBA
negotiations because it sent representatives without
authority to bind the company, and this was the reason why
the negotiations failed. They added that the management
transferred petitioners Lario, Barte, Egera and Aya-ay
from Caloocan to San Rafael, Bulacan to paralyze the
union. They prayed for the company to pay them their
salaries fromMay 26 to 31, 1997, service incentive leave,
and overtime pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the
petitioners were not dismissed but they refused to comply
with the managements directive for them to report to the
companys plant in San Rafael, Bulacan. They denied the
allegation that they negotiated in bad faith, stating that, in
fact, they sent the Executive Vice-President and Legal
Counsel as the companys representatives to the CBA
negotiations. They claim that the failure to arrive at an
agreement was due to the stubbornness of the union
panel.
Respondents further averred that, long before the
start of the negotiations, the company had already been
planning to decongest the Caloocan office to comply with

the government policy to shift the concentration of

manufacturing activities from the metropolis to the
countryside. The decision to transfer the companys
production activities to San Rafael, Bulacan was
precipitated by the letter-reminder of the Bureau of Animal
Industry.
On February 27, 1998, the Labor Arbiter
dismissed the case for lack of merit.[10] The Labor Arbiter
held that the transfer of the petitioners would not paralyze
or render the union ineffective for the following reasons: (1)
complainants are not members of the negotiating panel;
and (2) the transfer was made pursuant to the directive of
the Department of Agriculture.
The Labor Arbiter also denied the money claims,
ratiocinating that the nonpayment of wages was justified
because the petitioners did not render work from May 26 to
31, 1997; overtime pay is not due because of the
compressed workweek agreement between the union and
management; and service incentive leave pay cannot be
claimed by the complainants because they are already
enjoying vacation leave with pay for at least five days. As
for the claim of noncompliance with Wage Order No. 4, the
Labor Arbiter held that the issue should be left to the
grievance machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the
Labor Arbiters Decision, dismissing the case, thus:
PREMISES CONSIDERED,
the Decision of February 27, 1998 is
hereby AFFIRMED and complainants
appeal therefrom DISMISSED for lack
of merit. Complainants Joselito Lario,
Vivencio Barte, Saturnino Egera and
Simplicio Aya-ay are directed to report
to work at respondents San Rafael
Plant, Bulacan but without backwages.
Respondents are directed to accept the
complainants back to work.
SO ORDERED.[11]
On December 22, 1999, the NLRC denied the
petitioners motion for reconsideration for lack of merit. [12]
Left with no recourse, petitioners filed a petition
for certiorari with the CA.
On July 24, 2001, the CA dismissed the petition
for certiorari and ruled that the transfer order was a
management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further

sustained the enforceability of the MOA, particularly the

waiver of overtime pay in light of this Courts rulings
upholding a waiver of benefits in exchange of other
valuable privileges. The dispositive portion of the said CA
decision reads:
WHEREFORE, the instant
petition is DISMISSED. The Decision of
the Labor Arbiter dated February 27,
1998 and the Decision and Resolution
of the NLRC promulgated on October
29, 1999and December 22, 1999,
respectively, in NLRC-NCR Case Nos.
08-05715-97, 08-06115-97 and 0805920-97, are AFFIRMED.
SO ORDERED.[13]
The CA denied the petitioners motion for reconsideration
on December 20, 2001.[14]
Dissatisfied, petitioners filed this petition for review raising
the following issues:
-ATHE HONORABLE COURT OF
APPEALS ERRED IN AFFIRMING
THE
PATENTLY
ERRONEOUS
RULING OF THE LABOR ARBITER
AND THE COMMISSION THAT
THERE WAS NO DISMISSAL, MUCH
LESS ILLEGAL DISMISSAL, OF THE
INDIVIDUAL PETITIONERS.
-BTHE COURT OF APPEALS GRAVELY
ERRED IN NOT FINDING AND
CONCLUDING
THAT
PRIVATE
RESPONDENTS COMMITTED ACTS
OF UNFAIR LABOR PRACTICE.
-CTHE COURT OF APPEALS ERRED IN
NOT FINDING AND CONCLUDING
THAT PETITIONERS ARE ENTITLED
TO THEIR MONEY CLAIMS AND TO
DAMAGES, AS WELL AS LITIGATION
COSTS AND ATTORNEYS FEES.[15]
The petition has no merit.

We have no reason to deviate from the wellentrenched rule that findings of fact of labor officials, who
are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only
respect but even finality, and bind us when supported by
substantial evidence.[16] This is particularly true when the
findings of the Labor Arbiter, the NLRC and the CA are in
absolute agreement.[17] In this case, the Labor Arbiter, the
NLRC, and the CA uniformly agreed that the petitioners
were not constructively dismissed and that the transfer
orders did not amount to an unfair labor practice. But if only
to disabuse the minds of the petitioners who have
persistently pursued this case on the mistaken belief that
the labor tribunals and the appellate court committed
grievous errors, this Court will go over the issues raised in
this petition.
Petitioners mainly contend that the transfer
orders amount to a constructive dismissal. They maintain
that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy,
solicited by respondents to give them an excuse to effect a
massive transfer of employees. They point out that
the Caloocan City office is still engaged in production
activities until now and respondents even hired new
employees to replace them.
We do not agree.
We refuse to accept the petitioners wild and
reckless imputation that the Bureau of Animal Industry
conspired with the respondents just to effect the transfer of
the petitioners. There is not an iota of proof to support this
outlandish claim. Absent any evidence, the allegation is not
only highly irresponsible but is grossly unfair to the
government agency concerned. Even as this Court has
given litigants and counsel a relatively wide latitude to
present arguments in support of their cause, we will not
tolerate outright misrepresentation or baseless
accusation. Let this be fair warning to counsel for the
petitioners.
Furthermore, Trycos decision to transfer its
production activities to San Rafael, Bulacan, regardless of
whether it was made pursuant to the letter of the Bureau of
Animal Industry, was within the scope of its inherent right to
control and manage its enterprise effectively. While the law
is solicitous of the welfare of employees, it must also
protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose
cannot be denied.[18]

This prerogative extends to the managements

right to regulate, according to its own discretion and
judgment, all aspects of employment, including the
freedom to transferand reassign employees according to
the requirements of its business. [19] Managements
prerogative of transferring and reassigning employees from
one area of operation to another in order to meet the
requirements of the business is, therefore, generally not
constitutive of constructive dismissal.[20] Thus, the
consequent transfer of Trycos personnel, assigned to the
Production Department was well within the scope of its
management prerogative.

living accommodations in the area and prevent them from

commuting to Metro Manila daily to be with their families.

When the transfer is not unreasonable, or

inconvenient, or prejudicial to the employee, and it does
not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal.
[21]
However, the employer has the burden of proving that
the transfer of an employee is for valid and legitimate
grounds. The employer must show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee;
nor does it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits.[22]

More importantly, there was no showing or any

indication that the transfer orders were motivated by an
intention to interfere with the petitioners right to organize.
Unfair labor practice refers to acts that violate the workers
right to organize. With the exception of Article 248(f) of the
Labor Code of the Philippines, the prohibited acts are
related to the workers right to self-organization and to the
observance of a CBA. Without that element, the acts, no
matter how unfair, are not unfair labor practices. [26]

Indisputably, in the instant case, the transfer

orders do not entail a demotion in rank or diminution of
salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the
ground that it would cause them great inconvenience since
they are all residents of Metro Manila and they would incur
additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere
incidental inconvenience is not sufficient to warrant a claim
of constructive dismissal.[23] Objection to a transfer that is
grounded solely upon the personal inconvenience or
hardship that will be caused to the employee by reason of
the transfer is not a valid reason to disobey an order of
transfer.[24]
Incidentally, petitioners cite Escobin v. NLRC[25] where the
Court held that the transfer of the employees therein was
unreasonable. However, the distance of the workplace to
which the employees were being transferred can hardly
compare to that of the present case. In that case, the
employees were being transferred from Basilan to Manila;
hence, the Court noted that the transfer would have
entailed the separation of the employees from their families
who were residing in Basilan and accrual of additional
expenses for living accommodations in Manila. In contrast,
the distance from Caloocan to San Rafael, Bulacan is not
considerably great so as to compel petitioners to seek

Petitioners, however, went further and argued

that the transfer orders amounted to unfair labor practice
because it would paralyze and render the union ineffective.
To begin with, we cannot see how the mere
transfer of its members can paralyze the union. The union
was not deprived of the membership of the petitioners
whose work assignments were only transferred to another
location.

Finally, we do not agree with the petitioners

assertion that the MOA is not enforceable as it is contrary
to law. The MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the
waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.[27]
D.O. No. 21 sanctions the waiver of overtime pay
in consideration of the benefits that the employees will
derive from the adoption of a compressed workweek
scheme, thus:
The compressed workweek
scheme was originally conceived for
establishments wishing to save on
energy costs, promote greater work
efficiency and lower the rate of
employee absenteeism, among others.
Workers favor the scheme considering
that it would mean savings on the
increasing cost of transportation fares
for at least one (1) day a week; savings
on meal and snack expenses; longer
weekends, or an additional 52 off-days
a year, that can be devoted to rest,
leisure, family responsibilities, studies
and other personal matters, and that it
will spare them for at least another day
in a week from certain inconveniences

that are the normal incidents of

employment, such as commuting to
and from the workplace, travel time
spent, exposure to dust and motor
vehicle fumes, dressing up for work,
etc. Thus, under this scheme, the
generally observed workweek of six (6)
days is shortened to five (5) days but
prolonging the working hours from
Monday to Friday without the employer
being obliged for pay overtime
premium compensation for work
performed in excess of eight (8) hours
on weekdays, in exchange for the
benefits abovecited that will accrue to
the employees.
Moreover, the adoption of a compressed
workweek scheme in the company will help temper any
inconvenience that will be caused the petitioners by their
transfer to a farther workplace.
Notably, the MOA complied with the following
conditions set by the DOLE, under D.O. No. 21, to protect
the interest of the employees in the implementation of a
compressed workweek scheme:
1.

The employees voluntarily

agree to work more than
eight (8) hours a day the total
in a week of which shall not
exceed their normal weekly
hours of work prior to
adoption of the compressed
workweek arrangement;

2.

There will not be any

diminution whatsoever in the
weekly or monthly take-home
pay and fringe benefits of the
employees;

3.

If an employee is
permitted or required to work
in excess of his normal
weekly hours of work prior to
the
adoption
of
the
compressed
workweek
scheme, all such excess
hours shall be considered
overtime work and shall be
compensated in accordance
with the provisions of the
Labor Code or applicable

Collective
Bargaining
Agreement (CBA);
4.

Appropriate waivers with

respect to overtime premium
pay for work performed in
excess of eight (8) hours a
day may be devised by the
parties to the agreement.

5.

The
effectivity
and
implementation of the new
working time arrangement
shall be by agreement of the
parties.

PESALA v. NLRC,[28] cited by the petitioners, is

not applicable to the present case. In that case, an
employment contract provided that the workday consists of
12 hours and the employee will be paid a fixed monthly
salary rate that was above the legal minimum wage.
However, unlike the present MOA which specifically states
that the employee waives his right to claim overtime pay for
work rendered beyond eight hours, the employment
contract in that case was silent on whether overtime pay
was included in the payment of the fixed monthly salary.
This necessitated the interpretation by the Court as to
whether the fixed monthly rate provided under the
employment contract included overtime pay. The Court
noted that if the employee is paid only the minimum wage
but with overtime pay, the amount is still greater than the
fixed monthly rate as provided in the employment contract.
It, therefore, held that overtime pay was not included in the
agreed fixed monthly rate.
Considering that the MOA clearly states that the
employee waives the payment of overtime pay in exchange
of a five-day workweek, there is no room for interpretation
and its terms should be implemented as they are written.
WHEREFORE, the petition is DENIED. The
Court of Appeals Decision dated July 24, 2001 and
Resolution dated December 20, 2001 are AFFIRMED.
SO ORDERED.

Linton Commercial vs. Hellera et.

al [G.R. No. 163147. Oct. 10,
2007]
Facts:
Claiming financial losses, Linton implemented a
compressed workweek by reducing from six to three the

number of working days with the employees working on a

rotation basis.
Issue:
Was there an illegal reduction of work hours?
Held:
In Philippine Graphic Arts, Inc. v. NLRC, the Court upheld
for the validity of the reduction of working hours,
taking into consideration the following: the arrangement
was temporary, it was a more humane solution
instead of a retrenchment of personnel, there was notice
and consultations with the workers and supervisors, a
consensus were reached on how to deal with deteriorating
economic conditions and it was sufficiently proven
that the company was suffering from losses.
The Bureau of Working Conditions of the DOLE released a
bulletin which states that a reduction of the number

to justify the reduction of work hours.

If the standards set in determining the justifiability of
financial losses in retrenchment (Art 283) or suspension
of work (Art 286) were to be considered, Arco would fail to
meet the standards. On the one hand, Article 286
applies only when there is a bona fide suspension of the
employers operation of a business or undertaking for a
period not exceeding six (6) months; but in this case,
Linton continued its business operations during the
effectivity of the compressed workweek, which was more
than 6 months.
On the other hand, for retrenchment to be justified, any
claim of actual or potential business losses must satisfy
the following standards:
(1) the losses incurred are substantial and not de minimis;
(2) the losses are actual or reasonably imminent;

of regular working days is valid where the arrangement is

resorted to by the employer to prevent serious losses

(3) retrenchment is reasonably necessary and is likely tobe

effective in preventing expected losses; and

due to causes beyond his control, such as when there is a

substantial slump in the demand for his goods or

(4) the alleged losses, if already incurred, or the expected

imminent losses sought to be forestalled, are

services or when there is lack of raw materials.

proven by sufficient and convincing evidence.

Although the bulletin stands more as a set of directory

guidelines than a binding set of implementing rules, it

Linton failed to comply with these standards.

G.R. No. 119205, April 15, 1998

has one main consideration, consistent with the ruling in

Philippine Graphic Arts Inc., in determining the validity

Sime Darby Pilipinas, Inc. petitioner,

of reduction of working hours that the company was

suffering from losses. A close examination of petitioners

vs NLRC and Sime Darby Salaried Employees Assoc.,

respondents

financial reports showed that while Linton suffered from

losses for that year, there remained enough earnings

Ponente: Bellosillo

to sufficiently sustain its operations.

Issue: Is the act of management in revising the work

schedule of its employees and discarding their paid lunch
break constitutive of unfair labor practice?

Financial losses must be shown before a company can

validly opt to reduce the work hours of its employees.

Facts:

However, to date, no definite guidelines have yet been set

to determine whether the alleged losses are sufficient

Sime Darby is engaged in the manufacture of automotive

tires, tubes and other rubber products. Private respondent
is an association of the monthly salaried employees of the

Sime Darby factory workers in Marikina. Prior to the

controversy, all employees of Sime Darby worked from
7:45am to 3:45pm with a 30-minute paid "on call" lunch
break.
On August 14, 1992, the company issued a memorandum
to all factory employees advising all its monthly salaried
employees in Marikina Tire plant except those in the
warehouse and Quality Assurance Dept., of a change in
work schedules. (M-F, 7:45am-4:45pm and Sat 7:45am11:45am) with cofee break of 10 minutes between 9:30am10:30am and 2:30pm-3:30pm and lunch break between
12nn-1pm(M-F).
Because of this memorandum, the association filed a
complaint in behalf of its members a complaint with labor
Arbiter for unfair labor practice, discrimination and evasion
of liability. However, the labor arbiter dismissed the
complaint on the grounds that the elimination of the 30
minute paid lunch break constituted a valid exercise of
management prerogative and that the new work schedule
did not have the effect of dimishing the benefits for the
work did not exceed 8 hours.
Labor arbiter added that it would be unjust if they continue
to be paid during their lunch break even if they are no
longer on call or required to work during the break.
The association appealed to the NLRC but NLRC has
affirmed the labor arbiter's decision and dismissed the
appeal. However, in the motion for reconsideration, NLRC
having two new commissioners has reversed the earlier
decision. Stating that,the public respondent declared that
the new work schedule deprived the employees of the
benefits of a time-honored company practice of providing
its employees a 30-minute paid lunch break resulting in an
unjust diminution of company privileges prohibited by Art.
100 of the Labor Code, as amended.
Ruling:
The Office of the Solicitor General filed in a lieu of
comment a manifestation and motion recommending that
the petitioner be granted, alleging that the 14 August 1992
memorandum which contained the new work schedule was
not discriminatory of the union members nor did it
constitute unfair labor practice on the part of petitioner.
We agree, hence, we sustain petitioner. The right to fix the
work schedules of the employees rests principally on their

employer. In the instant case petitioner, as the employer,

cites as reason for the adjustment the efficient conduct of
its business operations and its improved production.
The case before us does not pertain to any controversy
involving discrimination of employees but only the issue of
whether the change of work schedule, which management
deems necessary to increase production, constitutes unfair
labor practice. As shown by the records, the change
effected by management with regard to working time is
made to apply to all factory employees engaged in the
same line of work whether or not they are members of
private respondent union. Hence, it cannot be said that the
new scheme adopted by management prejudices the right
of private respondent to self-organization.
Management is free to regulate, according to its own
discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed,
supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers. Further,
management retains the prerogative, whenever exigencies
of the service so require, to change the working hours of its
employees. So long as such prerogative is exercised in
good faith for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise.
Petition granted.
Arica vs NLRC
Teofilo Arica et al and 561 others sued Standard Fruits
Corporation (STANFILCO) Philippines for allegedly not
paying the workers for their assembly time which takes
place every work day from 5:30am to 6am. The assembly
time consists of the roll call of the workers; their getting of
assignments from the foreman; their filling out of the
Laborers Daily Accomplishment Report; their getting of
tools and equipments from the stockroom; and their going
to the field to work. The workers alleged that this is
necessarily and primarily for STANFILCOs benefit.
ISSUE: Whether or not the workers assembly time should
be paid.

HELD: No. The thirty minute assembly time long practiced

and institutionalized by mutual consent of the parties under
Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as waiting time within
the purview of Section 5, Rule I, Book III of the Rules and
Regulations Implementing the Labor Code . .

On August 8, 1985, the Acting Chief of Research and

Information and the Corporation Auditing Examiner of the
then Ministry of Labor and Employment submitted a
computation of backwages, ECOLA, 13th month pay, sick
and vacation leave benefits in favor of Reynaldo Bodegas
in the total amount of P24,316.38.

Furthermore, the thirty (30)-minute assembly is a deeplyrooted, routinary practice of the employees, and the
proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to
other personal pursuits. In short, they are not subject to the
absolute control of the company during this period,
otherwise, their failure to report in the assembly time would
justify the company to impose disciplinary measures.

The petitioner filed its opposition to the computation on the

ground that it contemplated a straight computation of
twenty six (26) working days in one month when the period
covered by the computation was intermittently interrupted
due to frequent brownouts and machine trouble and that
respondent Bodegas had only a total of 250.75 days of
attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of
P3,834.05 broken down as follows: salaries P1,993.00;
ECOLA P1,433.50, and 13th month pay P407.55.

DURABUILT RECAPPING PLANT & COMPANY and

EDUARDO LAO, GENERAL MANAGER, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON.
COMM. RICARDO C. CASTRO, HON. ARBITER AMELIA
M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA
DURABUILT and REYNALDO BODEGAS, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the May 16, 1986 resolution of
respondent National Labor Relations Commission (NLRC)
affirming the Labor Arbiter's order in NLRC Case No. NCR73162083. The sole issue raised is the proper basis for the
computation of backwages in favor of an illegally dismissed
employee.
The facts of the case are simple and uncontroverted.
On July 11, 1983, a complaint for illegal dismissal was filed
by respondent Reynaldo Bodegas, against petitioner
Durabuilt, a tire recapping company.
In a decision rendered by the Labor Arbiter on February 13,
1984, the private respondent was ordered reinstated to his
former position with full backwages, from the time he was
terminated up to the time he is actually reinstated, without
loss of seniority rights and benefits accruing to him.
The petitioners failed to file a seasonable appeal and entry
of final judgment was made on July 8, 1985.

On October 23, 1985, the Labor Arbiter denied the

opposition to the computation. The petitioner appealed to
the NLRC which, in an order dated May 16, 1986, affirmed
the order of the Labor Arbiter and dismissed the appeal.
Claiming grave abuse of discretion on the part of the public
respondents, Durabuilt filed the instant petition.
Backwages, in general, are granted on grounds of equity
for earnings which a worker or employee has lost due to
his dismissal from work (New Manila Candy Workers Union
(NACONWA-PAFLU v. CIR, 86 SCRA 37).
The general principle is that an employee is entitled to
receive as backwages all the amounts he may have lost
starting from the date of his dismissal up to the time of his
reinstatement (Capital Garment Corporation v. Ople, 117
SCRA 473; New Manila Candy Workers' Union
(NACONWA-PAFLU) v. CIR, supra).
In a line of cases, this Court has established a policy fixing
the amount of backwages to a just and reasonable level
without qualification or deduction (Insular Life Assurance
Co., Ltd. Employees' Association-NATU v. Insular Life
Assurance Co., Ltd., 76 SCRA 501; Feati University Club v.
Feati University, 58 SCRA 395; Mercury Drug Co., Inc. v.
CIR, 56 SCRA 694). The respondents center their attention
on the above underlined portion of this policy. Hence, their
contention that the deductions cited by the petitioners
cannot be made.

In their bid to recover a greater amount of backwages, the

rationale of the policy has escaped the respondents'
consideration. In Insular Life Assurance Employees
Association-NATU v. Insular Life Assurance Co., Ltd. (76
SCRA 50) we held that to fix the amount of backwages
without qualification or deduction simply means that the
workers are to be paid their backwages fixed as of the time
of their dismissal or strike without deduction for their
earnings elsewhere during their law-off and without
qualification of their backwages as thus fixed; i.e.
unqualified by any wage increases or other benefits that
may have been received by their co-workers who were not
dismissed or did not go on strike. The principle is justified
"as a realistic, reasonable and mutually beneficial solution
for it relieves the employees from proving their earnings
during their law-offs and the employer from submitting
counter proofs. It was meant to obviate the twin evils of
Idleness on the part of the employees and attrition and
undue delay in satisfying the award on the part of the
employer" (New Manila Candy Workers Union NACONWAPAFLU v. CIR supra). The same was not to establish an
inflexible rule of computation of any Backwages due an
employee.
The age-old rule governing the relation between labor and
capital, or management and employee of a "fair day's wage
for a fair day's labor" remains as the basic factor in
determining employees' wages, and for that matter
backwages. If there is no work performed by the employee
there can be no wage or pay unless, of course, the laborer
was able, willing and ready to work but was illegally locked
out, or suspended (SSS v. SSS Supervisors UnionCUGCO, 117 SCRA 746).
The illegal dismissal of the private respondent is conceded
by the petitioner. It is willing to pay backwages. However,
the petitioner argues that for days where no work was
required and could be done by its employees, no wages
could have been earned and, thereafter, lost by said
employees to justify an award of backwages. We quote
with approval the Solicitor General's comment,* to wit:
From the indubitable facts on record, it appears that
petitioners have valid reasons to claim that certain days
should not be considered days worked for purposes of
computing private respondent's backwages since their
business was not in actual operation due to brownouts or
power interruption and the retrenchment of workers they
had during the period of private respondent's dismissal.

It cannot be denied that during the past years particularly in

1983, there was chronic electrical power interruption
resulting to disruption of business operations. To alleviate
the situation, the government thru the Ministry of Trade and
Industry called on the industrial sector to resort to the socalled Voluntary Loan Curtailment Plan (or VLCP), whereby
brownouts or electrical power interruption was scheduled
by area. The program while it may have been called 1.
voluntary" was not so as electrical power consumers had
no choice then due to the prevailing energy crisis.
Petitioners heeding the government's call, participated in
the VLCP as indicated in their statement of conformity
dated November 23, 1982. Thus, beginning March 21,
1983 and every Wednesday thereafter, petitioner's
business (which indicentally is recapping rubber tires) was
not in actual operation. No less than the former Minister of
Trade and Industry expressed his gratitude to petitioners
for participating in the VLCP. Petitioners substantiated
claim therefore, that the days during which they were not in
operation due to the VLCP should be excluded in the
number of days worked for purposes of computing private
respondents backwages stands reasonable and should
have been considered by the corporation auditing
examiner.1avvphi1
Moreover, as early as May 1978, the Ministry of Labor and
Employment, thru Policy Instruction No. 36, has said that

2.
Brownouts running for more than twenty minutes
may not be treated as hours worked provided that any of
the following conditions are present;
a) The employees can leave their work place or go
elsewhere whether within or without the work premises; or

b) The employees can use the time effectively for their own
interest.
It is of record that during electrical power interruptions,
petitioners business was not in operation. This was never
disputed by private respondent.
Petitioners' claim that the period (December 1983) during
which they effected retrenchment of workers owing to
economic crisis then prevailing likewise appears plausible.
There is substantial evidence consisting of reports to
MOLE and Social Security System showing that petitioners

had laid off workers due to lack of raw materials. The

petitioners payrolls submitted to support their objection to
computation indicate that the number of working days was
reduced from the normal weekly six working days to four
working days for a great number of petitioners' workers.
Obviously, private respondent could not have been among
those laid off, as at that time he was already dismissed by
petitioner. (Rollo, pp. 31-34).

PLASLU, 6 SCRA 26: Cromwell Com. Employees &

Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison
Labor Union v. Harrison Co. Inc. 15 SCRA 310; PAL v.
PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA 15).
There is no indication, to paraphrase this Honorable
Court's ruling in Pantranco North Express Inc. v. NLRC
(126 SCRA 526) that private respondent was a "victim of
arbitrary and high handed action. Rollo, pp. 34-35).

Thus, we have held that where the failure of workers to

work was not due to the employer's fault, the burden of
economic loss suffered by the employees should not be
shifted to the employer. Each party must bear his own loss
(SSS v. SSS Supervisors' Union-CUGCO, supra; PanAmerican World Airways, Inc. v. CIR, 17 SCRA 813). As
pointed out by the Solicitor General

WHEREFORE, in view of the foregoing, the petition is

hereby GRANTED. The order of the Labor Arbiter, Amelia
M. Guloy in NLRC Case No. NCR-7-3162083, dated
October 23, 1985, as affirmed by the NLRC is SET ASIDE.
The petitioner is ordered to pay private respondent his
backwages from the time he was terminated up to the time
he was actually reinstated computed on the basis of the
number of days when petitioner's business was in actual
operation. The number of days where no work was
required and could be done by petitioner's employees on
account of shutdowns due to electrical power interruptions,
machine repair, and lack of raw materials are not
considered hours worked for purposes of computing the
petitioner's obligation to respondent employee. In no case
shall the award exceed three year's backpay as above
computed.

... to allow payment of backwages of P24,316.68 as

ordered by public respondents instead of P3,834.16 as
petitioners claim and which appears to be just and
reasonable under the circumstances of this case would not
only be unconscionable but would be grossly unfair to other
employees who were not paid when petitioners' business
was not in operation. (Rollo, p. 35).
Indeed, it would neither be fair nor just to allow respondent
to recover something he has not earned and could not
have earned and to further penalize the petitioner company
over and above the losses it had suffered due to lack of
raw materials and the energy-saving programs of the
government. The private respondent cannot be allowed to
enrich himself at the expense of the petitioner company.
The computation of backwages should be based on daily
rather than on monthly pay schedules where, as in the
case at bar, such basis is more realistic and accurate.
(Compania Maritima v. United Seamen's Union of the
Philippines, 65 SCRA 393).

SO ORDERED.
Fernan (Chairman), Feliciano, Bidin and Cortes, JJ.,
concur.
ALEJANDRO MERCADER, Plaintiff-Appellant, vs. MANILA
POLO CLUB and ALEX D. STEWART, DefendantAppellees.

In conclusion, we again quote the Solicitor General's

comment:
Finally, what strengthens petitioners claim for mitigated
liability is their evident good faith as manifested by their
reinstatement of private respondent while the case for
illegal dismissal was still pending and their willingness to
pay backwages. While it is true that as a general rule order
of reinstatement carries with it an award of backwages (Art.
280, Labor Code) this Honorable Court did not only
mitigate but absolved employers from liability of backwages
where good faith is evident (Findlay Millar Timber Co. v.

DECISION

ENDENCIA, J.:

The undisputed facts which gave rise to the present case

are as follows:chanroblesvirtuallawlibrary On May 11, 1946,
the Appellant was employed by the Defendant Manila Polo

Club through the intervention of its treasurer, the other

Defendant Alex D. Stewart, as bookkeeper and accountant
with a salary of P375 per month. On August 19, 1949, this
salary was increased to P400 allocated as
follows:chanroblesvirtuallawlibrary P375 for regular pay,
and P25.00 premium over regular pay for work on Sundays
and legal holidays, overtime and other special duty. He was
also granted two weeks leave with pay each year and 12
days sick leave with pay in any one year for proven illness
(Exhibit 3).

On March 26, 1951, Plaintiff requested for leave with pay

for a period from April 1 to August 1, which was granted,
and on April 17, 1951, while still on vacation, Plaintiff
received a letter (Exhibit 7) from Mr. H. J. MacLean,
manager of the Club, notifying him that the Club would
allow only two weeks sick leave for the year 1951 and
would give one months severance pay, for which a check
for P405.00 was enclosed. Not being agreeable with his
separation from the Club, on June 16, 1951, Plaintiff
brought the matter to the Department of Labor where he
filed the corresponding claim which was docketed as
Case No. 1224 for the amount of P10,000 for overtime
work and other privileges granted to him by the Defendant
Club in its communication to the Plaintiff, dated August 19,
1951, whereby Plaintiffs salary was increased to P400.00
allocated as above indicated. The Department of Labor
took cognizance of the matter and, after the corresponding
proceedings, on September 24, 1951, the Secretary of
Labor ordered the Defendant Manila Polo Club to pay to
the herein Plaintiff the sum of P10,623,24. The record does
not show what transpired during the intervening period
from September 24, 1951 up to November 9, 1951 when
Plaintiff and his Attorney Constancio Leuterio entered into
an amicable settlement and subscribed to the following
receipt:chanroblesvirtuallawlibrary

RECEIVED from Gibbs, Chuidian & Quasha, as attorneys

for the MANILA POLO CLUB, Chartered Bank of India,
Australia & China Check No. 192045 in the sum of P7,000
and payable to Constancio Leuterio, as attorney for
Alejandro Mercader, in full settlement of any and all claims,
including overtime work, vacation and sick leave privileges,
which said Alejandro Mercader has or many have against
the Manila Polo Club.

(Sgd.) ALEJANDRO MERCADER.

(Sgd.) CONSTANCIO LEUTERIO.

Accordingly, the aforesaid case No. 1224 was completely

closed.

Nevertheless and despite the settlement recited in the

aforequoted receipt, on January 9, 1953, Plaintiff filed with
the Court of First Instance of Manila his present complaint,
stating therein that while he was in the service of the
Defendant Manila Polo Club with a monthly compensation
at the rate of P375, assurance of the permanence of his
position as long as he did not commit any criminal act such
as embezzlement, misappropriation of funds, with 15 days
vacation and 15 days sick leave with pay for every years
service, the Defendant Club, arbitrarily and capriciously,
terminated Plaintiffs services in violation of the contract of
service and thus he was maliciously and arbitrarily
deprived of his monthly income of P405 from the time of his
separation up to the filing of the complaint. Plaintiff also
alleged that as a result of the malicious and arbitrary act of
the Defendant, he suffered untold mental anguish, serious
anxiety, wounded feelings, moral shame, social humiliation
and besmirched reputation, and prayed that the Defendant
be ordered to pay him, by way of actual and compensatory
damages, the sum of P5,000 per annum from the date of
his separation from the service on May 15, 1951 up to the
final termination of the case; chan roblesvirtualawlibrarythe
sum of P50,000, by way of moral damages; chan
roblesvirtualawlibrarythe sum of P2,000, by way of
attorneys fees; chan roblesvirtualawlibraryand P200 by
way of litigation expenses.

The Defendant Manila Polo Club, in its answer to the

complaint practically did not deny the principal allegations
of the complaint regarding the employment of the Plaintiff
by the Defendant, the vacation leave granted to Plaintiff
and his separation from the service, although it was
claimed that said separation was due to the fact that the
Plaintiff was very much behind in his work. Defendants also

pleaded that the Plaintiff is not entitled to recover any

amount from the Defendants, for on November 9, 1951 the
Plaintiff, in consideration of the sum of P7,000, released
the Defendant Manila Polo Club from all claims arising from
his employment and his separation from the Defendant
Club. And, by way of counterclaim, Defendant prayed for
the sum of P5,000 as attorneys fees on the allegation that,
owing to the filing of the complaint by the Plaintiff, the
Defendant had been compelled to retain the services of
counsel for the protection of his rights.
After the parties had joined issues, the case was tried and
the Court of First Instance of Manila dismissed the case on
the ground that the preponderance of evidence militated in
favor of the contention of the Defendants and that Plaintiffs
claim was already settled for P7,000 by virtue of the
execution of the receipt, Exhibit 1, quoted above, whereby
the Plaintiff renounced any and all claims he may have
against the Defendant Club. Not satisfied with this decision,
Plaintiff appealed claiming that the court a quo
erred:chanroblesvirtuallawlibrary
I. In holding that the overtime pay of the herein PlaintiffAppellant had been impliedly waived.
II. In holding that the position of the Plaintiff-Appellant was
not permanent.
III. In awarding excessive damages to the DefendantsAppellees.
We have carefully scrutinized the record of the case, the
pleadings of the parties and the evidence supporting them
and find no reason for disturbing the decision appealed
from. The settlement recited in Exhibit 1, signed by the
Plaintiff together with his counsel Constancio Leuterio,
does constitute an absolute waiver of any and all claims
including overtime work, vacation and sick leave privileges
which the Plaintiff had against the Manila Polo Club; chan
roblesvirtualawlibraryconsequently, by virtue of said
settlement, Plaintiff lost any action against the Defendant
Manila Polo Club in connection with his employment and
separation from said Club.
Plaintiff has lengthily discussed in his brief about the nature
of his employment and laboriously argued on the
permanency of his position as an employee of the
Defendant Manila Polo Club; chan
roblesvirtualawlibrarybut, in our opinion, all these questions
are completely immaterial for, whatever be the nature of his

employment, whether permanent or temporary, the facts of

the case show that he has no longer any action against the
Defendants because he entered with the latter in an
amicable settlement whereby he renounced and waived
any and all claims against them.
As to Defendant Alex D. Stewart, the evidence shows that
he only acted as agent of the Defendant Manila Polo Club
in securing the services of the Plaintiff and therefore he
cannot be made responsible for the separation of the
Plaintiff from his employment.
In his third assignment of error, Plaintiff assails the award
of P600 attorneys fees in favor of the Defendants
contending that in filing the present action he tried to
protect his rights. We notice that in the decision no reason
was given by the lower court for awarding the fees in
question; chan roblesvirtualawlibraryneither is there in the
record any indication that the present action was malicious
and intended only to cause prejudice to the Defendants;
chan roblesvirtualawlibraryhence, we believe that there is
no sufficient ground for ordering the Plaintiff to pay the fees
in question.
Wherefore, the decision appealed from in so far as it
dismisses the complaint is hereby affirmed, and reversed
as it orders the payment of P600 in favor of the Defendant
for litigation expenses and attorneys fees. No
pronouncement with regard to cost.
DURABUILT RECAPPING PLANT & COMPANY and
EDUARDO LAO, GENERAL MANAGER, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON.
COMM. RICARDO C. CASTRO, HON. ARBITER AMELIA
M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA
DURABUILT and REYNALDO BODEGAS, respondents.

GUTIERREZ, JR., J.:

This is a petition to review the May 16, 1986 resolution of
respondent National Labor Relations Commission (NLRC)
affirming the Labor Arbiter's order in NLRC Case No. NCR73162083. The sole issue raised is the proper basis for the
computation of backwages in favor of an illegally dismissed
employee.

The facts of the case are simple and uncontroverted.

On July 11, 1983, a complaint for illegal dismissal was filed
by respondent Reynaldo Bodegas, against petitioner
Durabuilt, a tire recapping company.
In a decision rendered by the Labor Arbiter on February 13,
1984, the private respondent was ordered reinstated to his
former position with full backwages, from the time he was
terminated up to the time he is actually reinstated, without
loss of seniority rights and benefits accruing to him.
The petitioners failed to file a seasonable appeal and entry
of final judgment was made on July 8, 1985.
On August 8, 1985, the Acting Chief of Research and
Information and the Corporation Auditing Examiner of the
then Ministry of Labor and Employment submitted a
computation of backwages, ECOLA, 13th month pay, sick
and vacation leave benefits in favor of Reynaldo Bodegas
in the total amount of P24,316.38.
The petitioner filed its opposition to the computation on the
ground that it contemplated a straight computation of
twenty six (26) working days in one month when the period
covered by the computation was intermittently interrupted
due to frequent brownouts and machine trouble and that
respondent Bodegas had only a total of 250.75 days of
attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of
P3,834.05 broken down as follows: salaries P1,993.00;
ECOLA P1,433.50, and 13th month pay P407.55.
On October 23, 1985, the Labor Arbiter denied the
opposition to the computation. The petitioner appealed to
the NLRC which, in an order dated May 16, 1986, affirmed
the order of the Labor Arbiter and dismissed the appeal.
Claiming grave abuse of discretion on the part of the public
respondents, Durabuilt filed the instant petition.
Backwages, in general, are granted on grounds of equity
for earnings which a worker or employee has lost due to
his dismissal from work (New Manila Candy Workers Union
(NACONWA-PAFLU v. CIR, 86 SCRA 37).

The general principle is that an employee is entitled to

receive as backwages all the amounts he may have lost
starting from the date of his dismissal up to the time of his
reinstatement (Capital Garment Corporation v. Ople, 117
SCRA 473; New Manila Candy Workers' Union
(NACONWA-PAFLU) v. CIR, supra).
In a line of cases, this Court has established a policy fixing
the amount of backwages to a just and reasonable level
without qualification or deduction (Insular Life Assurance
Co., Ltd. Employees' Association-NATU v. Insular Life
Assurance Co., Ltd., 76 SCRA 501; Feati University Club v.
Feati University, 58 SCRA 395; Mercury Drug Co., Inc. v.
CIR, 56 SCRA 694). The respondents center their attention
on the above underlined portion of this policy. Hence, their
contention that the deductions cited by the petitioners
cannot be made.
In their bid to recover a greater amount of backwages, the
rationale of the policy has escaped the respondents'
consideration. In Insular Life Assurance Employees
Association-NATU v. Insular Life Assurance Co., Ltd. (76
SCRA 50) we held that to fix the amount of backwages
without qualification or deduction simply means that the
workers are to be paid their backwages fixed as of the time
of their dismissal or strike without deduction for their
earnings elsewhere during their law-off and without
qualification of their backwages as thus fixed; i.e.
unqualified by any wage increases or other benefits that
may have been received by their co-workers who were not
dismissed or did not go on strike. The principle is justified
"as a realistic, reasonable and mutually beneficial solution
for it relieves the employees from proving their earnings
during their law-offs and the employer from submitting
counter proofs. It was meant to obviate the twin evils of
Idleness on the part of the employees and attrition and
undue delay in satisfying the award on the part of the
employer" (New Manila Candy Workers Union NACONWAPAFLU v. CIR supra). The same was not to establish an
inflexible rule of computation of any Backwages due an
employee.
The age-old rule governing the relation between labor and
capital, or management and employee of a "fair day's wage
for a fair day's labor" remains as the basic factor in
determining employees' wages, and for that matter
backwages. If there is no work performed by the employee
there can be no wage or pay unless, of course, the laborer
was able, willing and ready to work but was illegally locked

out, or suspended (SSS v. SSS Supervisors UnionCUGCO, 117 SCRA 746).

The illegal dismissal of the private respondent is conceded
by the petitioner. It is willing to pay backwages. However,
the petitioner argues that for days where no work was
required and could be done by its employees, no wages
could have been earned and, thereafter, lost by said
employees to justify an award of backwages. We quote
with approval the Solicitor General's comment,* to wit:
From the indubitable facts on record, it appears that
petitioners have valid reasons to claim that certain days
should not be considered days worked for purposes of
computing private respondent's backwages since their
business was not in actual operation due to brownouts or
power interruption and the retrenchment of workers they
had during the period of private respondent's dismissal.
It cannot be denied that during the past years particularly in
1983, there was chronic electrical power interruption
resulting to disruption of business operations. To alleviate
the situation, the government thru the Ministry of Trade and
Industry called on the industrial sector to resort to the socalled Voluntary Loan Curtailment Plan (or VLCP), whereby
brownouts or electrical power interruption was scheduled
by area. The program while it may have been called 1.
voluntary" was not so as electrical power consumers had
no choice then due to the prevailing energy crisis.
Petitioners heeding the government's call, participated in
the VLCP as indicated in their statement of conformity
dated November 23, 1982. Thus, beginning March 21,
1983 and every Wednesday thereafter, petitioner's
business (which indicentally is recapping rubber tires) was
not in actual operation. No less than the former Minister of
Trade and Industry expressed his gratitude to petitioners
for participating in the VLCP. Petitioners substantiated
claim therefore, that the days during which they were not in
operation due to the VLCP should be excluded in the
number of days worked for purposes of computing private
respondents backwages stands reasonable and should
have been considered by the corporation auditing
examiner.1avvphi1

Moreover, as early as May 1978, the Ministry of Labor and

Employment, thru Policy Instruction No. 36, has said that

2.
Brownouts running for more than twenty minutes
may not be treated as hours worked provided that any of
the following conditions are present;
a) The employees can leave their work place or go
elsewhere whether within or without the work premises; or
b) The employees can use the time effectively for their own
interest.
It is of record that during electrical power interruptions,
petitioners business was not in operation. This was never
disputed by private respondent.
Petitioners' claim that the period (December 1983) during
which they effected retrenchment of workers owing to
economic crisis then prevailing likewise appears plausible.
There is substantial evidence consisting of reports to
MOLE and Social Security System showing that petitioners
had laid off workers due to lack of raw materials. The
petitioners payrolls submitted to support their objection to
computation indicate that the number of working days was
reduced from the normal weekly six working days to four
working days for a great number of petitioners' workers.
Obviously, private respondent could not have been among
those laid off, as at that time he was already dismissed by
petitioner. (Rollo, pp. 31-34).
Thus, we have held that where the failure of workers to
work was not due to the employer's fault, the burden of
economic loss suffered by the employees should not be
shifted to the employer. Each party must bear his own loss
(SSS v. SSS Supervisors' Union-CUGCO, supra; PanAmerican World Airways, Inc. v. CIR, 17 SCRA 813). As
pointed out by the Solicitor General
... to allow payment of backwages of P24,316.68 as
ordered by public respondents instead of P3,834.16 as
petitioners claim and which appears to be just and
reasonable under the circumstances of this case would not
only be unconscionable but would be grossly unfair to other
employees who were not paid when petitioners' business
was not in operation. (Rollo, p. 35).

Indeed, it would neither be fair nor just to allow respondent

to recover something he has not earned and could not
have earned and to further penalize the petitioner company
over and above the losses it had suffered due to lack of
raw materials and the energy-saving programs of the

government. The private respondent cannot be allowed to

enrich himself at the expense of the petitioner company.
The computation of backwages should be based on daily
rather than on monthly pay schedules where, as in the
case at bar, such basis is more realistic and accurate.
(Compania Maritima v. United Seamen's Union of the
Philippines, 65 SCRA 393).
In conclusion, we again quote the Solicitor General's
comment:
Finally, what strengthens petitioners claim for mitigated
liability is their evident good faith as manifested by their
reinstatement of private respondent while the case for
illegal dismissal was still pending and their willingness to
pay backwages. While it is true that as a general rule order
of reinstatement carries with it an award of backwages (Art.
280, Labor Code) this Honorable Court did not only
mitigate but absolved employers from liability of backwages
where good faith is evident (Findlay Millar Timber Co. v.
PLASLU, 6 SCRA 26: Cromwell Com. Employees &
Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison
Labor Union v. Harrison Co. Inc. 15 SCRA 310; PAL v.
PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA 15).
There is no indication, to paraphrase this Honorable
Court's ruling in Pantranco North Express Inc. v. NLRC
(126 SCRA 526) that private respondent was a "victim of
arbitrary and high handed action. Rollo, pp. 34-35).
WHEREFORE, in view of the foregoing, the petition is
hereby GRANTED. The order of the Labor Arbiter, Amelia
M. Guloy in NLRC Case No. NCR-7-3162083, dated
October 23, 1985, as affirmed by the NLRC is SET ASIDE.
The petitioner is ordered to pay private respondent his
backwages from the time he was terminated up to the time
he was actually reinstated computed on the basis of the
number of days when petitioner's business was in actual
operation. The number of days where no work was
required and could be done by petitioner's employees on
account of shutdowns due to electrical power interruptions,
machine repair, and lack of raw materials are not
considered hours worked for purposes of computing the
petitioner's obligation to respondent employee. In no case
shall the award exceed three year's backpay as above
computed.
SO ORDERED.
Fernan (Chairman), Feliciano, Bidin and Cortes, JJ.,
concur.

Weekly rest period

ROMEO LAGATIC, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, CITYLAND DEVELOPMENT
CORPORATION, STEPHEN ROXAS, JESUS GO, GRACE
LIUSON, and ANDREW LIUSON, respondents.
DECISION
ROMERO, J.:
Petitioner seeks, in this petition for certiorari under Rule 65,
the reversal of the resolution of the National Labor
Relations Commission dated May 12, 1995, affirming the
February 17, 1994, decision of Labor Arbiter Ricardo C.
Nora finding that petitioner had been validly dismissed by
private respondent Cityland Development Corporation
(hereafter referred to as Cityland) and that petitioner was
not entitled to separation pay, premium pay and overtime
pay.
The facts of the case are as follows:
Petitioner Romeo Lagatic was employed in May 1986 by
Cityland, first as a probationary sales agent, and later on
as a marketing specialist. He was tasked with soliciting
sales for the company, with the corresponding duties of
accepting call-ins, referrals, and making client calls and
cold calls. Cold calls refer to the practice of prospecting for
clients through the telephone directory. Cityland, believing
that the same is an effective and cost-efficient method of
finding clients, requires all its marketing specialists to make
cold calls. The number of cold calls depends on the sales
generated by each: more sales mean less cold calls.
Likewise, in order to assess cold calls made by the sales
staff, as well as to determine the results thereof, Cityland
requires the submission of daily progress reports on the
same.
On October 22, 1991, Cityland issued a written reprimand
to petitioner for his failure to submit cold call reports for
September 10, October 1 and 10, 1991. This
notwithstanding, petitioner again failed to submit cold call
reports for September 2, 5, 8, 10, 11, 12, 15, 17, 18, 19,
20, 22, and 28, as well as for October 6, 8, 9, 10, 12, 13
and 14, 1992. Petitioner was required to explain his
inaction, with a warning that further non-compliance would
result in his termination from the company. In a reply dated
October 18, 1992, petitioner claimed that the same was an
honest omission brought about by his concentration on

other aspects of his job. Cityland found said excuse

inadequate and, on November 9, 1992, suspended him for
three days, with a similar warning.
Notwithstanding the aforesaid suspension and warning,
petitioner again failed to submit cold call reports for
February 5, 6, 8, 10 and 12, 1993. He was verbally
reminded to submit the same and was even given up to
February 17, 1993 to do so. Instead of complying with said
directive, petitioner, on February 16, 1993, wrote a note,
TO HELL WITH COLD CALLS! WHO CARES? and
exhibited the same to his co-employees. To worsen
matters, he left the same lying on his desk where everyone
could see it.
On February 23, 1993, petitioner received a memorandum
requiring him to explain why Cityland should not make
good its previous warning for his failure to submit cold call
reports, as well as for issuing the written statement
aforementioned. On February 24, 1993, he sent a letterreply alleging that his failure to submit cold call reports
should not be deemed as gross insubordination. He denied
any knowledge of the damaging statement, TO HELL WITH
COLD CALLS!
Finding petitioner guilty of gross insubordination, Cityland
served a notice of dismissal upon him on February 26,
1993. Aggrieved by such dismissal, petitioner filed a
complaint against Cityland for illegal dismissal, illegal
deduction, underpayment, overtime and rest day pay,
damages and attorneys fees. The labor arbiter dismissed
the petition for lack of merit. On appeal, the same was
affirmed by the NLRC; hence the present recourse.
Petitioner raises the following issues:
1. WHETHER OR NOT RESPONDENT NLRC GRAVELY
ABUSED ITS DISCRETION IN NOT FINDING THAT
PETITIONER WAS ILLEGALLY DISMISSED;

2. WHETHER OR NOT RESPONDENT NLRC GRAVELY

ABUSED ITS DISCRETION IN RULING THAT
PETITIONER IS NOT ENTITLED TO SALARY
DIFFERENTIALS, BACKWAGES, SEPARATION PAY,
OVERTIME PAY, REST DAY PAY, UNPAID
COMMISSIONS, MORAL AND EXEMPLARY DAMAGES
AND ATTORNEYS FEES.
The petition lacks merit.

To constitute a valid dismissal from employment, two

requisites must be met, namely: (1) the employee must be
afforded due process, and (2) the dismissal must be for a
valid cause.[1] In the case at bar, petitioner contends that
his termination was illegal on both substantive and
procedural aspects. It is his submission that the failure to
submit a few cold calls does not qualify as willful
disobedience, as, in his experience, cold calls are one of
the least effective means of soliciting sales. He thus
asserts that a couple of cold call reports need not be
accorded such tremendous significance as to warrant his
dismissal for failure to submit them on time.
These arguments are specious. Petitioner loses sight of the
fact that (e)xcept as provided for, or limited by, special
laws, an employer is free to regulate, according to his
discretion and judgment, all aspects of employment.[2]
Employers may, thus, make reasonable rules and
regulations for the government of their employees, and
when employees, with knowledge of an established rule,
enter the service, the rule becomes a part of the contract of
employment.[3] It is also generally recognized that
company policies and regulations, unless shown to be
grossly oppressive or contrary to law, are generally valid
and binding on the parties and must be complied with.[4]
Corollarily, an employee may be validly dismissed for
violation of a reasonable company rule or regulation
adopted for the conduct of the company business. An
employer cannot rationally be expected to retain the
employment of a person whose x x x lack of regard for his
employers rules x x x has so plainly and completely been
bared.[5] Petitioners continued infraction of company policy
requiring cold call reports, as evidenced by the 28
instances of non-submission of aforesaid reports, justifies
his dismissal. He cannot be allowed to arrogate unto
himself the privilege of setting company policy on the
effectivity of solicitation methods. To do so would be to
sanction oppression and the self-destruction of the
employer.

Moreover, petitioner made it worse for himself when he

wrote the statement, TO HELL WITH COLD CALLS! WHO
CARES? When required to explain, he merely denied any
knowledge of the same. Cityland, on the other hand,
submitted the affidavits of his co-employees attesting to his
authorship of the same. Petitioners only defense is denial.
The rule, however, is that denial, if unsubstantiated by clear

and convincing evidence, is negative and self-serving

evidence which has no weight in law.[6] More telling,
petitioner, while making much capital out of his lack of
opportunity to confront the affiants, never, in all of his
pleadings, categorically denied writing the same. He only
denied knowledge of the allegation that he issued such a
statement.
Based on the foregoing, we find petitioner guilty of willful
disobedience. Willful disobedience requires the
concurrence of at least two requisites: the employees
assailed conduct must have been willful or intentional, the
willfulness being characterized by a wrongful and perverse
attitude; and the order violated must have been
reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to
discharge.[7]
Petitioners failure to comply with Citylands policy of
requiring cold call reports is clearly willful, given the 28
instances of his failure to do so, despite a previous
reprimand and suspension. More than that, his written
statement shows his open defiance and disobedience to
lawful rules and regulations of the company. Likewise, said
company policy of requiring cold calls and the concomitant
reports thereon is clearly reasonable and lawful, sufficiently
known to petitioner, and in connection with the duties which
he had been engaged to discharge. There is, thus, just
cause for his dismissal.
On the procedural aspect, petitioner claims that he was
denied due process.
Well settled is the dictum that the twin requirements of
notice and hearing constitute the elements of due process
in the dismissal of employees. Thus, the employer must
furnish the employee with two written notices before the
termination of employment can be effected. The first
apprises the employee of the particular acts or omissions
for which his dismissal is sought; the second informs him of
the employers decision to dismiss him.[8]
In the case at bar, petitioner was notified of the charges
against him in a memorandum dated February 19, 1993,
which he received on February 23, 1993. He submitted a
letter-reply thereto on February 24, 1993, wherein he
asked that his failure to submit cold call reports be not
interpreted as gross insubordination.[9] He was given
notice of his termination on February 26, 1993. This

chronology of events clearly show that petitioner was

served with the required written notices.
Nonetheless, petitioner contends that he has not been
given the benefit of an effective hearing. He alleges that he
was not adequately informed of the results of the
investigation conducted by the company, nor was he able
to confront the affiants who attested to his writing the
statement, TO HELL WITH COLD CALLS! While we have
held that in dismissing employees, the employee must be
afforded ample opportunity to be heard, ample opportunity
connoting every kind of assistance that management must
afford the employee to enable him to prepare adequately
for his defense,[10] it is also true that the requirement of a
hearing is complied with as long as there was an
opportunity to be heard, and not necessarily that an actual
hearing be conducted.[11] Petitioner had an opportunity to
be heard as he submitted a letter-reply to the charge. He,
however, adduced no other evidence on his behalf. In fact,
he admitted his failure to submit cold call reports, praying
that the same be not considered as gross insubordination.
As held by this Court in Bernardo vs. NLRC,[12] there is no
necessity for a formal hearing where an employee admits
responsibility for an alleged misconduct. As to the written
statement, TO HELL WITH COLD CALLS!, petitioner
merely denied knowledge of the same. He failed to submit
controverting evidence thereon although the memorandum
of February 19, 1993, clearly charged that he had shown
said statement to several sales personnel. Denials are
weak forms of defenses, particularly when they are not
substantiated by clear and convincing evidence. Given the
foregoing, we hold that petitioners constitutional right to
due process has not been violated.
As regards the second issue, petitioner contends that he is
entitled to amounts illegally deducted from his
commissions, to unpaid overtime, rest day and holiday
premiums, to moral and exemplary damages, as well as
attorneys fees and costs.

Petitioner anchors his claim for illegal deductions of

commissions on Citylands formula for determining
commissions, viz:
COMMISSIONS= Credits Earned (CE) less CUMULATIVE
NEGATIVE (CN)
less AMOUNTS RECEIVED (AR)

= (CE CN) AR where CE = Monthly Sales Volume x

Commission Rate (CR)
AR = Monthly Compensation/.75
CR = 4.5%
Under said formula, an increase in salary would entail an
increase in AR, thus diminishing the amount of
commissions that petitioner would receive. Petitioner
construes the same as violative of the non-diminution of
benefits clause embodied in the wage orders applicable to
petitioner. Inasmuch as Cityland has paid petitioner
commissions based on a higher AR each time there has
been a wage increase, the difference between the original
AR and the subsequent ARs have been viewed by
petitioner as illegal deductions, to wit:
Wage Date of Amount of Corresponding Duration Total
Order Effectivity Increase Increase in Up To
Quota (AR) 2/26/93
----------- ------------- -------------- ----------------- ----------------------RA 6640 1/1/88 P265.75 P 353.33 x 62 mos. P 21,906.46
RA 6727 7/1/89 780.75 1,040.00 x 44 mos. 45,760.00
NCR 01 11/1/90 785.75 1,046.67 x 28 mos. 29,306.76
NCR 01-A -----------Grand Total P 96,973.22[13]
=======
Petitioner even goes as far as to claim that with the use of
Citylands formula, he is indebted to the company in the
amount of P 1,410.00, illustrated as follows:
Petitioners Basic Salary = P 4,230.00
= 4,230.00/.75
A.R. = 5,640.00
Petitioners Basic Salary AR = P 1,410.00
While it is true that an increase in salary would cause an
increase in AR, with the same being deducted from credits

earned, thus lessening his commissions, the fact remains

that petitioner still receives his basic salary without
deductions. Petitioners argument that he is indebted to
respondent by P1,410.00 is fallacious as his basic salary
remains the same and he continues to receive the same,
regardless of his collections. The failure to attain a CE
equivalent to the AR of P5,640.00 only means that the
difference would be credited to his CN for the next month.
Clearly, the purpose of the same is to encourage sales
personnel to accelerate their sales in order for them to earn
commissions.
Additionally, there is no law which requires employers to
pay commissions, and when they do so, as stated in the
letter-opinion of the Department of Labor and Employment
dated February 19, 1993, there is no law which prescribes
a method for computing commissions. The determination of
the amount of commissions is the result of collective
bargaining negotiations, individual employment contracts or
established employer practice.[14] Since the formula for
the computation of commissions was presented to and
accepted by petitioner, such prescribed formula is in order.
As to the allegation that said formula diminishes the
benefits being received by petitioner whenever there is a
wage increase, it must be noted that his commissions are
not meant to be in a fixed amount. In fact, there was no
assurance that he would receive any commission at all.
Non-diminution of benefits, as applied here, merely means
that the company may not remove the privilege of sales
personnel to earn a commission, not that they are entitled
to a fixed amount thereof.
With respect to petitioners claims for overtime pay, rest day
pay and holiday premiums, Cityland maintains that
Saturday and Sunday call-ins were voluntary activities on
the part of sales personnel who wanted to realize more
sales and thereby earn more commissions. It is their
contention that sales personnel were clamoring for the
privilege to attend Saturday and Sunday call-ins, as well as
to entertain walk-in clients at project sites during
weekends, that Cityland had to stagger the schedule of
sales employees to give everyone a chance to do so. But
simultaneously, Cityland claims that the same were
optional because call-ins and walk-ins were not scheduled
every weekend. If there really were a clamor on the part of
sales staff to voluntarily work on weekends, so much so
that Cityland needed to schedule them, how come no callins or walk-ins were scheduled on some weekends?

In addition to the above, the labor arbiter and the NLRC

sanctioned respondents practice of offsetting rest day or
holiday work with equivalent time on regular workdays on
the ground that the same is authorized by Department
Order 21, Series of 1990. As correctly pointed out by
petitioner, said D. O. was misapplied in this case. The D. O.
involves the shortening of the workweek from six days to
five days but with prolonged hours on those five days.
Under this scheme, non-payment of overtime premiums
was allowed in exchange for longer weekends for
employees. In the instant case, petitioners workweek was
never compressed. Instead, he claims payment for work
over and above his normal 5 days of work in a week.
Applying by analogy the principle that overtime cannot be
offset by undertime, to allow off-setting would prejudice the
worker. He would be deprived of the additional pay for the
rest day work he has rendered and which is utilized to
offset his equivalent time off on regular workdays. To allow
Cityland to do so would be to circumvent the law on
payment of premiums for rest day and holiday work.

WHEREFORE, premises considered, the assailed

Resolution is AFFIRMED and this petition is hereby
DISMISSED for lack of merit. Costs against petitioner.
SO ORDERED.
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES'
UNION (IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of
Labor and INSULAR BANK OF ASIA AND AMERICA,
respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara &
Gatmaytan Law Office and Sycip, Salazar, Feliciano &
Hernandez Law Office for respondents.
MAKASIAR, J.:+.wph!1

Notwithstanding the foregoing discussion, petitioner failed

to show his entitlement to overtime and rest day pay due,
to the lack of sufficient evidence as to the number of days
and hours when he rendered overtime and rest day work.
Entitlement to overtime pay must first be established by
proof that said overtime work was actually performed,
before an employee may avail of said benefit.[15] To
support his allegations, petitioner submitted in evidence
minutes of meetings wherein he was assigned to work on
weekends and holidays at Citylands housing projects.
Suffice it to say that said minutes do not prove that
petitioner actually worked on said dates. It is a basic rule in
evidence that each party must prove his affirmative
allegations.[16] This petitioner failed to do. He explains his
failure to submit more concrete evidence as being due to
the decision rendered by the labor arbiter without resolving
his motion for the production and inspection of documents
in the control of Cityland. Petitioner conveniently forgets
that on January 27, 1994, he agreed to submit the case for
decision based on the records available to the labor arbiter.
This amounted to an abandonment of above-said motion,
which was then pending resolution.
Lastly, with the finding that petitioners dismissal was for a
just and valid cause, his claims for moral and exemplary
damages, as well as attorneys fees, must fail.

This is a petition for certiorari to set aside the order dated

November 10, 1979, of respondent Deputy Minister of
Labor, Amado G. Inciong, in NLRC case No. RB-IV-156176 entitled "Insular Bank of Asia and America Employees'
Union (complainant-appellee), vs. Insular Bank of Asia and
America" (respondent-appellant), the dispositive portion of
which reads as follows: t.hqw
xxx

xxx

xxx

ALL THE FOREGOING CONSIDERED, let the appealed

Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment. promulgated dismissing the
instant case for lack of merit (p. 109 rec.).

The antecedent facts culled from the records are as

follows:
On June 20, 1975, petitioner filed a complaint against the
respondent bank for the payment of holiday pay before the
then Department of Labor, National Labor Relations
Commission, Regional Office No. IV in Manila. Conciliation
having failed, and upon the request of both parties, the

case was certified for arbitration on July 7, 1975 (p. 18,

NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano
rendered a decision in the above-entitled case, granting
petitioner's complaint for payment of holiday pay. Pertinent
portions of the decision read: t.hqw
xxx

xxx

xxx

The records disclosed that employees of respondent bank

were not paid their wages on unworked regular holidays as
mandated by the Code, particularly Article 208, to wit: t.
hqw
Art. 208. Right to holiday pay.
(a)
Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service
establishments regularly employing less than 10 workers.
(b)
The term "holiday" as used in this chapter, shall
include: New Year's Day, Maundy Thursday, Good Friday,
the ninth of April the first of May, the twelfth of June, the
fourth of July, the thirtieth of November, the twenty-fifth and
the thirtieth of December and the day designated by law for
holding a general election.
xxx

xxx

xxx

This conclusion is deduced from the fact that the daily rate
of pay of the bank employees was computed in the past
with the unworked regular holidays as excluded for
purposes of determining the deductible amount for
absences incurred Thus, if the employer uses the factor
303 days as a divisor in determining the daily rate of
monthly paid employee, this gives rise to a presumption
that the monthly rate does not include payments for
unworked regular holidays. The use of the factor 303
indicates the number of ordinary working days in a year
(which normally has 365 calendar days), excluding the 52
Sundays and the 10 regular holidays. The use of 251 as a
factor (365 calendar days less 52 Saturdays, 52 Sundays,
and 10 regular holidays) gives rise likewise to the same
presumption that the unworked Saturdays, Sundays and
regular holidays are unpaid. This being the case, it is not
amiss to state with certainty that the instant claim for
wages on regular unworked holidays is found to be tenable
and meritorious.
WHEREFORE, judgment is hereby rendered:

(a)

xxx

xxxx

xxx

(b)
Ordering respondent to pay wages to all its
employees for all regular h(olidays since November 1,
1974 (pp. 97-99, rec., underscoring supplied).
Respondent bank did not appeal from the said decision.
Instead, it complied with the order of Arbiter Ricarte T.
Soriano by paying their holiday pay up to and including
January, 1976.
On December 16, 1975, Presidential Decree No. 850 was
promulgated amending, among others, the provisions of
the Labor Code on the right to holiday pay to read as
follows: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be
paid his regular daily wages during regular holidays, except
in retail and service establishments regularly employing
less than ten (10) workers;
(b)
The employer may require an employee to work
on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate and
(c)
As used in this Article, "holiday" includes New
Year's Day, Maundy Thursday, Good Friday, the ninth of
April, the first of May, the twelfth of June, the fourth of July,
the thirtieth of November, the twenty-fifth and the thirtieth of
December, and the day designated by law for holding a
general election.
Accordingly, on February 16, 1976, by authority of Article 5
of the same Code, the Department of Labor (now Ministry
of Labor) promulgated the rules and regulations for the
implementation of holidays with pay. The controversial
section thereof reads: t.hqw
Sec. 2. Status of employees paid by the month.
Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a
salary of not less than the statutory or established
minimum wage shall be presumed to be paid for all days in
the month whether worked or not.
For this purpose, the monthly minimum wage shall not be
less than the statutory minimum wage multiplied by 365
days divided by twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by
the then Secretary of Labor (now Minister) interpreting the

above-quoted rule, pertinent portions of which read: t.

hqw
xxx

xxx

xxx

The ten (10) paid legal holidays law, to start with, is

intended to benefit principally daily employees. In the case
of monthly, only those whose monthly salary did not yet
include payment for the ten (10) paid legal holidays are
entitled to the benefit.
Under the rules implementing P.D. 850, this policy has
been fully clarified to eliminate controversies on the
entitlement of monthly paid employees, The new
determining rule is this: If the monthly paid employee is
receiving not less than P240, the maximum monthly
minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid
the ten (10) paid legal holidays. However, if deductions are
made from his monthly salary on account of holidays in
months where they occur, then he is still entitled to the ten
(10) paid legal holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the
aforecited rule implementing Article 94 of the Labor Code
and by Policy Instruction No. 9, stopped the payment of
holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of
execution to enforce the arbiter's decision of August 25,
1975, whereby the respondent bank was ordered to pay its
employees their daily wage for the unworked regular
holidays.
On September 10, 1975, respondent bank filed an
opposition to the motion for a writ of execution alleging,
among others, that: (a) its refusal to pay the corresponding
unworked holiday pay in accordance with the award of
Labor Arbiter Ricarte T. Soriano dated August 25, 1975, is
based on and justified by Policy Instruction No. 9 which
interpreted the rules implementing P. D. 850; and (b) that
the said award is already repealed by P.D. 850 which took
effect on December 16, 1975, and by said Policy
Instruction No. 9 of the Department of Labor, considering
that its monthly paid employees are not receiving less than
P240.00 and their monthly pay is uniform from January to
December, and that no deductions are made from the
monthly salaries of its employees on account of holidays in
months where they occur (pp. 64-65, NLRC rec.).

On October 18, 1976, Labor Arbiter Ricarte T. Soriano,

instead of issuing a writ of execution, issued an order
enjoining the respondent bank to continue paying its
employees their regular holiday pay on the following
grounds: (a) that the judgment is already final and the
findings which is found in the body of the decision as well
as the dispositive portion thereof is res judicata or is the
law of the case between the parties; and (b) that since the
decision had been partially implemented by the respondent
bank, appeal from the said decision is no longer available
(pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from
the above-cited order of Labor Arbiter Soriano to the
National Labor Relations Commission, reiterating therein
its contentions averred in its opposition to the motion for
writ of execution. Respondent bank further alleged for the
first time that the questioned order is not supported by
evidence insofar as it finds that respondent bank
discontinued payment of holiday pay beginning January,
1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations
Commission promulgated its resolution en banc dismissing
respondent bank's appeal, the dispositive portion of which
reads as follows: t.hqw
In view of the foregoing, we hereby resolve to dismiss, as
we hereby dismiss, respondent's appeal; to set aside Labor
Arbiter Ricarte T. Soriano's order of 18 October 1976 and,
as prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the
petitioner only on February 9, 1979 or almost eight. (8)
months after it was promulgated, while copies were served
on the respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the
Office of the Minister of Labor a motion for
reconsideration/appeal with urgent prayer to stay
execution, alleging therein the following: (a) that there is
prima facie evidence of grave abuse of discretion,
amounting to lack of jurisdiction on the part of the National
Labor Relations Commission, in dismissing the
respondent's appeal on pure technicalities without passing
upon the merits of the appeal and (b) that the resolution
appealed from is contrary to the law and jurisprudence (pp.
260-274, NLRC rec.).

On March 19, 1979, petitioner filed its opposition to the

respondent bank's appeal and alleged the following
grounds: (a) that the office of the Minister of Labor has no
jurisdiction to entertain the instant appeal pursuant to the
provisions of P. D. 1391; (b) that the labor arbiter's decision
being final, executory and unappealable, execution is a
matter of right for the petitioner; and (c) that the decision of
the labor arbiter dated August 25, 1975 is supported by the
law and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for
execution pending appeal, praying that a writ of execution
be issued by the National Labor Relations Commission
pending appeal of the case with the Office of the Minister of
Labor. Respondent bank filed its opposition thereto on
August 8, 1979.
On August 13, 1979, the National Labor Relations
Commission issued an order which states: t.hqw
The Chief, Research and Information Division of this
Commission is hereby directed to designate a SocioEconomic Analyst to compute the holiday pay of the
employees of the Insular Bank of Asia and America from
April 1976 to the present, in accordance with the Decision
of the Labor Arbiter dated August 25, 1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor,
through Deputy Minister Amado G. Inciong, issued an
order, the dispositive portion of which states: t.hqw
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment promulgated dismissing the
instant case for lack of merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public
respondent Amado G. Inciong with abuse of discretion
amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a
Labor Arbiter awarding payment of regular holiday pay can
still be set aside on appeal by the Deputy Minister of Labor
even though it has already become final and had been
partially executed, the finality of which was affirmed by the
National Labor Relations Commission sitting en banc, on
the basis of an Implementing Rule and Policy Instruction
promulgated by the Ministry of Labor long after the said
decision had become final and executory.

WE find for the petitioner.

I
WE agree with the petitioner's contention that Section 2,
Rule IV, Book III of the implementing rules and Policy
Instruction No. 9 issued by the then Secretary of Labor are
null and void since in the guise of clarifying the Labor
Code's provisions on holiday pay, they in effect amended
them by enlarging the scope of their exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850,
provides: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be
paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing
less than ten (10) workers. ...
The coverage and scope of exclusion of the Labor Code's
holiday pay provisions is spelled out under Article 82
thereof which reads: t.hqw
Art. 82. Coverage. The provision of this Title shall
apply to employees in all establishments and undertakings,
whether for profit or not, but not to government employees,
managerial employees, field personnel members of the
family of the employer who are dependent on him for
support domestic helpers, persons in the personal service
of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate
regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly
paid employees are not excluded from the benefits of
holiday pay. However, the implementing rules on holiday
pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting,
under Rule IV, Book Ill of the implementing rules, Section 2,
which provides that: "employees who are uniformly paid by
the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid
for all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing
P. D. 850 and Policy Instruction No. 9 were issued to clarify
the policy in the implementation of the ten (10) paid legal
holidays. As interpreted, 'unworked' legal holidays are

deemed paid insofar as monthly paid employees are

concerned if (a) they are receiving not less than the
statutory minimum wage, (b) their monthly pay is uniform
from January to December, and (c) no deduction is made
from their monthly salary on account of holidays in months
where they occur. As explained in Policy Instruction No, 9,
'The ten (10) paid legal holidays law, to start with, is
intended to benefit principally daily paid employees. In
case of monthly, only those whose monthly salary did not
yet include payment for the ten (10) paid legal holidays are
entitled to the benefit' " (pp. 340-341, rec.). This contention
is untenable.
It is elementary in the rules of statutory construction that
when the language of the law is clear and unequivocal the
law must be taken to mean exactly what it says. In the case
at bar, the provisions of the Labor Code on the entitlement
to the benefits of holiday pay are clear and explicit - it
provides for both the coverage of and exclusion from the
benefits. In Policy Instruction No. 9, the then Secretary of
Labor went as far as to categorically state that the benefit
is principally intended for daily paid employees, when the
law clearly states that every worker shall be paid their
regular holiday pay. This is a flagrant violation of the
mandatory directive of Article 4 of the Labor Code, which
states that "All doubts in the implementation and
interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in
favor of labor." Moreover, it shall always be presumed that
the legislature intended to enact a valid and permanent
statute which would have the most beneficial effect that its
language permits (Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded
his statutory authority granted by Article 5 of the Labor
Code authorizing him to promulgate the necessary
implementing rules and regulations.
Public respondent vehemently argues that the intent and
spirit of the holiday pay law, as expressed by the Secretary
of Labor in the case of Chartered Bank Employees
Association v. The Chartered Bank (NLRC Case No. RB1789-75, March 24, 1976), is to correct the disadvantages
inherent in the daily compensation system of employment
holiday pay is primarily intended to benefit the daily paid
workers whose employment and income are circumscribed
by the principle of "no work, no pay." This argument may
sound meritorious; but, until the provisions of the Labor
Code on holiday pay is amended by another law, monthly

paid employees are definitely included in the benefits of

regular holiday pay. As earlier stated, the presumption is
always in favor of law, negatively put, the Labor Code is
always strictly construed against management.
While it is true that the contemporaneous construction
placed upon a statute by executive officers whose duty is to
enforce it should be given great weight by the courts, still if
such construction is so erroneous, as in the instant case,
the same must be declared as null and void. It is the role of
the Judiciary to refine and, when necessary, correct
constitutional (and/or statutory) interpretation, in the
context of the interactions of the three branches of the
government, almost always in situations where some
agency of the State has engaged in action that stems
ultimately from some legitimate area of governmental
power (The Supreme Court in Modern Role, C. B. Swisher
1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs.
National Labor Relations Commission (106 SCRA 444, July
31, 1981) where the Secretary of Labor enlarged the scope
of exemption from the coverage of a Presidential Decree
granting increase in emergency allowance, this Court ruled
that: t.hqw
... the Secretary of Labor has exceeded his authority when
he included paragraph (k) in Section 1 of the Rules
implementing P. D. 1 1 23.
xxx

xxx

xxx

Clearly, the inclusion of paragraph k contravenes the

statutory authority granted to the Secretary of Labor, and
the same is therefore void, as ruled by this Court in a long
line of cases . . . .. t.hqw
The recognition of the power of administrative officials to
promulgate rules in the administration of the statute,
necessarily limited to what is provided for in the legislative
enactment, may be found in the early case of United States
vs. Barrios decided in 1908. Then came in a 1914 decision,
United States vs. Tupasi Molina (29 Phil. 119) delineation
of the scope of such competence. Thus: "Of course the
regulations adopted under legislative authority by a
particular department must be in harmony with the
provisions of the law, and for the sole purpose of carrying
into effect its general provisions. By such regulations, of
course, the law itself cannot be extended. So long,
however, as the regulations relate solely to carrying into

effect the provisions of the law, they are valid." In 1936, in

People vs. Santos, this Court expressed its disapproval of
an administrative order that would amount to an excess of
the regulatory power vested in an administrative official We
reaffirmed such a doctrine in a 1951 decision, where we
again made clear that where an administrative order
betrays inconsistency or repugnancy to the provisions of
the Act, 'the mandate of the Act must prevail and must be
followed. Justice Barrera, speaking for the Court in
Victorias Milling inc. vs. Social Security Commission, citing
Parker as well as Davis did tersely sum up the matter thus:
"A rule is binding on the Courts so long as the procedure
fixed for its promulgation is followed and its scope is within
the statutory authority granted by the legislature, even if the
courts are not in agreement with the policy stated therein or
its innate wisdom. ... On the other hand, administrative
interpretation of the law is at best merely advisory, for it is
the courts that finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the
authority of the President, in whom all executive power
resides, to take care that the laws be faithfully executed.
No lesser administrative executive office or agency then
can, contrary to the express language of the Constitution
assert for itself a more extensive prerogative. Necessarily,
it is bound to observe the constitutional mandate. There
must be strict compliance with the legislative enactment. Its
terms must be followed the statute requires adherence to,
not departure from its provisions. No deviation is allowable.
In the terse language of the present Chief Justice, an
administrative agency "cannot amend an act of Congress."
Respondents can be sustained, therefore, only if it could be
shown that the rules and regulations promulgated by them
were in accordance with what the Veterans Bill of Rights
provides" (Phil. Apparel Workers Union vs. National Labor
Relations Commission, supra, 463, 464, citing Teozon vs.
Members of the Board of Administrators, PVA 33 SCRA
585; see also Santos vs. Hon. Estenzo, et al, 109 Phil. 419;
Hilado vs. Collector of Internal Revenue, 100 Phil. 295; Sy
Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc.
vs. Aldanese and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case
of American Wire & Cable Workers Union (TUPAS) vs. The
National Labor Relations Commission and American Wire
& Cable Co., Inc., G.R. No. 53337, promulgated on June
29, 1984.

In view of the foregoing, Section 2, Rule IV, Book III of the

Rules to implement the Labor Code and Policy instruction
No. 9 issued by the then Secretary of Labor must be
declared null and void. Accordingly, public respondent
Deputy Minister of Labor Amado G. Inciong had no basis at
all to deny the members of petitioner union their regular
holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte
T. Soriano dated August 25, 1975, had already become
final, and was, in fact, partially executed by the respondent
bank
However, public respondent maintains that on the authority
of De Luna vs. Kayanan, 61 SCRA 49, November 13,
1974, he can annul the final decision of Labor Arbiter
Soriano since the ensuing promulgation of the integrated
implementing rules of the Labor Code pursuant to P.D. 850
on February 16, 1976, and the issuance of Policy
Instruction No. 9 on April 23, 1976 by the then Secretary of
Labor are facts and circumstances that transpired
subsequent to the promulgation of the decision of the labor
arbiter, which renders the execution of the said decision
impossible and unjust on the part of herein respondent
bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna
relied upon by the public respondent is not a labor case
wherein the express mandate of the Constitution on the
protection to labor is applied. Thus Article 4 of the Labor
Code provides that, "All doubts in the implementation and
interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in
favor of labor and Article 1702 of the Civil Code provides
that, " In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and
decent living for the laborer.

Consequently, contrary to public respondent's allegations, it

is patently unjust to deprive the members of petitioner
union of their vested right acquired by virtue of a final
judgment on the basis of a labor statute promulgated
following the acquisition of the "right".

On the question of whether or not a law or statute can

annul or modify a judicial order issued prior to its
promulgation, this Court, through Associate Justice Claro
M. Recto, said: t.hqw
xxx

xxx

xxx

We are decidedly of the opinion that they did not. Said

order, being unappealable, became final on the date of its
issuance and the parties who acquired rights thereunder
cannot be deprived thereof by a constitutional provision
enacted or promulgated subsequent thereto. Neither the
Constitution nor the statutes, except penal laws favorable
to the accused, have retroactive effect in the sense of
annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First
Instance of Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March
18, 1954, this Court said: "... when a court renders a
decision or promulgates a resolution or order on the basis
of and in accordance with a certain law or rule then in
force, the subsequent amendment or even repeal of said
law or rule may not affect the final decision, order, or
resolution already promulgated, in the sense of revoking or
rendering it void and of no effect." Thus, the amendatory
rule (Rule IV, Book III of the Rules to Implement the Labor
Code) cannot be given retroactive effect as to modify final
judgments. Not even a law can validly annul final decisions
(In re: Cunanan, et al., Ibid).
Furthermore, the facts of the case relied upon by the public
respondent are not analogous to that of the case at bar.
The case of De Luna speaks of final and executory
judgment, while iii the instant case, the final judgment is
partially executed. just as the court is ousted of its
jurisdiction to annul or modify a judgment the moment it
becomes final, the court also loses its jurisdiction to annul
or modify a writ of execution upon its service or execution;
for, otherwise, we will have a situation wherein a final and
executed judgment can still be annulled or modified by the
court upon mere motion of a panty This would certainly
result in endless litigations thereby rendering inutile the rule
of law.
Respondent bank counters with the argument that its
partial compliance was involuntary because it did so under
pain of levy and execution of its assets (p. 138, rec.). WE
find no merit in this argument. Respondent bank clearly
manifested its voluntariness in complying with the decision

of the labor arbiter by not appealing to the National Labor

Relations Commission as provided for under the Labor
Code under Article 223. A party who waives his right to
appeal is deemed to have accepted the judgment, adverse
or not, as correct, especially if such party readily
acquiesced in the judgment by starting to execute said
judgment even before a writ of execution was issued, as in
this case. Under these circumstances, to permit a party to
appeal from the said partially executed final judgment
would make a mockery of the doctrine of finality of
judgments long enshrined in this jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides
that "... execution shall issue as a matter of right upon the
expiration of the period to appeal ... or if no appeal has
been duly perfected." This rule applies to decisions or
orders of labor arbiters who are exercising quasi-judicial
functions since "... the rule of execution of judgments under
the rules should govern all kinds of execution of judgment,
unless it is otherwise provided in other laws" Sagucio vs.
Bulos 5 SCRA 803) and Article 223 of the Labor Code
provides that "... decisions, awards, or orders of the Labor
Arbiter or compulsory arbitrators are final and executory
unless appealed to the Commission by any or both of the
parties within ten (10) days from receipt of such awards,
orders, or decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal
period deprives the courts of jurisdiction to alter the final
judgment and the judgment becomes final ipso jure (Vega
vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR
436, 440, January 31, 1978; see also Soliven vs. WCC, 77
SCRA 621; Carrero vs. WCC and Regala vs. WCC,
decided jointly, 77 SCRA 297; Vitug vs. Republic, 75 SCRA
436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3
SCRA 422, 423, October 31, 1961, where the lower court
modified a final order, this Court ruled thus: t.hqw
xxx

xxx

xxx

The lower court was thus aware of the fact that it was
thereby altering or modifying its order of January 8, 1959.
Regardless of the excellence of the motive for acting as it
did, we are constrained to hold however, that the lower
court had no authorities to make said alteration or
modification. ...

xxx

xxx

xxx

The equitable considerations that led the lower court to

take the action complained of cannot offset the dem ands
of public policy and public interest which are also
responsive to the tenets of equity requiring that an
issues passed upon in decisions or final orders that have
become executory, be deemed conclusively disposed of
and definitely closed for, otherwise, there would be no end
to litigations, thus setting at naught the main role of courts
of justice, which is to assist in the enforcement of the rule
of law and the maintenance of peace and order, by settling
justiciable controversies with finality.
xxx

xxx

xxx

In the recent case of Gabaya vs. Mendoza, 113 SCRA 405,

406, March 30, 1982, this Court said: t.hqw
xxx

xxx

xxx

In Marasigan vs. Ronquillo (94 Phil. 237), it was

categorically stated that the rule is absolute that after a
judgment becomes final by the expiration of the period
provided by the rules within which it so becomes, no further
amendment or correction can be made by the court except
for clerical errors or mistakes. And such final judgment is
conclusive not only as to every matter which was offered
and received to sustain or defeat the claim or demand but
as to any other admissible matter which must have been
offered for that purpose (L-7044, 96 Phil. 526). In the
earlier case of Contreras and Ginco vs. Felix and China
Banking Corp., Inc. (44 O.G. 4306), it was stated that the
rule must be adhered to regardless of any possible
injustice in a particular case for (W)e have to subordinate
the equity of a particular situation to the over-mastering
need of certainty and immutability of judicial
pronouncements
xxx

xxx

xxx

III
The despotic manner by which public respondent Amado
G. Inciong divested the members of the petitioner union of
their rights acquired by virtue of a final judgment is
tantamount to a deprivation of property without due
process of law Public respondent completely ignored the
rights of the petitioner union's members in dismissing their
complaint since he knew for a fact that the judgment of the

labor arbiter had long become final and was even partially
executed by the respondent bank.
A final judgment vests in the prevailing party a right
recognized and protected by law under the due process
clause of the Constitution (China Ins. & Surety Co. vs.
Judge of First Instance of Manila, 63 Phil. 324). A final
judgment is "a vested interest which it is right and equitable
that the government should recognize and protect, and of
which the individual could no. be deprived arbitrarily
without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785,
791).
lt is by this guiding principle that the due process clause is
interpreted. Thus, in the pithy language of then Justice,
later Chief Justice, Concepcion "... acts of Congress, as
well as those of the Executive, can deny due process only
under pain of nullity, and judicial proceedings suffering from
the same flaw are subject to the same sanction, any
statutory provision to the contrary notwithstanding (Vda. de
Cuaycong vs. Vda. de Sengbengco 110 Phil. 118,
emphasis supplied), And "(I)t has been likewise established
that a violation of a constitutional right divested the court of
jurisdiction; and as a consequence its judgment is null and
void and confers no rights" (Phil. Blooming Mills Employees
Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA
211, June 5, 1973).
Tested by and pitted against this broad concept of the
constitutional guarantee of due process, the action of
public respondent Amado G. Inciong is a clear example of
deprivation of property without due process of law and
constituted grave abuse of discretion, amounting to lack or
excess of jurisdiction in issuing the order dated November
10, 1979
WHEREFORE, THE PETITION IS HEREBY GRANTED,
THE ORDER OF PUBLIC RESPONDENT IS SET ASIDE,
AND THE DECISION OF LABOR ARBITER RICARTE T.
SORIANO DATED AUGUST 25, 1975, IS HEREBY
REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR
BANK OF ASIA AND AMERICA
SO ORDERED.1wph1.t
The National Alliance of Teachers sued Jose Rizal College
for alleged nonpayment of unworked holidays from 1975 to
1977. The members of the Alliance concerned are faculty

members who are paid on the basis of student contract

hour.
ISSUE: Whether or not the school faculty are entitled to
unworked holiday pay.
HELD: As far as unworked regular holidays are concerned,
the teachers are not entitled to holiday pay. Regular
holidays specified as such by law are known to both school
and faculty members as no class days; certainly the latter
do not expect payment for said unworked days, and this
was clearly in their minds when they entered into the
teaching contracts.
On the other hand, the teachers are entitled to be paid for
unworked special holidays. Otherwise stated, the faculty
member, although forced to take a rest, does not earn what
he should earn on that day. Be it noted that when a special
public holiday is declared, the faculty member paid by the
hour is deprived of expected income, and it does not matter
that the school calendar is extended in view of the days or
hours lost, for their income that could be earned from other
sources is lost during the extended days. Similarly, when
classes are called off or shortened on account of typhoons,
floods, rallies, and the like, these faculty members must
likewise be paid, whether or not extensions are ordered.
SAN MIGUEL CORPORATION, petitioner, vs. THE
HONORABLE COURT OF APPEALS-FORMER
THIRTEENTH DIVISION, HON. UNDERSECRETARY
JOSE M. ESPAOL, JR., Hon. CRESENCIANO B.
TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M.
MACARAYA, respondents.
DECISION
KAPUNAN, J.:
Assailed in the petition before us are the decision,
promulgated on 08 May 2000, and the resolution,
promulgated on 18 October 2000, of the Court of Appeals
in CA G.R. SP-53269.

routine inspection in the premises of San Miguel

Corporation (SMC) in Sta. Filomena, Iligan City. In the
course of the inspection, it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its
employees. DOLE sent a copy of the inspection result to
SMC and it was received by and explained to its personnel
officer Elena dela Puerta.[1] SMC contested the findings
and DOLE conducted summary hearings on 19 November
1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC
failed to submit proof that it was paying regular Muslim
holiday pay to its employees. Hence, Alan M. Macaraya,
Director IV of DOLE Iligan District Office issued a
compliance order, dated 17 December 1993, directing SMC
to consider Muslim holidays as regular holidays and to pay
both its Muslim and non-Muslim employees holiday pay
within thirty (30) days from the receipt of the order.
SMC appealed to the DOLE main office in Manila but its
appeal was dismissed for having been filed late. The
dismissal of the appeal for late filing was later on
reconsidered in the order of 17 July 1998 after it was found
that the appeal was filed within the reglementary period.
However, the appeal was still dismissed for lack of merit
and the order of Director Macaraya was affirmed.
SMC went to this Court for relief via a petition for certiorari,
which this Court referred to the Court of Appeals pursuant
to St. Martin Funeral Homes vs. NLRC.[2]
The appellate court, in the now questioned decision,
promulgated on 08 May 2000, ruled, as follows:
WHEREFORE, the Order dated December 17, 1993 of
Director Macaraya and Order dated July 17, 1998 of
Undersecretary Espaol, Jr. is hereby MODIFIED with
regards the payment of Muslim holiday pay from 200% to
150% of the employee's basic salary. Let this case be
remanded to the Regional Director for the proper
computation of the said holiday pay.

SO ORDERED.[3]
The facts of the case are as follows:

On 17 October 1992, the Department of Labor and

Employment (DOLE), Iligan District Office, conducted a

Its motion for reconsideration having been denied for lack

of merit, SMC filed a petition for certiorari before this Court,
alleging that:

PUBLIC RESPONDENTS SERIOUSLY ERRED AND

COMMITTED GRAVE ABUSE OF DISCRETION WHEN
THEY GRANTED MUSLIM HOLIDAY PAY TO NONMUSLIM EMPLOYEES OF SMC-ILICOCO AND
ORDERING SMC TO PAY THE SAME RETROACTIVE
FOR ONE (1) YEAR FROM THE DATE OF THE
PROMULGATION OF THE COMPLIANCE ORDER
ISSUED ON DECEMBER 17, 1993, IT BEING CONTRARY
TO THE PROVISIONS, INTENT AND PURPOSE OF P.D.
1083 AND PREVAILING JURISPRUDENCE.
THE ISSUANCE OF THE COMPLIANCE ORDER WAS
TAINTED WITH GRAVE ABUSE OF DISCRETION IN
THAT SAN MIGUEL CORPORATION WAS NOT
ACCORDED DUE PROCESS OF LAW; HENCE, THE
ASSAILED COMPLIANCE ORDER AND ALL
SUBSEQUENT ORDERS, DECISION AND RESOLUTION
OF PUBLIC RESPONDENTS WERE ALL ISSUED WITH
GRAVE ABUSE OF DISCRETION AND ARE VOID AB
INITIO.
THE HON. COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT DECLARED THAT
REGIONAL DIRECTOR MACARAYA,
UNDERSECRETARY TRAJANO AND
UNDERSECRETARY ESPAOL, JR., WHO ALL LIKEWISE
ACTED WITH GRAVE ABUSE OF DISCRETION AND
WITHOUT OR IN EXCESS OF THEIR JURISDICTION,
HAVE JURISDICTION IN ISSUING THE ASSAILED
COMPLIANCE ORDER AND SUBSEQUENT ORDERS,
WHEN IN FACT THEY HAVE NO JURISDICTION OR HAS
LOST JURISDICTION OVER THE HEREIN LABOR
STANDARD CASE.[4]
At the outset, petitioner came to this Court via a petition for
certiorari under Rule 65 instead of an appeal under Rule 45
of the 1997 Rules of Civil Procedure. In National Irrigation
Administration vs. Court of Appeals,[5] the Court declared:
x x x (S)ince the Court of Appeals had jurisdiction over the
petition under Rule 65, any alleged errors committed by it
in the exercise of its jurisdiction would be errors of
judgment which are reviewable by timely appeal and not by
a special civil action of certiorari. If the aggrieved party fails
to do so within the reglementary period, and the decision
accordingly becomes final and executory, he cannot avail
himself of the writ of certiorari, his predicament being the
effect of his deliberate inaction.

The appeal from a final disposition of the Court of Appeals

is a petition for review under Rule 45 and not a special civil
action under Rule 65 of the Rules of Court, now Rule 45
and Rule 65, respectively, of the 1997 Rules of Civil
Procedure. Rule 45 is clear that decisions, final orders or
resolutions of the Court of Appeals in any case, i.e.,
regardless of the nature of the action or proceeding
involved, may be appealed to this Court by filing a petition
for review, which would be but a continuation of the
appellate process over the original case. Under Rule 45 the
reglementary period to appeal is fifteen (15) days from
notice of judgment or denial of motion for reconsideration.

xxx

For the writ of certiorari under Rule 65 of the Rules of Court

to issue, a petitioner must show that he has no plain,
speedy and adequate remedy in the ordinary course of law
against its perceived grievance. A remedy is considered
"plain, speedy and adequate" if it will promptly relieve the
petitioner from the injurious effects of the judgment and the
acts of the lower court or agency. In this case, appeal was
not only available but also a speedy and adequate remedy.
[6]
Well-settled is the rule that certiorari cannot be availed of
as a substitute for a lost appeal.[7] For failure of petitioner
to file a timely appeal, the questioned decision of the Court
of Appeals had already become final and executory.
In any event, the Court finds no reason to reverse the
decision of the Court of Appeals.
Muslim holidays are provided under Articles 169 and 170,
Title I, Book V, of Presidential Decree No. 1083,[8]
otherwise known as the Code of Muslim Personal Laws,
which states:

Art. 169. Official Muslim holidays. - The following are

hereby recognized as legal Muslim holidays:
(a) Amun Jadd (New Year), which falls on the first day of
the first lunar month of Muharram;

(b) Maulid-un-Nab (Birthday of the Prophet Muhammad),

which falls on the twelfth day of the third lunar month of
Rabi-ul-Awwal;
(c) Lailatul Isr Wal Mirj (Nocturnal Journey and
Ascension of the Prophet Muhammad), which falls on the
twenty-seventh day of the seventh lunar month of Rajab;
(d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day
of the tenth lunar month of Shawwal, commemorating the
end of the fasting season; and
(e) d-l-Adh (Hari Raya Haji),which falls on the tenth day
of the twelfth lunar month of Dhl-Hijja.
Art. 170. Provinces and cities where officially observed. (1) Muslim holidays shall be officially observed in the
Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Iligan, Marawi, Pagadian,
and Zamboanga and in such other Muslim provinces and
cities as may hereafter be created;
(2) Upon proclamation by the President of the Philippines,
Muslim holidays may also be officially observed in other
provinces and cities.
The foregoing provisions should be read in conjunction with
Article 94 of the Labor Code, which provides:
Art. 94. Right to holiday pay. -

Assuming arguendo that the respondents position is

correct, then by the same token, Muslims throughout the
Philippines are also not entitled to holiday pays on
Christian holidays declared by law as regular holidays. We
must remind the respondent-appellant that wages and
other emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws
and certainly not on the basis of the workers faith or
religion.
At any rate, Article 3(3) of Presidential Decree No. 1083
also declares that x x x nothing herein shall be construed to
operate to the prejudice of a non-Muslim.
In addition, the 1999 Handbook on Workers Statutory
Benefits, approved by then DOLE Secretary Bienvenido E.
Laguesma on 14 December 1999 categorically stated:
Considering that all private corporations, offices, agencies,
and entities or establishments operating within the
designated Muslim provinces and cities are required to
observe Muslim holidays, both Muslim and Christians
working within the Muslim areas may not report for work on
the days designated by law as Muslim holidays.[9]
On the question regarding the jurisdiction of the Regional
Director Allan M. Macaraya, Article 128, Section B of the
Labor Code, as amended by Republic Act No. 7730,
provides:
Article 128. Visitorial and enforcement power. -

(a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service
establishments regularly employing less than ten (10)
workers;

(b) The employer may require an employee to work on any

holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; x x x.
Petitioner asserts that Article 3(3) of Presidential Decree
No. 1083 provides that (t)he provisions of this Code shall
be applicable only to Muslims x x x. However, there should
be no distinction between Muslims and non-Muslims as
regards payment of benefits for Muslim holidays. The Court
of Appeals did not err in sustaining Undersecretary Espaol
who stated:

xxx
(b) Notwithstanding the provisions of Article 129 and 217 of
this Code to the contrary, and in cases where the
relationship of employer-employee still 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 the inspection. The
Secretary or his duly authorized representative shall issue
writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment
and enforcement officer and raises issues supported by
documentary proofs which were not considered in the
course of inspection.

xxx
In the case before us, Regional Director Macaraya acted
as the duly authorized representative of the Secretary of
Labor and Employment and it was within his power to issue
the compliance order to SMC. In addition, the Court agrees
with the Solicitor General that the petitioner did not deny
that it was not paying Muslim holiday pay to its non-Muslim
employees. Indeed, petitioner merely contends that its nonMuslim employees are not entitled to Muslim holiday pay.
Hence, the issue could be resolved even without
documentary proofs. In any case, there was no indication
that Regional Director Macaraya failed to consider any
documentary proof presented by SMC in the course of the
inspection.
Anent the allegation that petitioner was not accorded due
process, we sustain the Court of Appeals in finding that
SMC was furnished a copy of the inspection order and it
was received by and explained to its Personnel Officer.
Further, a series of summary hearings were conducted by
DOLE on 19 November 1992, 28 May 1993 and 4 and 5
October 1993. Thus, SMC could not claim that it was not
given an opportunity to defend itself.
Finally, as regards the allegation that the issue on Muslim
holiday pay was already resolved in NLRC CA No. M000915-92 (Napoleon E. Fernan vs. San Miguel

Corporation Beer Division and Leopoldo Zaldarriaga),[10]

the Court notes that the case was primarily for illegal
dismissal and the claim for benefits was only incidental to
the main case. In that case, the NLRC Cagayan de Oro
City declared, in passing:
We also deny the claims for Muslim holiday pay for lack of
factual and legal basis. Muslim holidays are legally
observed within the area of jurisdiction of the present
Autonomous Region for Muslim Mindanao (ARMM),
particularly in the provinces of Maguindanao, Lanao del
Sur, Sulu and Tawi-Tawi. It is only upon Presidential
Proclamation that Muslim holidays may be officially
observed outside the Autonomous Region and generally
extends to Muslims to enable them the observe said
holidays.[11]
The decision has no consequence to issues before us, and
as aptly declared by Undersecretary Espaol, it can never
be a benchmark nor a guideline to the present case x x x.
[12]
WHEREFORE, in view of the foregoing, the petition is
DISMISSED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and YnaresSantiago, JJ., concur.