Republic of the Philippines Mutual Aid Association was organized for the first
SUPREME COURT time, having been granted certificate No. 375 by
Manila
EN BANC
G.R. No. L-4148 July 16, 1952
MANILA TERMINAL COMPANY, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and
MANILA TERMINAL RELIEF AND MUTUAL AID
ASSOCIATION,respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto
E. Llacarfor respondent Association.
Mariano R. Padilla for respondent Court of
Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal
Company, Inc. hereinafter to be referred as to the
petitioner, undertook the arrastre service in some
of the piers in Manila's Port Area at the request
and under the control of the United States Army.
The petitioner hired some thirty men as watchmen
on twelve-hour shifts at a compensation of P3 per
day for the day shift and P6 per day for the night
shift. On February 1, 1946, the petitioner began the
postwar operation of the arrastre service at the
present at the request and under the control of the
Bureau of Customs, by virtue of a contract entered
into with the Philippine Government. The
watchmen of the petitioner continued in the service
with a number of substitutions and additions, their
salaries having been raised during the month of
February to P4 per day for the day shift and P6.25
per day for the nightshift. On March 28, 1947,
Dominador Jimenez, a member of the Manila
Terminal Relief and Mutual Aid Association, sent a
letter to the Department of Labor, requesting that
the matter of overtime pay be investigated, but
nothing was done by the Department. On April 29,
1947, Victorino Magno Cruz and five other
employees, also member of the Manila Transit
Mutual Aid Association, filed a 5-point demand with
the Department of Labor, including overtime pay,
but the Department again filed to do anything
about the matter. On May 27, 1947, the petitioner
instituted the system of strict eight-hour shifts. On
June 19, 1947, the Manila Port Terminal Police
Association, not registered in accordance with the
provisions of Commonwealth Act No. 213, filed a
petition with the Court of Industrial Relations. On
July 16, 1947, the Manila Terminal Relief and
the Department of Labor. On July 28, 1947, Manila
Terminal Relief and Mutual Aid Association filed an
amended petition with the Court of Industrial
Relations praying, among others, that the petitioner
be ordered to pay its watchmen or police force
overtime pay from the commencement of their
employment. On May 9, 1949, by virtue of
Customs Administrative Order No. 81 and
Executive Order No. 228 of the President of the
Philippines, the entire police force of the petitioner
was consolidated with the Manila Harvor Police of
the Customs Patrol Service, a Government agency
under the exclusive control of the Commissioner of
Customs and the Secretary of Finance The Manila
Terminal Relief and Mutual Aid Association will
hereafter be referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial
Relations in his decision of April 1, 1950, as
amended on April 18, 1950, while dismissing other
demands of the Association for lack of jurisdiction,
ordered the petitioner to pay to its police force —
(a) Regular or base pay corresponding to four
hours' overtime plus 25 per cent thereof as
additional overtime compensation for the period
from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those
who worked from 6:00 p.m. to 6:00 a.m. during the
same period:
(c) Additional compensation of 50 per cent for work
performed on Sundays and legal holidays during
the same period;
(d) Additional compensation of 50 per cent for work
performed on Sundays and legal holidays from
May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work
performed at night from May 29, 1947 to May 9,
1949.
With reference to the pay for overtime service after
the watchmen had been integrated into the Manila
Harbor Police, Judge Yanson ruled that the court
has no jurisdiction because it affects the Bureau of
Customs, an instrumentality of the Government
having no independent personality and which
cannot be sued without the consent of the State.
(Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration.
The Association also filed a motion for
reconsideration in so far its other demands were
dismissed. Judge Yanson, concurred in by Judge
Jose S. Bautista, promulgated on July 13, 1950, a
resolution denying both motions for
reconsideration. Presiding Judge Arsenio C.
Roldan, in a separate opinion concurred in by
Judge Modesto Castillo, agreed with the decision
of Judge Yanson of April 1, 1950, as to the
dismissal of other demands of the Association, but
dissented therefrom as to the granting of overtime
pay. In a separate decisive opinion, Judge Juan S.
Lanting concurred in the dismissal of other
demands of the Association. With respect to
overtime compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in
so far it grants compensation for overtime on
regular days (not Sunday and legal holidays)during
the period from the date of entrance to duty to May
24, 1947, such compensation to consists of the
amount corresponding to the four hours' overtime
at the regular rate and an additional amount of 25
per cent thereof.
2. As to the compensation for work on Sundays
and legal holidays, the petitioner should pay to its
watchmen the compensation that corresponds to
the overtime (in excess of 8 hours) at the regular
rate only, that is, without any additional amount,
thus modifying the decision under review
accordingly.
3. The watchmen are not entitled to night
differential pay for past services, and therefore the
decision should be reversed with the respect
thereto.
The petitioner has filed a present petition for
certiorari. Its various contentions may be briefly
summed up in the following propositions: (1) The
Court of Industrial Relations has no jurisdiction to
render a money judgment involving obligation in
arrears. (2) The agreement under which its police
force were paid certain specific wages for twelve-
hour shifts, included overtime compensation. (3)
The Association is barred from recovery by
estoppel and laches. (4) the nullity or invalidity of
the employment contract precludes any recovery
by the Association. (5) Commonwealth Act No.
4444 does not authorize recovery of back overtime
pay.
The contention that the Court of Industrial
Relations has no jurisdiction to award a money
judgment was already overruled by this Court in
G.R. No. L-4337, Detective & protective Bureau,
Inc. vs. Court of Industrial Relations and United
Employees Welfare Association, 90 Phil., 665, in
this wise: "It is also argued that the respondent
court has no jurisdiction to award overtime pay,
which is money judgment. We believe that under
Commonwealth Act No. 103 the Court is
empowered to make the order for the purpose of
settling disputes between the employer and
employee1. As a matter of fact this Court has
confirmed an order of the Court of Industrial
Relations requiring the Elks Club to pay to its
employees certain sum of money as overtime back
wages from June 3, 1939 to March 13, 1941. This,
in spite the allegation of lack or excess of
jurisdiction on the part of said court. (45 Off. Gaz.,
3829; 80 Phil. 272)"
The important point stressed by the petitioner is
that the contract between it and the Association
upon the commencement of the employment of its
watchman was to the certain rates of pay, including
overtime compensation namely, P3 per day for the
day shift and P6 per day for night shift beginning
September 1, 1945, and P4 per day shift and
P6.25 per day for the night shift since February,
1946. The record does not bear out these
allegations. The petitioner has relied merely on the
facts that its watchmen had worked on twelve-hour
shifts at specific wages per day and that no
complaint was made about the matter until, first on
March 28, 1947 and, secondly, on April 29, 1947.
In times of acute unemployment, the people, urged
by the instinct of self-preservation, go from place to
place and from office to office in search for any
employment, regardless of its terms and
conditions, their main concern in the first place
being admission to some work. Specially for
positions requiring no special qualifications,
applicants would be good as rejected if they ever
try to be inquisitive about the hours of work or the
amount of salary, ever attempt to dictate their
terms. The petitioner's watchmen must have
railroaded themselves into their employment, so to
speak, happy in the thought that they would then
have an income on which to subsist. But, at the
same time, they found themselves required to work
for twelve hours a day. True, there was agreement
to work, but can it fairly be supposed that they had
the freedom to bargain in any way, much less to
insist in the observance of the Eight Hour Labor
Law?
As was aptly said in Floyd vs. Du Bois Soap Co.,
1942, 317 U. S. 596, 63 Sup. Ct. 159; 6 CCH
Labor Cases, Par. 51, 147, "A contract of
employment, which provides for a weekly wage for
a specified number of hours, sufficient to cover
both the statutory minimum wage and overtime
compensation, if computed on the basis of the
statutory minimum wage, and which makes no
provision for a fixed hourly rate or that the weekly
wage includes overtime compensation, does not
meet the requirements of the Act."
Moreover, we note that after the petition had
instituted the strict eight-hour shifts, no reduction
was made in the salaries which its watchmen
received under the twelve hour arrangement.
Indeed, as admitted by the petitioner, "when the
members or the respondent union were placed on
strict eight-hour shifts, the lowest salary of all the
members of the respondent union was P165 a
month, or P5.50 daily, for both day and night
shifts." Although it may be argued that the salary
for the night shift was somewhat lessened, the fact
that the rate for the day shift was increased in a
sense tends to militate against the contention that
the salaries given during the twelve-hour shifts
included overtime compensation.
Petitioner's allegation that the association had
acquiesced in the twelve-hour shifts for more than
18 months, is not accurate, because the watchmen
involved in this case did not enter the service of the
petitioner, at one time, on September 1, 1945. As
Judge Lanting found, "only one of them entered the
service of the company on said date, very few
during the rest of said month, some during the rest
of that year (1945) and in 1946, and very many in
1947, 1948 and 1949."
The case at bar is quite on all fours with the case
of Detective & Protective Bureau, Inc. vs. Court of
Industrial Relations and United Employees Welfare
Association, supra, in which the facts were as
follows: "The record discloses that upon petition
properly submitted, said court made an
investigation and found that the members of the
United Employees Welfare Association (hereafter
called the Association) were in the employ of the
petitioner Detective and Protective Bureau, Inc.
(herein called the Bureau) which is engaged in the
business of furnishing security guards to
commercial and industrial establishments, paying
to said members monthly salaries out of what it
received from the establishments benefited by
guard service. The employment called for daily
tours of duty for more than eight hours, in addition
to work on Sundays and holidays. Nonetheless the
members performed their labors without receiving
extra compensation." The only difference is that,
while in said case the employees concerned were
paid monthly salaries, in the case now before us
the wages were computed daily. In the case cited,
we held the following:
It appears that the Bureau had been
granting the members of the Association,
every month, "two days off" days in which
they rendered no service, although they
received salary for the whole month. Said
Bureau contended below that the pay
corresponding to said 2 day vacation
corresponded to the wages for extra work.
The court rejected the contention, quite
properly we believe, because in the
contract there was no agreement to that
effect; and such agreement, if any, would
probably be contrary to the provisions of
the Eight-Hour Law (Act No. 444, sec. 6)
and would be null and void ab initio.
It is argued here, in opposition to the
payment, that until the commencement of
this litigation the members of the
Association never claimed for overtime
pay. That may be true. Nevertheless the
law gives them the right to extra
compensation. And they could not be held
to have impliedly waived such extra
compensation, for the obvious reason that
could not have expressly waived it.
The foregoing pronouncements are in point. The
Association cannot be said to have impliedly
waived the right to overtime compensation, for the
obvious reason that they could not have expressly
waived it."
The principle of estoppel and the laches cannot
well be invoked against the Association. In the first
place, it would be contrary to the spirit of the Eight
Hour Labor Law, under which as already seen, the
laborers cannot waive their right to extra
compensation. In the second place, the law
principally obligates the employer to observe it, so
much so that it punishes the employer for its
violation and leaves the employee or laborer free
and blameless. In the third place, the employee or
laborer is in such a disadvantageous position as to
be naturally reluctant or even apprehensive in
asserting any claim which may cause the employer
to devise a way for exercising his right to terminate
the employment.
If the principle of estoppel and laches is to be
applied, it may bring about a situation, whereby the
employee or laborer, who cannot expressly
renounce their right to extra compensation under
the Eight-Hour Labor Law, may be compelled to
accomplish the same thing by mere silence or
lapse of time, thereby frustrating the purpose of law
by indirection.
While counsel for the petitioner has cited
authorities in support of the doctrine invoked, there
are also authorities pointed out in the opinion of
Judge Lanting to the contrary. Suffice it to say, in
this connection, that we are inclined to rule
adversely against petitioner for the reasons already
stated.
The argument that the nullity or invalidity of the
employment contract precludes recovery by the
Association of any overtime pay is also untenable.
The argument, based on the supposition that the
parties are in pari delicto, was in effect turned
down in Gotamo Lumber Co. vs. Court of Industrial
Relations,* 47 Off. Gaz., 3421, wherein we ruled:
"The petitioner maintains that as the overtime work
had been performed without a permit from the
Department of Labor, no extra compensation
should be authorized. Several decisions of this
court are involved. But those decisions were based
on the reasoning that as both the laborer and
employer were duty bound to secure the permit
from the Department of Labor, both were in pari
delicto. However the present law in effect imposed
that duty upon the employer (C.A. No. 444). Such
employer may not therefore be heard to plead his
own neglect as exemption or defense.
The employee in rendering extra service
at the request of his employer has a right
to assume that the latter has complied
with the requirement of the law, and
therefore has obtained the required
permission from the Department of Labor.
Moreover, the Eight-Hour Law, in providing that
"any agreement or contract between the employer
and the laborer or employee contrary to the
provisions of this Act shall be null avoid ab initio,"
(Commonwealth Act No. 444, sec. 6), obviously
intended said provision for the benefit of the
laborers or employees. The employer cannot,
therefore, invoke any violation of the act to exempt
him from liability for extra compensation. This
conclusion is further supported by the fact that the
law makes only the employer criminally liable for
any violation. It cannot be pretended that, for the
employer to commit any violation of the Eight-Hour
Labor Law, the participation or acquiescence of the
employee or laborer is indispensable, because the
latter in view of his need and desire to live, cannot
be considered as being on the same level with the
employer when it comes to the question of applying
for and accepting an employment.
Petitioner also contends that Commonwealth Act
No. 444 does not provide for recovery of back
overtime pay, and to support this contention it
makes referrence to the Fair Labor Standards Act
of the United States which provides that "any
employer who violates the provisions of section
206 and section 207 of this title shall be liable to
the employee or employees affected in the amount
of their unpaid minimum wages or their unpaid
overtime compensation as the case may be," — a
provision not incorporated in Commonwealth Act
No. 444, our Eight-Hour Labor Law. We cannot
agree to the proposition, because sections 3 and 5
of Commonwealth Act 444 expressly provides for
the payment of extra compensation in cases where
overtime services are required, with the result that
the employees or laborers are entitled to collect
such extra compensation for past overtime work.
To hold otherwise would be to allow an employer to
violate the law by simply, as in this case, failing to
provide for and pay overtime compensation.
The point is stressed that the payment of the claim
of the Association for overtime pay covering a
period of almost two years may lead to the financial
ruin of the petitioner, to the detriment of its
employees themselves. It is significant, however,
that not all the petitioner's watchmen would receive
back overtime pay for the whole period specified in
the appealed decision, since the record shows that
the great majority of the watchmen were admitted
in 1946 and 1947, and even 1948 and 1949. At
any rate, we are constrained to sustain the claim of
the Association as a matter of simple justice,
consistent with the spirit and purpose of the Eight-
Hour Labor Law. The petitioner, in the first place,
was required to comply with the law and should
therefore be made liable for the consequences of
its violation.
It is high time that all employers were warned that
the public is interested in the strict enforcement of
the Eight-Hour Labor Law. This was designed not
only to safeguard the health and welfare of the
laborer or employee, but in a way to minimize
unemployment by forcing employers, in cases
where more than 8-hour operation is necessary, to
utilize different shifts of laborers or employees
working only for eight hours each.
Wherefore, the appealed decision, in the form
voted by Judge Lanting, is affirmed, it being
understood that the petitioner's watchmen will be
entitled to extra compensation only from the dates
they respectively entered the service of the
petitioner, hereafter to be duly determined by the
Court of Industrial Relations. So ordered, without
costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista
Angelo, and Labrador, JJ., concur.
THIRD DIVISION
[G.R. No.151370. December 4, 2002]
ASIA PACIFIC CHARTERING (PHILS.) INC.,
petitioner, vs. MARIA LINDA R. FAROLAN,
respondent.
DECISION
CARPIO MORALES, J.:
Before this Court is a Petition for Review under
Rule 45 of the 1997 Rules of Civil Procedure
assailing the Court of Appeals 1) June 28, 2001
Decision[1] which set aside the decision of the
National Labor Relations Commission (NLRC)
reversing that of the Labor Arbiter, and 2)
January 9, 2002[2] Resolution denying a
reconsideration of its decision.
Petitioner Asia Pacific Chartering (Phils) Inc.
was, until 1996, the general sales agent (GSA) of
the Scandinavian Airline System (SAS), an off-
line international airline company with license
to do business in the Philippines. As GSA,
petitioner sold passenger and cargo spaces for
airlines operated by SAS.
Respondent Maria Linda R. Farolan was on
December 16, 1992 hired as Sales Manager of
petitioner for its passenger and cargo GSA
operations for SAS, following her conformity to
a December 10, 1992 letter-offer of
employment[3] from petitioner through its Vice
President/Comptroller Catalino Bondoc. The
pertinent portion of the letter-offer reads:
Dear Ms. Farolan:
Confirming our previous discussions, ASIA-
PACIFIC CHARTERING PHIL., INC. is pleased to
offer you the position of Sales Manager of its
Passenger and Cargo Operations for
SCANDINAVIAN AIRLINES SYSTEM in the
Philippines, commencing on December 16, 1992
on the following terms:
Monthly
Basic Pay P 22, 000.00
Housing Allowance 4,000.00
Transportation Allowance
(200 liters of gas) Cash Equivalent
Meal Allowance 750.00
Please affix your signature below if you find the
foregoing acceptable and return to us a signed
duplicate. Meanwhile, we certainly look
forward to your joining us and rest assured of
our fullest support.
xxx
(Sgd) Maria Linda R. Farolan
Conforme: (Emphasis supplied).
It is gathered that Leslie Murray, the then Sales
Manager of petitioner, talked to respondent
into accepting the position after verbally
briefing her on the nature of the position.
Soon after respondent assumed her post, she
participated in a number of
meetings/seminars[4] including a Customer
Service Seminar in Bangkok, Thailand, a
Regional Sales Meeting on the technical aspects
of airline commercial operations in February
1993, and a course on the highly technical
airline computer reservations system called
Amadeus, all geared towards improving her
marketing and sales skills.
In September of 1993, respondent, upon
instruction of Bondoc, submitted a report[5] RE:
OUR COMMENTS AND ACTIONS BEING TAKEN
CONCERNING SAS POOR P & L PERFORMANCE
FOR JANUARY - JULY 1993 the pertinent
portions of which read:
1 January to July 1993 Sales x x x
1993 1992 CHANGE
Seaman 233 423 (190)
Expats/Tourists 503 716 (213)
PTAs 346 196 150
Refugees/IOM 53 864 (811)
xxx
Explanations.
1. International Organization for Migration
(IOM)-both Vietnam and Scandinavian
Governments have terminated projects for
refugees; hence the tremendous decrease
(94%) x x x.
2. Seamans Fares-Rates not competitive
enough.
3. Expats/Tourists-In a market where on-line
carriers were dropping rates drastically, we
were losing passengers to said carriers.
1 The present Market:
1. As SAS is off-line, we have no control over
space and to an extent our rates are higher
because of proration with delivering carriers.
2. On-lines do not prorate with other carriers
therefore can dive fares x x x.
I have convinced Mr. Jespersen to bring down
the fares to be more competitive. The reason
he did not do so earlier was because low-yield
fares are low in priority for confirming seats.
But now that SAS is considering increasing their
frequencies ex-Hongkong before year-end, this
will be advantageous to boosting our sales.
A. Measures to take remainder of 1993 and for
1994:
1. We have negotiated a lower fare for seamen
(effective September) which is competitive. We
are already getting positive response from
agents. Since this(sic) low-yield sales, Hongkong
did not adjust fare accordingly first half of 1993
because of space constraints.
2. As SAS still prefers high-yield sales, we have
offered incentives to Ameco as Asian
Development Bank (ADB) (effective 1st June for
one year) with Mr. Jespersens approval x x x.
In addition, ADB itself is willing to consider
proposals we submit to them in the case of
cost-savings. In exchange, they can endorse to
SAS a relevant share of their Europe travel x x x.
3. We have also negotiated a lower net fare for
Economy Class. This rate is also competitive and
is in force.
4. Incentive Program for Agents-Using the
points system similar to PALs promo (PALs
Smiles), to stimulate sales. We are at present
fine-tuning mechanics for Hongkongs approval
which we intend to launch before Christmas.
This promo is self-sustaining (no significant
expenses to be incurred)
5. We are currently pushing sales for Baltic
area/Russia as we have the best rates. We have
identified the agents who have passengers to
these destinations and we are focusing on them
x x x. (Emphasis and underscoring supplied).
As reflected in respondents report, there was a
drop in SAS sales revenues which to her was
attributable to market forces beyond her
control.
Noting the marked decline in SAS sales
revenues, petitioner directed its high ranking
officer Roberto Zozobrado in January 1994 to
conduct an investigation on the matter and
identify the problem/s and implement possible
solutions.
Zozobrado thus informally took over some of
respondents marketing and sales
responsibilities, albeit respondent retained her
title as Sales Manager and continued to receive
her salary as such.
By petitioners claim, Zozobrado found out that
respondent did not adopt any sales strategy nor
conduct any sales meeting or develop other
sources of revenue for SAS, she having simply
let her sales staff perform their functions all by
themselves; in 1994, Soren Jespersen, General
Manager of SAS in Hongkong, Southern China,
Taipei and the Philippines, came to the
Philippines to assess the statistics on SAS sales
revenues and SAS was convinced that
respondent was not fit for the job of Sales
Manager; and in view of the changes
introduced by Zozobrado, SAS-GSA sales
operations drew positive results.
On May 21, 1994, respondent received a
message[6] from Jespersen reading:
Dear Linda and Bob [Zozobrado],
First of all congratulation to your sale result in
April. You reached and exceeded the target by
50% In C/class (Fantastic!!!) and 1% In M/class.
This is the second month in a row (and the last
2 first in more than a year) and hopefully the
beginning of a new and positive trend.
xxx
As you can see May looks very good.
With the agreed focus on selling the M/class
and all the activities initiated, Im sure that the
rest of the period will pick very soon.
x x x (Underscoring supplied; Quoted verbatim).
On July 18, 1994,[7] respondent received
another message from Jespersen reading:
Dear Linda,
The sales report for June 1994 did unfortunately
not reach target in C/class but in M/class you
managed very well. Totally 9% below target.
The pre bookings eff. 14 July looks very good
and encouraging and with 2 weeks to go July
should not be a problem. (enclosed)
Please send my regards to all the girls and tell
them to keep up the good work.
Just for reason of clarification. Enclosed to your
action list is a production report for Jan-May
1994. The figures I send to you is only your
long-haul sales and do not include European
sectors. The correct figure for the period will be
436,000 USD in target for long-haul (actual 362
TUSD) and 642 TUSD total with 514 TUSD
achieved.
Please be so kind and inform Bob accordingly.
xxx
On even date, however, petitioner sent
respondent a letter of termination[8] on the
ground of loss of confidence. The letter reads:
This confirms our (Bob Zozobrado and myself)
July 4, 1994 verbal advice to you regarding
Managements decision to terminate your
Services as our GSA Manager for
SCANDINAVIAN AIRLINES SYSTEMs Offline
Operations in the Philippines, thirty (30) days
upon receipt of this Notice, due to our loss of
confidence in your Managerial and Marketing
capabilities. As explained to you by Mr.
Zozobrado and myself, records will show that
under your Management (or lack of it), our SAS-
GSA performance is, as follows:
A. 1993 vs. 1992
Gross Revenue - 29 % shortfall
Operating Expenses - 2% over
Net Cash Flow - 79% shortfall
B. JAN-APR 94 vs. JAN-APR 92
Revenues - 34% shortfall
Operating Expenses - 6% over
Net Cash Flow - 94% shortfall
Several times in the past, we have made you
aware in the need to improve your sales
performance and gain the respect of your staff
which have openly expressed their concern on
their lack of direction under your management.
Even our principal (SAS) had negative
comments about the way you handle urgent
requirements of the Regional Office. SAS was
also alarmed by the aforementioned dismal
overall Performance of APC/SAS. All these
prompted us to decide to replace you as our
SAS GSA Manager to save the situation and our
representation of the SAS-GSA in the
Philippines.
x x x (Quoted verbatim; Emphasis supplies).
Thus spawned the filing by respondent of a
complaint for illegal dismissal against petitioner,
Bondoc, Zozobrado and one Donald Marshall
(the record indicates that he had ceased to be
connected with petitioner when the case was
pending before the Labor Arbiter), with prayer
for damages and attorneys fees. In her
complaint petitioner alleged that Bondoc and
Zozobrado had asked her to tender her
resignation as she was not the person whom
SAS was looking for to handle the position of
Sales Manager[9] but that she refused, hence,
she was terminated by the letter of July 18,
1994 letter.[10]
The Labor Arbiter, after a detailed analysis of
the evidence for both parties, found for
respondent upon the following issues:
1. Whether or not complainant was validly
terminated for cause;
2. Whether or not due process was observed
when complainant was terminated; and
3. Whether or not any of the parties are entitled
to damages,
and disposed in his decision[11] as follows:
WHEREFORE, finding the dismissal of the
complainant Ms Linda Farolan to be without
just cause, effected with malice, ill will and bad
faith, respondent Asian Pacific Chartering
Philippine, Inc. is hereby ordered to pay her
separation pay of Forty Four Thousand Pesos
(P44,000.00), and all the benefit that would
have been due her under the premises. Asian
Pacific Chartering is likewise ordered to pay
complainant moral damages in the amount of
One Million Five Hundred Thousand Pesos
(P1,500,000.00) and exemplary damages in the
amount of Seven Hundred Fifty Thousand Pesos
(P750,000.00), nominal damages of Five
Thousand Pesos (P5,000.00) and the equivalent
of 25% of the total award as attorneys fees.
On appeal, the NLRC, by Decision of March 22,
1999,[12] reversed the Labor Arbiters decision,
it recognizing the right of petitioner as
employer to terminate or dismiss employees
based on loss of trust and confidence, the right
being a management prerogative.
Respondents Motion for Reconsideration of the
NLRC Decision having been denied, she brought
her case to the Court of Appeals via
Certiorari.[13]
By Decision of June 28, 2001,[14] the Court of
Appeals, as stated early on, reversed the NLRC
decision and disposed as follows:
WHEREFORE, premises considered, the
challenged decision dated March 22, 1999 and
the Resolution dated July 16, 1999 of public
respondent National Labor Relations
Commission (Second Division) are hereby set
aside for having been issued with grave abuse
of discretion amounting to lack or in excess of
jurisdiction. The decision dated September 17,
1998 of Labor Arbiter Romulus S. Protacio is
hereby upheld with modifications that the
award of attorneys fees shall only be equivalent
to ten percent (10%) of the total monetary
award. In addition, the award for nominal
damages is deleted for lack of basis.
(Underscoring supplied).
Petitioner filed a motion for reconsideration[15]
of the Court of Appeals decision but it was
denied, hence, the present Petition for Review
on Certiorari[16] anchored on the following
grounds:
I i.e., he must be given opportunity to be heard
THE CA DEFIED THE WELL-ESTABLISHED RULE
THAT APC, AS EMPLOYER, HAS THE
MANAGEMENT PREROGATIVE TO REPLACE A
SALES MANAGER WHOM IT HAS REASONABLE
GROUNDS TO BELIEVE CANNOT EFFECTIVELY
DISCHARGE THE DUTIES DEMANDED BY SUCH
POSITION.
II
THE CA DECISION WAS PREMISED ON LACK OF
EVIDENCE TO DISPROVE RESPONDENTS THEORY
THAT THE POOR SALES PERFORMANCE OF SAS
WAS DUE TO MARKET FORCES BEYOND HER
CONTROL. YET, THE EVIDENCE ON RECORD
SHOWED THE CONTRARY. NO LESS THAN SAS
CONFIRMED THAT RESPONDENT WAS NOT FIT
FOR THE POSITION OF MANAGER AND, THAT
NO SPECIAL CIRCUMSTANCES SUFFICIENT TO
TRIGGER THE SHARP DECLINE IN SALES
SUPERVENED IN THE PHILIPPINE MARKET.
III
IN AWARDING MORAL AND EXEMPLARY
DAMAGES, THE CA ACTED WITH GRAVE ABUSE
OF DISCRETION. EVEN ASSUMING, THAT
RESPONDENTS TERMINATION WAS WITHOUT
JUST CAUSE, APC IS NOT LIABLE TO PAY
DAMAGES [MILLARES vs. NLRC, 328 SCRA 79
(2001)] COROLLARILY, APC IS PRESUMED TO
HAVE ACTED IN GOOD FAITH [GONZALES vs.
NLRC, G.R. NO. 131653-26 March 2001]. THE
CA, HOWEVER, REVERSED THE PRESUMPTION.
IT PRESUMED-WITHOUT ANY EVIDENCE
WHATSOEVER-THAT APC ACTED IN BAD FAITH
IN TERMINATING RESPONDENT WITHOUT DUE
REGARD TO THE HARSH CONSEQUENCES OF
THE TERMINATION
The issue in the main is whether or not
respondents dismissal was legal.
A statement of the requisites for a valid
dismissal of an employee is thus in order, to wit:
(a) the employee must be afforded due process,
and to defend himself; and (b) dismissal must
be for a valid cause as provided in Article 282 of
the Labor Code or any of the authorized causes
under Article 283 and 284 of the same
Code.[17]
As regards the first requisite, the following
substantiated findings of the Labor Arbiter,
which were adopted by the Court of Appeals,
reflect respondents deprivation of due process:
xxx
[W]e find that the manner by which
complainant was dismissed violated the basic
precepts of fairness and due process. First,
without any semblance of, or written authority
whatsoever (TSN dated January 30, 1996, pp. 46
- 48), respondent Zozobrado took over the
functions of complainant. Complainant claims
that she has been told it was upon the will of
respondent Marshall that she be replaced.
Although respondent Zozobrado may have been
merely giving pointers and suggestions to the
staff of complainant, the appearance of
authority was unpleasantly conspicuous. Later,
respondent Bondoc summoned complainant
and told her to tender her resignation or face
termination. Complainant, not having been
given a justifiable ground, refused to resign.
Thereafter, she was finally terminated, without
being afforded the opportunity to be heard and
to present evidence in her defense. She was
never given a written notice stating the
particular acts or omission constituting the
grounds for her dismissal as required by law. x x
x[18]
As regards the second requisite, the rule is
settled that in termination cases, the employer
bears the onus of proving that the dismissal is
for just cause failing which the dismissal is not
justified and the employee is entitled to
reinstatement.[19]
Petitioner claims that respondent failed to live
up to managements expectation in light of her
failure to adopt sales and marketing strategies
to increase sales revenues of SAS, which failure
is reflective of her incompetence and
inefficiency, thus resulting to loss of revenues in
1993 and 1994.
Petitioner adds that had it not been through
Zozobrados efforts, SAS sales revenues could
not have recovered.
Petitioner further claims that Jespersen was the
one who initiated the termination of
respondent because of her dismal performance
in handling its operations.
And petitioner reiterates the principle that the
right to dismiss a managerial employee is a
measure of self-preservation, it citing the cases
of Grand Motor Parts Corp. v. Minister of Labor
et al.,[20] and Buiser et al. v. Legardo.[21]
Before passing on petitioners position, this
Court deems it imperative to discuss the nature
of respondents job as sales manager of
petitioner. It is not disputed that her job
description, and the terms and conditions of her
employment, with the exception of her salary
and allowances, were never reduced to writing.
Recent decisions of this Court distinguish the
treatment of managerial employees from that
of rank and file personnel insofar as the
application of the doctrine of loss of trust and
confidence is concerned.[22]
Thus with respect to rank and file personnel,
loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the
alleged events in question and that mere
uncorroborated assertions and accusations by
the employer will not be sufficient. But as
regards a managerial employee, mere existence
of a basis for believing that such employee has
breached the trust of his employer would
suffice for his dismissal. (Underscoring supplied)
As enunciated in Samson v. NLRC, 330 SCRA
460,
Before one may be properly considered a
managerial employee, all the following
conditions must be met:
(1) Their primary duty consists of the
management of the establishment in which
they are employed or of a department or
subdivision thereof;
(2) They customarily and regularly direct the
work of two or more employees therein;
(3) They have the authority to hire or fire other
employees of lower rank; or their suggestions
and recommendations as to the hiring and firing
and as to the promotion or any other change of
status of other employees are given particular
weight. (Section 2(b), Rule I, Book III of the
Omnibus Rules Implementing the Labor Code,
emphasis supplied).
By respondents claim, her function, as verbally
explained to her by Murray, dealt mainly with
servicing of existing clientele.[23] Bondoc,
however, described respondents functions and
duties as critical.[24]
The following ruling of this Court in Paper
Industries Corp. of the Philippines v.
Laguesma[25] is instructive:
Managerial employees are ranked as Top
Managers, Middle Managers and First Line
Managers. The mere fact that an employee is
designated manager does not ipso facto make
him one-designation should be reconciled with
the actual job description of the employee for it
is the job description that determines the
nature of employment. 24 (Underscoring
supplied).
The absence of a written job description or
prescribed work standards, however, leaves this
Court in the dark.
Even assuming, however, that respondent was a
managerial employee, the stated ground (in the
letter of termination) for her dismissal, loss of
confidence, should have a basis and
determination thereof cannot be left entirely to
the employer.
Loss of trust and confidence to be a valid
ground for an employees dismissal must be
based on a willful breach and founded on
clearly established facts.[26] A breach is willful
if it is done intentionally, knowingly and
purposely, without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.[27]
Respondents detailed REPORT dated September
8, 1993, quoted above, relative to SAS profit
and loss for 1993, which was closely examined
and analyzed by the Labor Arbiter, contains an
explanation of what brought about the decline
in sales revenues. And it contains too a number
of recommended measures on improvement of
sales for the remainder of 1993 and for 1994.
As did the Labor Arbiter and the Court of
Appeals, this Court finds respondents
explanation in her Report behind the decline in
sales revenues as due to market forces beyond
respondents control plausible. In any event,
there is no showing that the decline is reflective
of any willfull breach of duties by respondent.
The two letters sent by SAS to respondent in
1994 in fact negate willful breach of her duties
by respondent. The first (received on May 21,
1994) congratulated her and Zozobrado for
exceeding sale (sic) result in April 1994.
Petitioners argument that respondent could not
invoke these letters in her favor as they were
intended for Zozobrado fails. The letters were
addressed to respondent and Zozobrado. The
second letter (received on July 18, 1994) which
was addressed to respondent, while noting that
the sales for June 1994 did not reach the target
in C/class, noted that in M/class she managed
very well. And it went on to state that [t]he pre-
bookings eff. 14 July looks (sic) very good and
encouraging and with 2 weeks to go July should
not be a problem. In fact it requested
respondent to send . . . regards to all the girls
and tell them to keep up the good work.
While petitioner attributes the improvement of
sales in 1994 to Zozobrado, the fact remains
that respondent was still the Sales Manager up
to July 1994, in charge of those sales meetings
during which pertinent market strategies were
developed and utilized to increase sales.
In another vein, petitioner attributes loss of
confidence to respondents alleged gross
inefficiency and incompetence, it citing, as
earlier stated, the cases of Grand Motor Parts
Corp. (supra) and Buiser et al. (supra).
The Grand Motors case, however, involved a
probationary employee-manager who failed to,
among other things, submit required monthly
reports and violated company policy, clearly
mirroring his insubordination and disrespect to
express instructions of management.
While this Court, in the Buiser case (supra), held
that [f]ailure to observe prescribed standards of
work, or to fulfill reasonable work assignments
due to inefficiency may be just cause for
dismissal, petitioner has neither shown what
standards of work or reasonable work
assignments were prescribed which respondent
failed to observe nor that if she did fail to
observe any such, it was due to inefficiency.
Finally and at all events, given respondents
previous work experience as herein below
indicated, to wit:
Period Company Position
1960-1967 Express Tours, Inc. Clerk-
Reservations &
Ticketing
1968-1970 House of Travel, Inc. Sales Manager
1971-1973 Super Travel Manager,
Administration
1973-1978 American Express, Manager, World
Health
Inc. Organization Account
1978-1983 F.A.R. Travel President & General
Manager Masters, Inc.
1983-1984 Cebu Plaza Director, Convention
1985-1989 American Express, Manager-World
Health
Inc. Organization In-Plant Office
Senior Manager-Asian
Development Bank In-Plant Office
1992-1994 Asia Pacific Sales Manager,
Passenger
Chartering Phil. Inc. & Cargo GSA Operations,
Scandinavian Airlines
System.
(Exhibit A, p. 72, Court of Appeals Rollo),
this Court is not prepared to find for petitioner.
It bears noting that there is no showing that
respondent represented herself as possessed of
the highest degree of skill and care known in
the trade. And it is not disputed that
respondent was approached by petitioners then
Sales Manager Murray, and offered the position
of Sales Manager. She thus could not just be
unceremoniously discharged for loss of
confidence arising from alleged
incompetency[28].
While an employee may be dismissed because
of inefficiency, neglect or carelessness, the law
implies a situation or undertaking by an
employee in entering into a contract of
employment that he is competent to perform
the work undertaken and is possessed of the
requisite skill and knowledge to enable him to
do so, and that he will do the work of the
employer in a careful manner. If he is not
qualified to do the work which he undertakes, if
he is incompetent, unskillful or inefficient, or if
he executes his work in a negligent manner or is
otherwise guilty of neglect of duty, he may
lawfully be discharged before the expiration of
his term of employment.[29]
In fine, this Court finds that respondent had
been illegally dismissed and is accordingly
entitled to reinstatement to her former position
without loss of seniority rights and payment of
backwages.[30] But as the matter of
reinstatement is no longer feasible as the GSA
contract between SAS and petitioner had been
terminated in May of 1996, respondent is, as
correctly held by the Court of Appeals, entitled
to separation pay in an amount equivalent to
one (1) month salary for every year of service, a
fraction of six (6) months to be considered a
year.
Having been hired on December 16, 1992 and
terminated on July 18, 1994, respondent is
considered to have worked for two (2) years for
purposes of computing her separation pay.
Respondent is also entitled to the award of
backwages computed from July 18, 1994 up to
May of 1996.
As regards the award to respondent of moral
and exemplary damages, petitioner assails it in
this wise: The award of damages in so far as the
same was based solely on respondents affidavit
containing general and uncorroborated
statement that she suffered damages as a result
of her termination is null and void [it being]
insufficient to overcome the presumption o
good faith.
The following pertinent portions of petitioners
Affidavit which Affidavit was submitted as part
of her testimony are self-explanatory, however.
xxx
8. On July 4, 1994, Messrs. Bondoc and
Zozobrado summoned me and without any
clear explanation, ordered me to submit a letter
of resignation; they informed me that I was not
the person whom SAS was looking for to handle
the position of Sales Manager; even as I was
deeply hurt, shocked, and humiliated, I declined
to resign from my position as I strongly believed
that the instruction for me to resign was unjust
and violative of my rights; during the
conference, I was never given the chance to
know precisely why I was being asked to resign
or to explain my position; furthermore, I was
informed then that Mr. Donald Marshall was
the one who decided and insisted on my
termination.
9. On July 18, 1994, again without regard to the
basic requirements of due process, I was given a
notice of termination signed by Mr. Bondoc; the
supposed ground for my termination was APCs
alleged loss of confidence in my managerial and
marketing capabilities due to the companys
alleged dismal performance during my term of
office as GSA Sales Manager; once more, I was
never called to answer this charge; a copy of
the notice of termination is hereto attached as
Annex E;
10. The news of my termination circulated at
once in the travel industry and as a result, I was
and still am frequently asked by my friends and
acquaintances in the industry about my
termination from APC to my endless humiliation
and embarrassment; this up to now causes me
endless emotional pain that I even avoid my
friends and acquaintances for fear that they
might look at me differently after my
termination from APC; my reputation as a
professional has been totally shattered by the
unjust act of APC;
11. Because of the extreme social humiliation,
and serious anxiety over my now besmirched
reputation in the travel industry, I decided to
seek legal advise; on July 21, 1994, my counsel
wrote APC demanding for my immediate
reinstatement without loss of seniority rights
and for damages; a copy of the letter-demand is
hereto attached as Annex F;
x x x.
They need no amplification and/or
corroboration. Indeed, petitioner was deprived
of due process and denied basic precepts of
fairness when she was terminated. Her
resultant sufferings thus entitle her to an award
of moral damages.
To warrant award of moral damages, it must be
shown that the dismissal of the employee was
attended to by bad faith, or constituted an act
opposite to labor, or was done in a manner
contrary to morals, good customs or public
policy.[31]
Award of moral and exemplary damages for an
illegally dismissed employee is proper where
the employee had been harassed and arbitrarily
terminated by the employer.32
In determining the amount of moral damages
recoverable, however, the business, social and
financial position of the offended party and the
business or financial position of the offender
are taken into account.33 Given petitioners
business position or standing before and at the
time of termination and petitioners business
and financial position, this Court reduces the
amount of moral damages awarded to
P500,000.00 which it finds reasonable. The
amount of exemplary damages awarded is
accordingly reduced too to P250,000.00.

WHEREFORE, the decision of the Court of

Appeals is hereby AFFIRMED with the
MODIFICATION that the amount of moral
damages and exemplary damages awarded to
respondent, Ma. Linda R. Farolan, is hereby
reduced to Five Hundred Thousand
(P500,000.00) Pesos and Two Hundred Fifty
Thousand (P250,000.00) Pesos, respectively.

Costs against petitioner.

SO ORDERED.

Panganiban, (Acting Chairman), Sandoval-

Gutierrez and Corona, JJ., concur.
Puno, (Chairman), J., on official leave.

FIRST DIVISION
G.R. No. 159577 May 3, 2006
CHARLITO PEÑARANDA, Petitioner,
vs.
BAGANGA PLYWOOD CORPORATION and
HUDSON CHUA, Respondents.
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the
managerial staff are exempted from the
provisions of the Labor Code on labor
standards. Since petitioner belongs to this class
of employees, he is not entitled to overtime pay
and premium pay for working on rest days.
The Case
Before us is a Petition for Review1 under Rule
45 of the Rules of Court, assailing the January
27, 20032 and July 4, 20033 Resolutions of the
Court of Appeals (CA) in CA-GR SP No. 74358.
The earlier Resolution disposed as follows:
"WHEREFORE, premises considered, the instant
petition is hereby DISMISSED."4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National
Labor Relations Commission (NLRC) challenged
in the CA disposed as follows:
"WHEREFORE, premises considered, the
decision of the Labor Arbiter below awarding
overtime pay and premium pay for rest day to
complainant is hereby REVERSED and SET
ASIDE, and the complaint in the above-entitled
case dismissed for lack of merit.5
The Facts
Sometime in June 1999, Petitioner Charlito
Peñaranda was hired as an employee of
Baganga Plywood Corporation (BPC) to take
charge of the operations and maintenance of its
steam plant boiler.6 In May 2001, Peñaranda
filed a Complaint for illegal dismissal with
money claims against BPC and its general
manager, Hudson Chua, before the NLRC.7
After the parties failed to settle amicably, the
labor arbiter8 directed the parties to file their
position papers and submit supporting
documents.9 Their respective allegations are
summarized by the labor arbiter as follows:
"[Peñaranda] through counsel in his position
paper alleges that he was employed by
respondent [Baganga] on March 15, 1999 with a
monthly salary of P5,000.00 as Foreman/Boiler
Head/Shift Engineer until he was illegally
terminated on December 19, 2000. Further,
[he] alleges that his services [were] terminated
without the benefit of due process and valid
grounds in accordance with law. Furthermore,
he was not paid his overtime pay, premium pay
for working during holidays/rest days, night
shift differentials and finally claims for payment
of damages and attorney’s fees having been
forced to litigate the present complaint.
"Upon the other hand, respondent [BPC] is a
domestic corporation duly organized and
existing under Philippine laws and is
represented herein by its General Manager
HUDSON CHUA, [the] individual respondent.
Respondents thru counsel allege that
complainant’s separation from service was
done pursuant to Art. 283 of the Labor Code.
The respondent [BPC] was on temporary
closure due to repair and general maintenance
and it applied for clearance with the
Department of Labor and Employment,
Regional Office No. XI to shut down and to
dismiss employees (par. 2 position paper). And
due to the insistence of herein complainant he
was paid his separation benefits (Annexes C and
D, ibid). Consequently, when respondent [BPC]
partially reopened in January 2001, [Peñaranda]
failed to reapply. Hence, he was not terminated
from employment much less illegally. He opted
to severe employment when he insisted
payment of his separation benefits.
Furthermore, being a managerial employee he
is not entitled to overtime pay and if ever he
rendered services beyond the normal hours of
work, [there] was no office order/or
authorization for him to do so. Finally,
respondents allege that the claim for damages
has no legal and factual basis and that the
instant complaint must necessarily fail for lack
of merit."10
The labor arbiter ruled that there was no illegal
dismissal and that petitioner’s Complaint was
premature because he was still employed by
BPC.11 The temporary closure of BPC’s plant
did not terminate his employment, hence, he
need not reapply when the plant reopened.
According to the labor arbiter, petitioner’s
money claims for illegal dismissal was also
weakened by his quitclaim and admission
during the clarificatory conference that he
accepted separation benefits, sick and vacation
leave conversions and thirteenth month pay.12
Nevertheless, the labor arbiter found petitioner
entitled to overtime pay, premium pay for
working on rest days, and attorney’s fees in the
total amount of P21,257.98.13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which
deleted the award of overtime pay and
premium pay for working on rest days.
According to the Commission, petitioner was
not entitled to these awards because he was a
managerial employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA
dismissed Peñaranda’s Petition for Certiorari.
The appellate court held that he failed to: 1)
attach copies of the pleadings submitted before
the labor arbiter and NLRC; and 2) explain why
the filing and service of the Petition was not
done by personal service.15
In its later Resolution dated July 4, 2003, the CA
denied reconsideration on the ground that
petitioner still failed to submit the pleadings
filed before the NLRC.16
Hence this Petition.17
The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of
discretion amounting to excess or lack of
jurisdiction when it entertained the APPEAL of
the respondent[s] despite the lapse of the
mandatory period of TEN DAYS.1avvphil.net
"The [NLRC] committed grave abuse of
discretion amounting to an excess or lack of
jurisdiction when it rendered the assailed
RESOLUTIONS dated May 8, 2002 and AUGUST
16, 2002 REVERSING AND SETTING ASIDE the
FACTUAL AND LEGAL FINDINGS of the [labor
arbiter] with respect to the following:
"I. The finding of the [labor arbiter] that
[Peñaranda] is a regular, common employee
entitled to monetary benefits under Art. 82 [of
the Labor Code].
"II. The finding that [Peñaranda] is entitled to
the payment of OVERTIME PAY and OTHER
MONETARY BENEFITS."18
The Court’s Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Peñaranda’s Petition on
purely technical grounds, particularly with
regard to the failure to submit supporting
documents.
In Atillo v. Bombay,19 the Court held that the
crucial issue is whether the documents
accompanying the petition before the CA
sufficiently supported the allegations therein.
Citing this case, Piglas-Kamao v. NLRC20 stayed
the dismissal of an appeal in the exercise of its
equity jurisdiction to order the adjudication on
the merits.
The Petition filed with the CA shows a prima
facie case. Petitioner attached his evidence to
challenge the finding that he was a managerial
employee.21 In his Motion for Reconsideration,
petitioner also submitted the pleadings before
the labor arbiter in an attempt to comply with
the CA rules.22 Evidently, the CA could have
ruled on the Petition on the basis of these
attachments. Petitioner should be deemed in
substantial compliance with the procedural
requirements.
Under these extenuating circumstances, the
Court does not hesitate to grant liberality in
favor of petitioner and to tackle his substantive
arguments in the present case. Rules of
procedure must be adopted to help promote,
not frustrate, substantial justice.23 The Court
frowns upon the practice of dismissing cases
purely on procedural grounds.24 Considering
that there was substantial compliance,25 a
liberal interpretation of procedural rules in this
labor case is more in keeping with the
constitutional mandate to secure social
justice.26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an
appeal from the decision of the labor arbiter
should be filed within 10 days from receipt
thereof.27
Petitioner’s claim that respondents filed their
appeal beyond the required period is not
substantiated. In the pleadings before us,
petitioner fails to indicate when respondents
received the Decision of the labor arbiter.
Neither did the petitioner attach a copy of the
challenged appeal. Thus, this Court has no
means to determine from the records when the
10-day period commenced and terminated.
Since petitioner utterly failed to support his
claim that respondents’ appeal was filed out of
time, we need not belabor that point. The
parties alleging have the burden of
substantiating their allegations.28
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial
employee, and therefore, entitled to the award
granted by the labor arbiter.
Article 82 of the Labor Code exempts
managerial employees from the coverage of
labor standards. Labor standards provide the
working conditions of employees, including
entitlement to overtime pay and premium pay
for working on rest days.29 Under this
provision, managerial employees are "those
whose primary duty consists of the
management of the establishment in which
they are employed or of a department or
subdivision."30
The Implementing Rules of the Labor Code state
that managerial employees are those who meet
the following conditions:
"(1) Their primary duty consists of the
management of the establishment in which
they are employed or of a department or
subdivision thereof;
"(2) They customarily and regularly direct the
work of two or more employees therein;
"(3) They have the authority to hire or fire other
employees of lower rank; or their suggestions
and recommendations as to the hiring and firing
and as to the promotion or any other change of
status of other employees are given particular
weight."31
The Court disagrees with the NLRC’s finding that
petitioner was a managerial employee.
However, petitioner was a member of the
managerial staff, which also takes him out of
the coverage of labor standards. Like
managerial employees, officers and members of
the managerial staff are not entitled to the
provisions of law on labor standards.32 The
Implementing Rules of the Labor Code define
members of a managerial staff as those with
the following duties and responsibilities:
"(1) The primary duty consists of the
performance of work directly related to
management policies of the employer;
"(2) Customarily and regularly exercise
discretion and independent judgment;
"(3) (i) Regularly and directly assist a proprietor
or a managerial employee whose primary duty
consists of the management of the
establishment in which he is employed or
subdivision thereof; or (ii) execute under
general supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (iii) execute under
general supervision special assignments and
tasks; and
"(4) who do not devote more than 20 percent of
their hours worked in a workweek to activities
which are not directly and closely related to the
performance of the work described in
paragraphs (1), (2), and (3) above."33
As shift engineer, petitioner’s duties and
responsibilities were as follows:
"1. To supply the required and continuous
steam to all consuming units at minimum cost.
"2. To supervise, check and monitor manpower
workmanship as well as operation of boiler and
accessories.
"3. To evaluate performance of machinery and
manpower.
"4. To follow-up supply of waste and other
materials for fuel.
"5. To train new employees for effective and
safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as:
promotion, or disciplinary action.
"8. To check water from the boiler, feedwater
and softener, regenerate softener if beyond
hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the
superior from time to time."34
The foregoing enumeration, particularly items
1, 2, 3, 5 and 7 illustrates that petitioner was a
member of the managerial staff. His duties and
responsibilities conform to the definition of a
member of a managerial staff under the
Implementing Rules.
Petitioner supervised the engineering section of
the steam plant boiler. His work involved
overseeing the operation of the machines and
the performance of the workers in the
engineering section. This work necessarily
required the use of discretion and independent
judgment to ensure the proper functioning of
the steam plant boiler. As supervisor, petitioner
is deemed a member of the managerial staff.35
Noteworthy, even petitioner admitted that he
was a supervisor. In his Position Paper, he
stated that he was the foreman responsible for
the operation of the boiler.36 The term
foreman implies that he was the representative
of management over the workers and the
operation of the department.37 Petitioner’s
evidence also showed that he was the
supervisor of the steam plant.38 His
classification as supervisor is further evident
from the manner his salary was paid. He
belonged to the 10% of respondent’s 354
employees who were paid on a monthly basis;
the others were paid only on a daily basis.39

On the basis of the foregoing, the Court finds no

justification to award overtime pay and
premium pay for rest days to petitioner.

WHEREFORE, the Petition is DENIED. Costs

against petitioner.

SO ORDERED.

ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice MA. ALICIA AUSTRIA-
MARTINEZ
Asscociate Justice
ROMEO J. CALLEJO, SR.
Associate Justice MINITA V. CHICO-
NAZARIO
Asscociate Justice
CERTIFICATION

Pursuant to Section 13, Article VIII of the

Constitution, I certify that the conclusions in the
above Decision were reached in consultation
before the case was assigned to the writer of
the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice
SECOND DIVISION
[G.R. No. 112574. October 8, 1998]
MERCIDAR FISHING CORPORATION
represented by its President DOMINGO B.
NAVAL, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and FERMIN AGAO,
JR., respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the
decision, dated August 30, 1993, of the National
Labor Relations Commission dismissing the
appeal of petitioner Mercidar Fishing
Corporation from the decision of the Labor
Arbiter in NLRC NCR Case No. 09-05084-90, as
well as the resolution dated October 25, 1993,
of the NLRC denying reconsideration.
This case originated from a complaint filed on
September 20, 1990 by private respondent
Fermin Agao, Jr. against petitioner for illegal
dismissal, violation of P.D. No. 851, and non-
payment of five days service incentive leave for
1990. Private respondent had been employed
as a bodegero or ships quartermaster on
February 12, 1988. He complained that he had
been constructively dismissed by petitioner
when the latter refused him assignments
aboard its boats after he had reported to work
on May 28, 1990.[1]
Private respondent alleged that he had been
sick and thus allowed to go on leave without
pay for one month from April 28, 1990 but that
when he reported to work at the end of such
period with a health clearance, he was told to
come back another time as he could not be
reinstated immediately. Thereafter, petitioner
refused to give him work. For this reason,
private respondent asked for a certificate of
employment from petitioner on September 6,
1990. However, when he came back for the
certificate on September 10, petitioner refused
to issue the certificate unless he submitted his
resignation. Since private respondent refused to
submit such letter unless he was given
separation pay, petitioner prevented him from
entering the premises.[2]
Petitioner, on the other hand, alleged that it
was private respondent who actually
abandoned his work. It claimed that the latter
failed to report for work after his leave had
expired and was, in fact, absent without leave
for three months until August 28, 1998.
Petitioner further claims that, nonetheless, it
assigned private respondent to another vessel,
but the latter was left behind on September 1,
1990. Thereafter, private respondent asked for
a certificate of employment on September 6 on
the pretext that he was applying to another
fishing company. On September 10, 1990, he
refused to get the certificate and resign unless
he was given separation pay.[3]
On February 18, 1992, Labor Arbiter Arthur L.
Amansec rendered a decision disposing of the
case as follows:
ACCORDINGLY, respondents are ordered to
reinstate complainant with backwages, pay him
his 13th month pay and incentive leave pay for
1990.
All other claims are dismissed.
SO ORDERED.
Petitioner appealed to the NLRC which, on
August 30, 1993, dismissed the appeal for lack
of merit. The NLRC dismissed petitioners claim
that it cannot be held liable for service incentive
leave pay by fishermen in its employ as the
latter supposedly are field personnel and thus
not entitled to such pay under the Labor
Code.[4]
The NLRC likewise denied petitioners motion for
reconsideration of its decision in its order dated
October 25, 1993.
Hence, this petition. Petitioner contends:
I

THE RESPONDENT COMMISSION PALPABLY
ERRED IN RULING AND SUSTAINING THE VIEW
THAT FISHING CREW MEMBERS, LIKE FERMIN
AGAO, JR., CANNOT BE CLASSIFIED AS FIELD
PERSONNEL UNDER ARTICLE 82 OF THE LABOR
CODE.
II
THE RESPONDENT COMMISSION ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT UPHELD THE
FINDINGS OF THE LABOR ARBITER THAT HEREIN
PETITIONER HAD CONSTRUCTIVELY DISMISSED
FERMIN AGAO, JR., FROM EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
ART. 82. Coverage. - The provisions of this Title
[Working Conditions and Rest Periods] shall
apply to employees in all establishments and
undertakings whether for profit or not, but not
to government 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.
..........
Field personnel shall refer to non-agricultural
employees who regularly perform their duties
away from the principal place of business or
branch office of the employer and whose actual
hours of work in the field cannot be determined
with reasonable certainty.
Petitioner argues essentially that since the work
of private respondent is performed away from
its principal place of business, it has no way of
verifying his actual hours of work on the vessel.
It contends that private respondent and other
fishermen in its employ should be classified as
field personnel who have no statutory right to
service incentive leave pay.
In the case of Union of Filipro Employees (UFE)
v. Vicar,[5] this Court explained the meaning of
the phrase whose actual hours of work in the
field cannot be determined with reasonable
certainty in Art. 82 of the Labor Code, as
follows:
Moreover, the requirement that actual hours of
work in the field cannot be determined with
reasonable certainty must be read in
conjunction with Rule IV, Book III of the
Implementing Rules which provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all
employees except:
..........
(e) Field personnel and other employees whose
time and performance is unsupervised by the
employer xxx (Italics supplied)
While contending that such rule added another
element not found in the law (Rollo, p. 13), the
petitioner nevertheless attempted to show that
its affected members are not covered by the
abovementioned rule. The petitioner asserts
that the companys sales personnel are strictly
supervised as shown by the SOD (Supervisor of
the Day) schedule and the company circular
dated March 15, 1984 (Annexes 2 and 3, Rollo,
pp. 53-55).
Contrary to the contention of the petitioner,
the Court finds that the aforementioned rule
did not add another element to the Labor Code
definition of field personnel. The clause whose
time and performance is unsupervised by the
employer did not amplify but merely
interpreted and expounded the clause whose
actual hours of work in the field cannot be
determined with reasonable certainty. The
former clause is still within the scope and
purview of Article 82 which defines field
personnel. Hence, in deciding whether or not an
employees actual working hours in the field can
be determined with reasonable certainty, query
must be made as to whether or not such
employees time and performance is constantly
supervised by the employer.[6]
Accordingly, it was held in the aforementioned
case that salesmen of Nestle Philippines, Inc.
were field personnel:
It is undisputed that these sales personnel start
their field work at 8:00 a.m. after having
reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are
Makati-based.
The petitioner maintains that the period
between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnels working hours
which can be determined with reasonable
certainty.
The Court does not agree. The law requires that
the actual hours of work in the field be
reasonably ascertained. The company has no
way of determining whether or not these sales
personnel, even if they report to the office
before 8:00 a.m. prior to field work and come
back at 4:30 p.m., really spend the hours in
between in actual field work.[7]
In contrast, in the case at bar, during the entire
course of their fishing voyage, fishermen
employed by petitioner have no choice but to
remain on board its vessel. Although they
perform non-agricultural work away from
petitioners business offices, the fact remains
that throughout the duration of their work they
are under the effective control and supervision
of petitioner through the vessels patron or
master as the NLRC correctly held.[8]
Neither did petitioner gravely abuse its
discretion in ruling that private respondent had
constructively been dismissed by petitioner.
Such factual finding of both the NLRC and the
Labor Arbiter is based not only on the pleadings
of the parties but also on a medical certificate
of fitness which, contrary to petitioners claim,
private respondent presented when he
reported to work on May 28, 1990.[9] As the
NLRC held:
Anent grounds (a) and (b) of the appeal, the
respondent, in a nutshell, would like us to
believe that the Arbiter abused his discretion
(or seriously erred in his findings of facts) in
giving credence to the factual version of the
complainant. But it is settled that (W)hen
confronted with conflicting versions of factual
matters, the Labor Arbiter has the discretion to
determine which party deserves credence on
the basis of evidence received. [Gelmart
Industries (Phils.), Inc. vs. Leogardo, 155 SCRA
403, 409, L-70544, November 5, 1987]. And
besides, it is settled in this jurisdiction that to
constitute abandonment of position, there must
be concurrence of the intention to abandon and
some overt acts from which it may be inferred
that the employee concerned has no more
interest in working (Dagupan Bus Co., Inc. vs.
NLRC, 191 SCRA 328), and that the filing of the
complaint which asked for reinstatement plus
backwages (Record, p. 20) is inconsistent with
respondents defense of abandonment (Hua Bee
Shirt Factory vs. NLRC, 188 SCRA 586).[10]
It is trite to say that the factual findings of
quasi-judicial bodies are generally binding as
long as they are supported substantially by
evidence in the record of the case.[11] This is
especially so where, as here, the agency and its
subordinate who heard the case in the first
instance are in full agreement as to the
facts.[12]
As regards the labor arbiters award which was
affirmed by respondent NLRC, there is no
reason to apply the rule that reinstatement may
not be ordered if, as a result of the case
between the parties, their relation is
strained.[13] Even at this late stage of this
dispute, petitioner continues to reiterate its
offer to reinstate private respondent.[14]
WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Regalado, Acting C.J., (Chairman), Melo, Puno,

and Martinez, JJ., concur.
SECOND DIVISION
[G.R. No. 156367. May 16, 2005]
AUTO BUS TRANSPORT SYSTEMS, INC.,
petitioner, vs. ANTONIO BAUTISTA,
respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari
assailing the Decision[1] and Resolution[2] of
the Court of Appeals affirming the Decision[3]
of the National Labor Relations Commission
(NLRC). The NLRC ruling modified the Decision
of the Labor Arbiter (finding respondent
entitled to the award of 13th month pay and
service incentive leave pay) by deleting the
award of 13th month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio
Bautista has been employed by petitioner Auto
Bus Transport Systems, Inc. (Autobus), as
driver-conductor with travel routes Manila-
Tuguegarao via Baguio, Baguio- Tuguegarao via
Manila and Manila-Tabuk via Baguio.
Respondent was paid on commission basis,
seven percent (7%) of the total gross income
per travel, on a twice a month basis.
On 03 January 2000, while respondent was
driving Autobus No. 114 along Sta. Fe, Nueva
Vizcaya, the bus he was driving accidentally
bumped the rear portion of Autobus No. 124, as
the latter vehicle suddenly stopped at a sharp
curve without giving any warning.
Respondent averred that the accident
happened because he was compelled by the
management to go back to Roxas, Isabela,
although he had not slept for almost twenty-
four (24) hours, as he had just arrived in Manila
from Roxas, Isabela. Respondent further alleged
that he was not allowed to work until he fully
paid the amount of P75,551.50, representing
thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondents
pleas for reconsideration, the same was ignored
by management. After a month, management
sent him a letter of termination.
Thus, on 02 February 2000, respondent
instituted a Complaint for Illegal Dismissal with
Money Claims for nonpayment of 13th month
pay and service incentive leave pay against
Autobus.
Petitioner, on the other hand, maintained that
respondents employment was replete with
offenses involving reckless imprudence, gross
negligence, and dishonesty. To support its
claim, petitioner presented copies of letters,
memos, irregularity reports, and warrants of
arrest pertaining to several incidents wherein
respondent was involved.
Furthermore, petitioner avers that in the
exercise of its management prerogative,
respondents employment was terminated only
after the latter was provided with an
opportunity to explain his side regarding the
accident on 03 January 2000.
On 29 September 2000, based on the pleadings
and supporting evidence presented by the
parties, Labor Arbiter Monroe C. Tabingan
promulgated a Decision,[4] the dispositive
portion of which reads:
WHEREFORE, all premises considered, it is
hereby found that the complaint for Illegal
Dismissal has no leg to stand on. It is hereby
ordered DISMISSED, as it is hereby DISMISSED.
However, still based on the above-discussed
premises, the respondent must pay to the
complainant the following:
a. his 13th month pay from the date of his
hiring to the date of his dismissal, presently
computed at P78,117.87;
b. his service incentive leave pay for all the
years he had been in service with the
respondent, presently computed at P13,788.05.

All other claims of both complainant and
respondent are hereby dismissed for lack of
merit.[5]
Not satisfied with the decision of the Labor
Arbiter, petitioner appealed the decision to the
NLRC which rendered its decision on 28
September 2001, the decretal portion of which
reads:
[T]he Rules and Regulations Implementing
Presidential Decree No. 851, particularly Sec. 3
provides:
Section 3. Employers covered. The Decree shall
apply to all employers except to:
xxx xxx xxx
e) employers of those who are paid on purely
commission, boundary, or task basis,
performing a specific work, irrespective of the
time consumed in the performance thereof.
xxx.
Records show that complainant, in his position
paper, admitted that he was paid on a
commission basis.
In view of the foregoing, we deem it just and
equitable to modify the assailed Decision by
deleting the award of 13th month pay to the
complainant.
WHEREFORE, the Decision dated 29 September
2000 is MODIFIED by deleting the award of 13th
month pay. The other findings are
AFFIRMED.[6]
In other words, the award of service incentive
leave pay was maintained. Petitioner thus
sought a reconsideration of this aspect, which
was subsequently denied in a Resolution by the
NLRC dated 31 October 2001.
Displeased with only the partial grant of its
appeal to the NLRC, petitioner sought the
review of said decision with the Court of
Appeals which was subsequently denied by the
appellate court in a Decision dated 06 May
2002, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition
is DISMISSED for lack of merit; and the assailed
Decision of respondent Commission in NLRC
NCR CA No. 026584-2000 is hereby AFFIRMED
in toto. No costs.[7]
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to
service incentive leave;
2. Whether or not the three (3)-year
prescriptive period provided under Article 291
of the Labor Code, as amended, is applicable to
respondents claim of service incentive leave
pay.
RULING OF THE COURT
The disposition of the first issue revolves
around the proper interpretation of Article 95
of the Labor Code vis--vis Section 1(D), Rule V,
Book III of the Implementing Rules and
Regulations of the Labor Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least
one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all
employees except:
(d) Field personnel and other employees whose
performance is unsupervised by the employer
including those who are engaged on task or
contract basis, purely commission basis, or
those who are paid in a fixed amount for
performing work irrespective of the time
consumed in the performance thereof; . . .
A careful perusal of said provisions of law will
result in the conclusion that the grant of service
incentive leave has been delimited by the
Implementing Rules and Regulations of the
Labor Code to apply only to those employees
not explicitly excluded by Section 1 of Rule V.
According to the Implementing Rules, Service
Incentive Leave shall not apply to employees
classified as field personnel. The phrase other
employees whose performance is unsupervised
by the employer must not be understood as a
separate classification of employees to which
service incentive leave shall not be granted.
Rather, it serves as an amplification of the
interpretation of the definition of field
personnel under the Labor Code as those whose
actual hours of work in the field cannot be
determined with reasonable certainty.[8]
The same is true with respect to the phrase
those who are engaged on task or contract
basis, purely commission basis. Said phrase
should be related with field personnel, applying
the rule on ejusdem generis that general and
unlimited terms are restrained and limited by
the particular terms that they follow.[9] Hence,
employees engaged on task or contract basis or
paid on purely commission basis are not
automatically exempted from the grant of
service incentive leave, unless, they fall under
the classification of field personnel.
Therefore, petitioners contention that
respondent is not entitled to the grant of
service incentive leave just because he was paid
on purely commission basis is misplaced. What
must be ascertained in order to resolve the
issue of propriety of the grant of service
incentive leave to respondent is whether or not
he is a field personnel.
According to Article 82 of the Labor Code, field
personnel shall refer to non-agricultural
employees who regularly perform their duties
away from the principal place of business or
branch office of the employer and whose actual
hours of work in the field cannot be determined
with reasonable certainty. This definition is
further elaborated in the Bureau of Working
Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial
Employees Association[10] which states that:
As a general rule, [field personnel] are those
whose performance of their job/service is not
supervised by the employer or his
representative, the workplace being away from
the principal office and whose hours and days
of work cannot be determined with reasonable
certainty; hence, they are paid specific amount
for rendering specific service or performing
specific work. If required to be at specific places
at specific times, employees including drivers
cannot be said to be field personnel despite the
fact that they are performing work away from
the principal office of the employee. [Emphasis
ours]
To this discussion by the BWC, the petitioner
differs and postulates that under said advisory
opinion, no employee would ever be considered
a field personnel because every employer, in
one way or another, exercises control over his
employees. Petitioner further argues that the
only criterion that should be considered is the
nature of work of the employee in that, if the
employees job requires that he works away
from the principal office like that of a
messenger or a bus driver, then he is inevitably
a field personnel.
We are not persuaded. At this point, it is
necessary to stress that the definition of a field
personnel is not merely concerned with the
location where the employee regularly
performs his duties but also with the fact that
the employees performance is unsupervised by
the employer. As discussed above, field
personnel are those who regularly perform
their duties away from the principal place of
business of the employer and whose actual
hours of work in the field cannot be determined
with reasonable certainty. Thus, in order to
conclude whether an employee is a field
employee, it is also necessary to ascertain if
actual hours of work in the field can be
determined with reasonable certainty by the
employer. In so doing, an inquiry must be made
as to whether or not the employees time and
performance are constantly supervised by the
employer.
As observed by the Labor Arbiter and concurred
in by the Court of Appeals:
It is of judicial notice that along the routes that
are plied by these bus companies, there are its
inspectors assigned at strategic places who
board the bus and inspect the passengers, the
punched tickets, and the conductors reports.
There is also the mandatory once-a-week car
barn or shop day, where the bus is regularly
checked as to its mechanical, electrical, and
hydraulic aspects, whether or not there are
problems thereon as reported by the driver
and/or conductor. They too, must be at specific
place as [sic] specified time, as they generally
observe prompt departure and arrival from
their point of origin to their point of
destination. In each and every depot, there is
always the Dispatcher whose function is
precisely to see to it that the bus and its crew
leave the premises at specific times and arrive
at the estimated proper time. These, are
present in the case at bar. The driver, the
complainant herein, was therefore under
constant supervision while in the performance
of this work. He cannot be considered a field
personnel.[11]
We agree in the above disquisition. Therefore,
as correctly concluded by the appellate court,
respondent is not a field personnel but a regular
employee who performs tasks usually necessary
and desirable to the usual trade of petitioners
business. Accordingly, respondent is entitled to
the grant of service incentive leave.
The question now that must be addressed is up
to what amount of service incentive leave pay
respondent is entitled to.
The response to this query inevitably leads us to
the correlative issue of whether or not the
three (3)-year prescriptive period under Article
291 of the Labor Code is applicable to
respondents claim of service incentive leave
pay.
Article 291 of the Labor Code states that all
money claims arising from employer-employee
relationship shall be filed within three (3) years
from the time the cause of action accrued;
otherwise, they shall be forever barred.
In the application of this section of the Labor
Code, the pivotal question to be answered is
when does the cause of action for money claims
accrue in order to determine the reckoning date
of the three-year prescriptive period.
It is settled jurisprudence that a cause of action
has three elements, to wit, (1) a right in favor of
the plaintiff by whatever means and under
whatever law it arises or is created; (2) an
obligation on the part of the named defendant
to respect or not to violate such right; and (3)
an act or omission on the part of such
defendant violative of the right of the plaintiff
or constituting a breach of the obligation of the
defendant to the plaintiff.[12]
To properly construe Article 291 of the Labor
Code, it is essential to ascertain the time when
the third element of a cause of action
transpired. Stated differently, in the
computation of the three-year prescriptive
period, a determination must be made as to the
period when the act constituting a violation of
the workers right to the benefits being claimed
was committed. For if the cause of action
accrued more than three (3) years before the
filing of the money claim, said cause of action
has already prescribed in accordance with
Article 291.[13]
Consequently, in cases of nonpayment of
allowances and other monetary benefits, if it is
established that the benefits being claimed
have been withheld from the employee for a
period longer than three (3) years, the amount
pertaining to the period beyond the three-year
prescriptive period is therefore barred by
prescription. The amount that can only be
demanded by the aggrieved employee shall be
limited to the amount of the benefits withheld
within three (3) years before the filing of the
complaint.[14]
It is essential at this point, however, to
recognize that the service incentive leave is a
curious animal in relation to other benefits
granted by the law to every employee. In the
case of service incentive leave, the employee
may choose to either use his leave credits or
commute it to its monetary equivalent if not
exhausted at the end of the year.[15]
Furthermore, if the employee entitled to service
incentive leave does not use or commute the
same, he is entitled upon his resignation or
separation from work to the commutation of
his accrued service incentive leave. As
enunciated by the Court in Fernandez v.
NLRC:[16]
The clear policy of the Labor Code is to grant
service incentive leave pay to workers in all
establishments, subject to a few exceptions.
Section 2, Rule V, Book III of the Implementing
Rules and Regulations provides that [e]very
employee who has rendered at least one year
of service shall be entitled to a yearly service
incentive leave of five days with pay. Service
incentive leave is a right which accrues to every
employee who has served within 12 months,
whether continuous or broken reckoned from
the date the employee started working,
including authorized absences and paid regular
holidays unless the working days in the
establishment as a matter of practice or policy,
or that provided in the employment contracts,
is less than 12 months, in which case said
period shall be considered as one year. It is also
commutable to its money equivalent if not used
or exhausted at the end of the year. In other
words, an employee who has served for one
year is entitled to it. He may use it as leave days
or he may collect its monetary value. To limit
the award to three years, as the solicitor
general recommends, is to unduly restrict such
right.[17] [Italics supplied]
Correspondingly, it can be conscientiously
deduced that the cause of action of an entitled
employee to claim his service incentive leave
pay accrues from the moment the employer
refuses to remunerate its monetary equivalent
if the employee did not make use of said leave
credits but instead chose to avail of its
commutation. Accordingly, if the employee
wishes to accumulate his leave credits and opts
for its commutation upon his resignation or
separation from employment, his cause of
action to claim the whole amount of his
accumulated service incentive leave shall arise
when the employer fails to pay such amount at
the time of his resignation or separation from
employment.
Applying Article 291 of the Labor Code in light
of this peculiarity of the service incentive leave,
we can conclude that the three (3)-year
prescriptive period commences, not at the end
of the year when the employee becomes
entitled to the commutation of his service
incentive leave, but from the time when the
employer refuses to pay its monetary
equivalent after demand of commutation or
upon termination of the employees services, as
the case may be.
The above construal of Art. 291, vis--vis the
rules on service incentive leave, is in keeping
with the rudimentary principle that in the
implementation and interpretation of the
provisions of the Labor Code and its
implementing regulations, the workingmans
welfare should be the primordial and
paramount consideration.[18] The policy is to
extend the applicability of the decree to a
greater number of employees who can avail of
the benefits under the law, which is in
consonance with the avowed policy of the State
to give maximum aid and protection to
labor.[19]
In the case at bar, respondent had not made
use of his service incentive leave nor demanded
for its commutation until his employment was
terminated by petitioner. Neither did petitioner
compensate his accumulated service incentive
leave pay at the time of his dismissal. It was
only upon his filing of a complaint for illegal
dismissal, one month from the time of his
dismissal, that respondent demanded from his
former employer commutation of his
accumulated leave credits. His cause of action
to claim the payment of his accumulated service
incentive leave thus accrued from the time
when his employer dismissed him and failed to
pay his accumulated leave credits.

Therefore, the prescriptive period with respect

to his claim for service incentive leave pay only
commenced from the time the employer failed
to compensate his accumulated service
incentive leave pay at the time of his dismissal.
Since respondent had filed his money claim
after only one month from the time of his
dismissal, necessarily, his money claim was filed
within the prescriptive period provided for by
Article 291 of the Labor Code.

WHEREFORE, premises considered, the instant

petition is hereby DENIED. The assailed Decision
of the Court of Appeals in CA-G.R. SP. No. 68395
is hereby AFFIRMED. No Costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr.,

and Tinga, JJ., concur.
FIRST DIVISION
[G. R. No. 123938. May 21, 1998]
LABOR CONGRESS OF THE PHILIPPINES (LCP)
vs. NATIONAL LABOR RELATIONS
COMMISSION, EMPIRE FOOD PRODUCTS, its
Proprietor/President & Manager, MR.
GONZALO KEHYENG and MRS. EVELYN
KEHYENG, respondents.
DECISION
DAVIDE, JR., J.:
In this special civil action for certiorari under
Rule 65, petitioners seek to reverse the 29
March 1995 resolution[1] of the National Labor
Relations Commission (NLRC) in NLRC RAB III
Case No. 01-1964-91 which affirmed the
Decision[2] of Labor Arbiter Ariel C. Santos
dismissing their complaint for utter lack of
merit.
The antecedents of this case as summarized by
the Office of the Solicitor General in its
Manifestation and Motion in Lieu of
Comment,[3] are as follows:
The 99 persons named as petitioners in this
proceeding were rank-and-file employees of
respondent Empire Food Products, which hired
them on various dates (Paragraph 1, Annex A of
Petition, Annex B; Page 2, Annex F of Petition).
Petitioners filed against private respondents a
complaint for payment of money claim[s] and
for violation of labor standard[s] laws (NLRC
Case No. RAB-111-10-1817-90). They also filed a
petition for direct certification of petitioner
Labor Congress of the Philippines as their
bargaining representative (Case No. R0300-
9010-RU-005).
On October 23, 1990, petitioners represented
by LCP President Benigno B. Navarro, Sr. and
private respondents Gonzalo Kehyeng and
Evelyn Kehyeng in behalf of Empire Food
Products, Inc. entered into a Memorandum of
Agreement which provided, among others, the
following:
1. That in connection with the pending Petition
for Direct Certification filed by the Labor
Congress with the DOLE, Management of the
Empire Food Products has no objection [to] the
direct certification of the LCP Labor Congress
and is now recognizing the Labor Congress of
the Philippines (LCP) and its Local Chapter as
the SOLE and EXCLUSIVE Bargaining Agent and
Representative for all rank and file employees
of the Empire Food Products regarding WAGES,
HOURS OF WORK, AND OTHER TERMS AND
CONDITIONS OF EMPLOYMENT;
2. That with regards [sic] to NLRC CASE NO.
RAB-III-10-1817-90 pending with the NLRC
parties jointly and mutually agreed that the
issues thereof, shall be discussed by the parties
and resolve[d] during the negotiation of the
Collective Bargaining Agreement;
3. That Management of the Empire Food
Products shall make the proper adjustment of
the Employees Wages within fifteen (15) days
from the signing of this Agreement and further
agreed to register all the employees with the
SSS;
4. That Employer, Empire Food Products thru its
Management agreed to deduct thru payroll
deduction UNION DUES and other
Assessment[s] upon submission by the LCP
Labor Congress individual Check-Off
Authorization[s] signed by the Union Members
indicating the amount to be deducted and
further agreed all deduction[s] made
representing Union Dues and Assessment[s]
shall be remitted immediately to the LCP Labor
Congress Treasurer or authorized
representative within three (3) or five (5) days
upon deductions [sic], Union dues not deducted
during the period due, shall be refunded or
reimbursed by the Employer/Management.
Employer/Management further agreed to
deduct Union dues from non-union members
the same amount deducted from union
members without need of individual Check-Off
Authorizations [for] Agency Fee;

5. That in consideration [of] the foregoing
covenant, parties jointly and mutually agreed
that NLRC CASE NO. RAB-III-10-1817-90 shall be
considered provisionally withdrawn from the
Calendar of the National Labor Relations
Commission(NLRC), while the Petition for direct
certification of the LCP Labor Congress parties
jointly move for the direct certification of the
LCP Labor Congress;
6. That parties jointly and mutually agreed that
upon signing of this Agreement, no
Harassments [sic], Threats, Interferences [sic] of
their respective rights under the law, no
Vengeance or Revenge by each partner nor any
act of ULP which might disrupt the operations
of the business;
7. Parties jointly and mutually agreed that
pending negotiations or formalization of the
propose[d] CBA, this Memorandum of
Agreement shall govern the parties in the
exercise of their respective rights involving the
Management of the business and the terms and
condition[s] of employment, and whatever
problems and grievances may arise by and
between the parties shall be resolved by them,
thru the most cordial and good harmonious
relationship by communicating the other party
in writing indicating said grievances before
taking any action to another forum or
government agencies;
8. That parties [to] this Memorandum of
Agreement jointly and mutually agreed to
respect, abide and comply with all the terms
and conditions hereof. Further agreed that
violation by the parties of any provision herein
shall constitute an act of ULP. (Annex A of
Petition).
In an Order dated October 24, 1990, Mediator
Arbiter Antonio Cortez approved the
memorandum of agreement and certified LCP
as the sole and exclusive bargaining agent
among the rank-and-file employees of Empire
Food Products for purposes of collective
bargaining with respect to wages, hours of work
and other terms and conditions of employment
(Annex B of Petition).
On November 9, 1990, petitioners through LCP
President Navarro submitted to private
respondents a proposal for collective bargaining
(Annex C of Petition).
On January 23, 1991, petitioners filed a
complaint docketed as NLRC Case No. RAB-III-
01-1964-91 against private respondents for:
a. Unfair Labor Practice by way of Illegal
Lockout and/or Dismissal;
b. Union busting thru Harassments [sic],
threats, and interfering with the rights of
employees to self-organization;
c. Violation of the Memorandum of Agreement
dated October 23, 1990;
d. Underpayment of Wages in violation of R.A.
No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages.
(Annex D of Petition)
After the submission by the parties of their
respective position papers and presentation of
testimonial evidence, Labor Arbiter Ariel C.
Santos absolved private respondents of the
charges of unfair labor practice, union busting,
violation of the memorandum of agreement,
underpayment of wages and denied petitioners
prayer for actual, moral and exemplary
damages. Labor Arbiter Santos, however,
directed the reinstatement of the individual
complainants:
The undersigned Labor Arbiter is not oblivious
to the fact that respondents have violated a
cardinal rule in every establishment that a
payroll and other papers evidencing hours of
work, payments, etc. shall always be
maintained and subjected to inspection and
visitation by personnel of the Department of
Labor and Employment. As such penalty,
respondents should not escape liability for this
technicality, hence, it is proper that all
individual complainants except those who
resigned and executed quitclaim[s] and releases
prior to the filing of this complaint should be
reinstated to their former position[s] with the
admonition to respondents that any
harassment, intimidation, coercion or any form
of threat as a result of this immediately
executory reinstatement shall be dealt with
accordingly.
SO ORDERED. (Annex G of Petition)
On appeal, the National Labor Relations
Commission vacated the Decision dated April
14, 1972 [sic] and remanded the case to the
Labor Arbiter for further proceedings for the
following reasons:
The Labor Arbiter, through his decision, noted
that xxx complainant did not present any single
witness while respondent presented four (4)
witnesses in the persons of Gonzalo Kehyeng,
Orlando Cairo, Evelyn Kehyeng and Elvira
Bulagan xxx (p. 183, Records), that xxx
complainant before the National Labor
Relations Commission must prove with
definiteness and clarity the offense charged. xxx
(Record, p. 183); that xxx complainant failed to
specify under what provision of the Labor Code
particularly Art. 248 did respondents violate so
as to constitute unfair labor practice xxx
(Record, p. 183); that complainants failed to
present any witness who may describe in what
manner respondents have committed unfair
labor practice xxx (Record, p. 185); that xxx
complainant LCP failed to present anyone of the
so-called 99 complainants in order to testify
who committed the threats and intimidation
xxx (Record, p. 185).
Upon review of the minutes of the proceedings
on record, however, it appears that
complainant presented witnesses, namely,
BENIGNO NAVARRO, JR. (28 February 1991,
RECORD, p. 91; 8 March 1991, RECORD, p. 92,
who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit A and the
annexes thereto as Exhibit B, B-1 to B-9,
inclusive. Minutes of the proceedings on record
show that complainant further presented other
witnesses, namely: ERLINDA BASILIO (13 March
1991, RECORD, p. 93; LOURDES PANTILLO,
MARIFE PINLAC, LENIE GARCIA (16 April 1991,
Record, p. 96, see back portion thereof; 2 May
1991, Record, p. 102; 16 May 1991, Record, p.
103; 11 June 1991, Record, p. 105). Formal offer
of Documentary and Testimonial Evidence was
made by complainant on June 24, 1991 (Record,
p. 106-109)
The Labor Arbiter must have overlooked the
testimonies of some of the individual
complainants which are now on record. Other
individual complainants should have been
summoned with the end in view of receiving
their testimonies. The complainants should be
afforded the time and opportunity to fully
substantiate their claims against the
respondents. Judgment should be rendered
only based on the conflicting positions of the
parties. The Labor Arbiter is called upon to
consider and pass upon the issues of fact and
law raised by the parties.
Toward this end, therefore, it is Our considered
view [that] the case should be remanded to the
Labor Arbiter of origin for further
proceedings.(Annex H of Petition)
In a Decision dated July 27, 1994, Labor Arbiter
Santos made the following determination:
Complainants failed to present with
definiteness and clarity the particular act or acts
constitutive of unfair labor practice.
It is to be borne in mind that a declaration of
unfair labor practice connotes a finding of prima
facie evidence of probability that a criminal
offense may have been committed so as to
warrant the filing of a criminal information
before the regular court. Hence, evidence which
is more than a scintilla is required in order to
declare respondents/employers guilty of unfair
labor practice. Failing in this regard is fatal to
the cause of complainants. Besides, even the
charge of illegal lockout has no leg to stand on
because of the testimony of respondents
through their guard Orlando Cairo (TSN, July 31,
1991 hearing; p. 5-35) that on January 21, 1991,
complainants refused and failed to report for
work, hence guilty of abandoning their post
without permission from respondents. As a
result of complainants[] failure to report for
work, the cheese curls ready for repacking were
all spoiled to the prejudice of respondents.
Under cross-examination, complainants failed
to rebut the authenticity of respondents
witness testimony.
As regards the issue of harassments [sic],
threats and interference with the rights of
employees to self-organization which is actually
an ingredient of unfair labor practice,
complainants failed to specify what type of
threats or intimidation was committed and who
committed the same. What are the acts or
utterances constitutive of harassments [sic]
being complained of? These are the specifics
which should have been proven with
definiteness and clarity by complainants who
chose to rely heavily on its position paper
through generalizations to prove their case.
Insofar as violation of [the] Memorandum of
Agreement dated October 23, 1990 is
concerned, both parties agreed that:
2 - That with regards [sic] to the NLRC Case No.
RAB III-10-1817-90 pending with the NLRC,
parties jointly and mutually agreed that the
issues thereof shall be discussed by the parties
and resolve[d] during the negotiation of the
CBA.
The aforequoted provision does not speak of
[an] obligation on the part of respondents but
on a resolutory condition that may occur or may
not happen. This cannot be made the basis of
an imposition of an obligation over which the
National Labor Relations Commission has
exclusive jurisdiction thereof.
Anent the charge that there was underpayment
of wages, the evidence points to the contrary.
The enumeration of complainants wages in
their consolidated Affidavits of merit and
position paper which implies underpayment has
no leg to stand on in the light of the fact that
complainants admission that they are piece
workers or paid on a pakiao [basis] i.e. a certain
amount for every thousand pieces of cheese
curls or other products repacked. The only
limitation for piece workers or pakiao workers is
that they should receive compensation no less
than the minimum wage for an eight (8) hour
work [sic]. And compliance therewith was
satisfactorily explained by respondent Gonzalo
Kehyeng in his testimony (TSN, p. 12-30) during
the July 31, 1991 hearing. On cross-
examination, complainants failed to rebut or
deny Gonzalo Kehyengs testimony that
complainants have been even receiving more
than the minimum wage for an average workers
[sic]. Certainly, a lazy worker earns less than the
minimum wage but the same cannot be
attributable to respondents but to the lazy
workers.
Finally, the claim for moral and exemplary
damages has no leg to stand on when no
malice, bad faith or fraud was ever proven to
have been perpetuated by respondents.
WHEREFORE, premises considered, the
complaint is hereby DISMISSED for utter lack of
merit. (Annex I of Petition).[4]
On appeal, the NLRC, in its Resolution dated 29
March 1995,[5] affirmed in toto the decision of
Labor Arbiter Santos. In so doing, the NLRC
sustained the Labor Arbiters findings that: (a)
there was a dearth of evidence to prove the
existence of unfair labor practice and union
busting on the part of private respondents; (b)
the agreement of 23 October 1990 could not be
made the basis of an obligation within the
ambit of the NLRCs jurisdiction, as the
provisions thereof, particularly Section 2, spoke
of a resolutory condition which could or could
not happen; (c) the claims for underpayment of
wages were without basis as complainants were
admittedly pakiao workers and paid on the
basis of their output subject to the lone
limitation that the payment conformed to the
minimum wage rate for an eight-hour workday;
and (d) petitioners were not underpaid.
Their motion for reconsideration having been
denied by the NLRC in its Resolution of 31
October 1995,[6] petitioners filed the instant
special civil action for certiorari raising the
following issues:
I (denying their motion for reconsideration) on
WHETHER OR NOT THE PUBLIC RESPONDENT
NATIONAL LABOR RELATIONS COMMISSION
GRAVELY ABUSED ITS DISCRETION WHEN IT
DISREGARDED OR IGNORED NOT ONLY THE
EVIDENCE FAVORABLE TO HEREIN PETITIONERS,
APPLICABLE JURISPRUDENCE BUT ALSO ITS
OWN DECISIONS AND THAT OF THIS
HONORABLE HIGHEST TRIBUNAL WHICH [WAS]
TANTAMOUNT NOT ONLY TO THE DEPRIVATION
OF PETITIONERS RIGHT TO DUE PROCESS BUT
WOULD RESULT [IN] MANIFEST INJUSTICE.
II
WHETHER OR NOT THE PUBLIC RESPONDENT
GRAVELY ABUSED ITS DISCRETION WHEN IT
DEPRIVED THE PETITIONERS OF THEIR
CONSTITUTIONAL RIGHT TO SELF-
ORGANIZATION, SECURITY OF TENURE,
PROTECTION TO LABOR, JUST AND HUMANE
CONDITIONS OF WORK AND DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE
ILLEGALLY EASED OUT [OF] OR
CONSTRUCTIVELY DISMISSED FROM THEIR
ONLY MEANS OF LIVELIHOOD.
IV
WHETHER OR NOT PETITIONERS SHOULD BE
REINSTATED FROM THE DATE OF THEIR
DISMISSAL UP TO THE TIME OF THEIR
REINSTATEMENT, WITH BACKWAGES,
STATUTORY BENEFITS, DAMAGES AND
ATTORNEYS FEES.[7]
We required respondents to file their respective
Comments.
In their Manifestation and Comment, private
respondents asserted that the petition was filed
out of time. As petitioners admitted in their
Notice to File petition for Review on Certiorari
that they received a copy of the resolution
13 December 1995, they had only until 29
December 1995 to file the petition. Having
failed to do so, the NLRC thus already entered
judgment in private respondents favor.
In their Reply, petitioners averred that Mr.
Navarro, a non-lawyer who filed the notice to
file a petition for review on their behalf,
mistook which reglementary period to apply.
Instead of using the reasonable time criterion
for certiorari under Rule 65, he used the 15-day
period for petitions for review on certiorari
under Rule 45. They hastened to add that such
was a mere technicality which should not bar
their petition from being decided on the merits
in furtherance of substantial justice, especially
considering that respondents neither denied
nor contradicted the facts and issues raised in
the petition.
In its Manifestation and Motion in Lieu of
Comment, the Office of the Solicitor General
(OSG) sided with petitioners. It pointed out that
the Labor Arbiter, in finding that petitioners
abandoned their jobs, relied solely on the
testimony of Security Guard Rolando Cairo that
petitioners refused to work on 21 January 1991,
resulting in the spoilage of cheese curls ready
for repacking. However, the OSG argued, this
refusal to report for work for a single day did
not constitute abandonment, which pertains to
a clear, deliberate and unjustified refusal to
resume employment, and not mere absence. In
fact, the OSG stressed, two days after allegedly
abandoning their work, petitioners filed a
complaint for, inter alia, illegal lockout or illegal
dismissal. Finally, the OSG questioned the lack
of explanation on the part of Labor Arbiter
Santos as to why he abandoned his original
decision to reinstate petitioners.
In view of the stand of the OSG, we resolved to
require the NLRC to file its own Comment.
In its Comment, the NLRC invokes the general
rule that factual findings of an administrative
agency bind a reviewing court and asserts that
this case does not fall under the exceptions. The
NLRC further argues that grave abuse of
discretion may not be imputed to it, as it
affirmed the factual findings and legal
conclusions of the Labor Arbiter only after
carefully reviewing, weighing and evaluating the
evidence in support thereof, as well as the
pertinent provisions of law and jurisprudence.
In their Reply, petitioners claim that the
decisions of the NLRC and the Labor Arbiter
were not supported by substantial evidence;
that abandonment was not proved; and that
much credit was given to self-serving
statements of Gonzalo Kehyeng, owner of
Empire Foods, as to payment of just wages.
On 7 July 1997, we gave due course to the
petition and required the parties to file their
respective memoranda. However, only
petitioners and private respondents filed their
memoranda, with the NLRC merely adopting its
Comment as its Memorandum.
We find for petitioners.
Invocation of the general rule that factual
findings of the NLRC bind this Court is
unavailing under the circumstances. Initially, we
are unable to discern any compelling reason
justifying the Labor Arbiters volte face from his
14 April 1992 decision reinstating petitioners to
his diametrically opposed 27 July 1994 decision,
when in both instances, he had before him
substantially the same evidence. Neither do we
find the 29 March 1995 NLRC resolution to have
sufficiently discussed the facts so as to comply
with the standard of substantial evidence. For
one thing, the NLRC confessed its reluctance to
inquire into the veracity of the Labor Arbiters
factual findings, staunchly declaring that it was
not about to substitute [its] judgment on
matters that are within the province of the trier
of facts. Yet, in the 21 July 1992 NLRC
resolution,[8] it chastised the Labor Arbiter for
his errors both in judgment and procedure, for
which reason it remanded the records of the
case to the Labor Arbiter for compliance with
the pronouncements therein.
What cannot escape from our attention is that
the Labor Arbiter did not heed the observations
and pronouncements of the NLRC in its
resolution of 21 July 1992, neither did he
understand the purpose of the remand of the
records to him. In said resolution, the NLRC
summarized the grounds for the appeal to be:
1. that there is a prima facie evidence of abuse
of discretion and acts of gross incompetence
committed by the Labor Arbiter in rendering the
decision.
2. that the Labor Arbiter in rendering the
decision committed serious errors in the
findings of facts.
After which, the NLRC observed and found:
Complainant alleged that the Labor Arbiter
disregarded the testimonies of the 99
complainants who submitted their Consolidated
Affidavit of Merit and Position Paper which was
adopted as direct testimonies during the
hearing and cross-examined by respondents
counsel.
The Labor Arbiter, through his decision, noted
that x x x complainant did not present any
single witness while respondent presented four
(4) witnesses in the persons of Gonzalo
Kehyeng, Orlando Cairo, Evelyn Kehyeng and
Elvira Bulagan x x x (Records, p. 183), that x x x
complainant before the National Labor
Relations Commission must prove with
definiteness and clarity the offense charged. x x
x (Record, p. 183; that x x x complainant failed
to specify under what provision of the Labor
Code particularly Art. 248 did respondents
violate so as to constitute unfair labor practice x
x x (Record, p. 183); that complainants failed to
present any witness who may describe in what
manner respondents have committed unfair
labor practice x x x (Record, p. 185); that x x x
complainant a [sic] LCP failed to present anyone
of the so called 99 complainants in order to
testify who committed the threats and
intimidation x x x (Record, p. 185).
Upon review of the minutes of the proceedings
on record, however, it appears that
complainant presented witnesses, namely
BENIGNO NAVARRO, JR. (28 February 1991,
RECORD, p. 91; 8 March 1991, RECORD, p. 92),
who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit A and the
annexes thereto as Exhibit B, B-1 to B-9,
inclusive. Minutes of the proceedings on record
show that complainant further presented other
witnesses, namely: ERLINDA BASILIO (13 March
1991, RECORD, p. 93; LOURDES PANTILLO,
MARIFE PINLAC, LENI GARCIA (16 April 1991,
Record, p. 96, see back portion thereof; 2 May
1991, Record, p. 102; 16 May 1991, Record, p.
103; 11 June 1991, Record, p. 105). Formal offer
of Documentary and Testimonial Evidence was
made by the complainant on June 24, 1991
(Record, p. 106-109).
The Labor Arbiter must have overlooked the
testimonies of some of the individual
complainants which are now on record. Other
individual complainants should have been
summoned with the end in view of receiving
their testimonies. The complainants should
[have been] afforded the time and opportunity
to fully substantiate their claims against the
respondents. Judgment should [have been]
rendered only based on the conflicting positions
of the parties. The Labor Arbiter is called upon
to consider and pass upon the issues of fact and
law raised by the parties.
Toward this end, therefore, it is Our considered
view the case should be remanded to the Labor
Arbiter of origin for further proceedings.
Further, We take note that the decision does
not contain a dispositive portion or fallo. Such
being the case, it may be well said that the
decision does not resolve the issues at hand. On
another plane, there is no portion of the
decision which could be carried out by way of
execution.
It may be argued that the last paragraph of the
decision may be categorized as the dispositive
portion thereof:
xxxxx
The undersigned Labor Arbiter is not oblivious
[to] the fact that respondents have violated a
cardinal rule in every establishment that a
payroll and other papers evidencing hour[s] of
work, payment, etc. shall always be maintained
and subjected to inspection and visitation by
personnel of the Department of Labor and
Employment. As such penalty, respondents
should not escape liability for this technicality,
hence, it is proper that all the individual
complainants except those who resigned and
executed quitclaim[s] and release[s] prior to the
filing of this complaint should be reinstated to
their former position with the admonition to
respondents that any harassment, intimidation,
coercion or any form of threat as a result of this
immediately executory reinstatement shall be
dealt with accordingly.
SO ORDERED.
It is Our considered view that even assuming
arguendo that the respondents failed to
maintain their payroll and other papers
evidencing hours of work, payment etc., such
circumstance, standing alone, does not warrant
the directive to reinstate complainants to their
former positions. It is [a] well settled rule that
there must be a finding of illegal dismissal
before reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby
directed to include in his clarificatory decision,
after receiving evidence, considering and
resolving the same, the requisite dispositive
portion.[9]
Apparently, the Labor Arbiter perceived that if
not for petitioners, he would not have fallen
victim to this stinging rebuke at the hands of
the NLRC. Thus does it appear to us that the
Labor Arbiter, in concluding in his 27 July 1994
Decision that petitioners abandoned their work,
was moved by, at worst, spite, or at best,
lackadaisically glossed over petitioners
evidence. On this score, we find the following
observations of the OSG most persuasive:
In finding that petitioner employees abandoned
their work, the Labor Arbiter and the NLRC
relied on the testimony of Security Guard
Rolando Cairo that on January 21, 1991,
petitioners refused to work. As a result of their
failure to work, the cheese curls ready for
repacking on said date were spoiled.
The failure to work for one day, which resulted
in the spoilage of cheese curls does not amount
to abandonment of work. In fact two (2) days
after the reported abandonment of work or on
January 23, 1991, petitioners filed a complaint
for, among others, unfair labor practice, illegal
lockout and/or illegal dismissal. In several cases,
this Honorable Court held that one could not
possibly abandon his work and shortly
thereafter vigorously pursue his complaint for
illegal dismissal (De Ysasi III v. NLRC, 231 SCRA
173; Ranara v. NLRC, 212 SCRA 631; Dagupan
Bus Co. v. NLRC, 191 SCRA 328; Atlas
Consolidated Mining and Development Corp. v.
NLRC, 190 SCRA 505; Hua Bee Shirt Factory v.
NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203
SCRA 570 and Flexo Manufacturing v. NLRC, 135
SCRA 145). In Atlas Consolidated, supra, this
Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his
work and then immediately file an action
seeking for his reinstatement. We can not
believe that Caballo, who had worked for Atlas
for two years and ten months, would simply
walk away from his job unmindful of the
consequence of his act, i.e. the forfeiture of his
accrued employment benefits. In opting to
finally to [sic] contest the legality of his
dismissal instead of just claiming his separation
pay and other benefits, which he actually did
but which proved to be futile after all, ably
supports his sincere intention to return to work,
thus negating Atlas stand that he had
abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable
Court stressed that it is the clear, deliberate and
unjustified refusal to resume employment and
not mere absence that constitutes
abandonment. The absence of petitioner
employees for one day on January 21, 1991 as
testified [to] by Security Guard Orlando Cairo
did not constitute abandonment.
In his first decision, Labor Arbiter Santos
expressly directed the reinstatement of the
petitioner employees and admonished the
private respondents that any harassment,
intimidation, coercion or any form of threat as a
result of this immediately executory
reinstatement shall be dealt with accordingly.
In his second decision, Labor Arbiter Santos did
not state why he was abandoning his previous
decision directing the reinstatement of
petitioner employees.
By directing in his first decision the
reinstatement of petitioner employees, the
Labor Arbiter impliedly held that they did not
abandon their work but were not allowed to
work without just cause.
That petitioner employees are pakyao or piece
workers does not imply that they are not
regular employees entitled to reinstatement.
Private respondent Empire Food Products, Inc.
is a food and fruit processing company. In Tabas
v. California Manufacturing Co., Inc. (169 SCRA
497), this Honorable Court held that the work of
merchandisers of processed food, who
coordinate with grocery stores and other
outlets for the sale of the processed food is
necessary in the day-to-day operation[s] of the
company. With more reason, the work of
processed food repackers is necessary in the
day-to-day operation[s] of respondent Empire
Food Products.[10]
It may likewise be stressed that the burden of
proving the existence of just cause for
dismissing an employee, such as abandonment,
rests on the employer, [11] a burden private
respondents failed to discharge.
Private respondents, moreover, in considering
petitioners employment to have been
terminated by abandonment, violated their
rights to security of tenure and constitutional
right to due process in not even serving them
with a written notice of such termination.[12]
Section 2, Rule XIV, Book V of the Omnibus
Rules Implementing the Labor Code provides:
SEC. 2. Notice of Dismissal. - Any employer who
seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or
omission constituting the grounds for his
dismissal. In cases of abandonment of work, the
notice shall be served at the workers last known
address.
Petitioners are therefore entitled to
reinstatement with full back wages pursuant to
Article 279 of the Labor Code, as amended by
R.A. No. 6715. Nevertheless, the records
disclose that taking into account the number of
employees involved, the length of time that has
lapsed since their dismissal, and the perceptible
resentment and enmity between petitioners
and private respondents which necessarily
strained their relationship, reinstatement would
be impractical and hardly promotive of the best
interests of the parties. In lieu of reinstatement
then, separation pay at the rate of one month
for every year of service, with a fraction of at
least six (6) months of service considered as one
(1) year, is in order.[13]
That being said, the amount of back wages to
which each petitioner is entitled, however,
cannot be fully settled at this time. Petitioners,
as piece-rate workers having been paid by the
piece,[14] there is need to determine the
varying degrees of production and days worked
by each worker. Clearly, this issue is best left to
the National Labor Relations Commission.
As to the other benefits, namely, holiday pay,
premium pay, 13th month pay and service
incentive leave which the labor arbiter failed to
rule on but which petitioners prayed for in their
complaint,[15] we hold that petitioners are so
entitled to these benefits. Three (3) factors lead
us to conclude that petitioners, although piece-
rate workers, were regular employees of private
respondents. First, as to the nature of
petitioners tasks, their job of repacking snack
food was necessary or desirable in the usual
business of private respondents, who were
engaged in the manufacture and selling of such
food products; second, petitioners worked for
private respondents throughout the year, their
employment not having been dependent on a
specific project or season; and third, the length
of time[16] that petitioners worked for private
respondents. Thus, while petitioners mode of
compensation was on a per piece basis, the
status and nature of their employment was that
of regular employees.
The Rules Implementing the Labor Code exclude
certain employees from receiving benefits such
as nighttime pay, holiday pay, service incentive
leave[17] and 13th month pay,[18] inter alia,
field personnel and other employees whose
time and performance is unsupervised by the
employer, including those who are engaged on
task or contract basis, purely commission basis,
or those who are paid a fixed amount for
performing work irrespective of the time
consumed in the performance thereof. Plainly,
petitioners as piece-rate workers do not fall
within this group. As mentioned earlier, not
only did petitioners labor under the control of
private respondents as their employer, likewise
did petitioners toil throughout the year with the
fulfillment of their quota as supposed basis for
compensation. Further, in Section 8 (b), Rule IV,
Book III which we quote hereunder, piece
workers are specifically mentioned as being
entitled to holiday pay.
SEC. 8. Holiday pay of certain employees.-
(b) Where a covered employee is paid by results
or output, such as payment on piece work, his
holiday pay shall not be less than his average
daily earnings for the last seven (7) actual
working days preceding the regular holiday:
Provided, however, that in no case shall the
holiday pay be less than the applicable statutory
minimum wage rate.
In addition, the Revised Guidelines on the
Implementation of the 13th Month Pay Law, in
view of the modifications to P.D. No. 851[19] by
Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those
exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by
P.D. No. 851:
d. Employers of those who are paid on purely
commission, boundary or task basis, and those
who are paid a fixed amount for performing
specific work, irrespective of the time
consumed in the performance thereof, except
where the workers are paid on piece-rate basis
in which case the employer shall grant the
required 13th month pay to such workers.
(italics supplied)
The Revised Guidelines as well as the Rules and
Regulations identify those workers who fall
under the piece-rate category as those who are
paid a standard amount for every piece or unit
of work produced that is more or less regularly
replicated, without regard to the time spent in
producing the same.[20]
As to overtime pay, the rules, however, are
different. According to Sec. 2(e), Rule I, Book III
of the Implementing Rules, workers who are
paid by results including those who are paid on
piece-work, takay, pakiao, or task basis, if their
output rates are in accordance with the
standards prescribed under Sec. 8, Rule VII,
Book III, of these regulations, or where such
rates have been fixed by the Secretary of Labor
in accordance with the aforesaid section, are
not entitled to receive overtime pay. Here,
private respondents did not allege adherence to
the standards set forth in Sec. 8 nor with the
rates prescribed by the Secretary of Labor. As
such, petitioners are beyond the ambit of
exempted persons and are therefore entitled to
overtime pay. Once more, the National Labor
Relations Commission would be in a better
position to determine the exact amounts owed
petitioners, if any.
As to the claim that private respondents
violated petitioners right to self-organization,
the evidence on record does not support this
claim. Petitioners relied almost entirely on
documentary evidence which, per se, did not
prove any wrongdoing on private respondents
part. For example, petitioners presented their
complaint[21] to prove the violation of labor
laws committed by private respondents. The
complaint, however, is merely the pleading
alleging the plaintiffs cause or causes of
action.[22] Its contents are merely allegations,
the verity of which shall have to be proved
during the trial. They likewise offered their
Consolidated Affidavit of Merit and Position
Paper[23] which, like the offer of their
Complaint, was a tautological exercise, and did
not help nor prove their cause. In like manner,
the petition for certification election[24] and
the subsequent order of certification[25]
merely proved that petitioners sought and
acquired the status of bargaining agent for all
rank-and-file employees. Finally, the existence
of the memorandum of agreement[26] offered
to substantiate private respondents non-
compliance therewith, did not prove either
compliance or non-compliance, absent evidence
of concrete, overt acts in contravention of the
provisions of the memorandum.

IN VIEW WHEREOF, the instant petition is

hereby GRANTED. The Resolution of the
National Labor Relations Commission of 29
March 1995 and the Decision of the Labor
Arbiter of 27 July 1994 in NLRC Case No. RAB-III-
01-1964-91 are hereby SET ASIDE, and another
is hereby rendered:

1. DECLARING petitioners to have been illegally

dismissed by private respondents, thus entitled
to full back wages and other privileges, and
separation pay in lieu of reinstatement at the
rate of one months salary for every year of
service with a fraction of six months of service
considered as one year;

2. REMANDING the records of this case to the

National Labor Relations Commission for its
determination of the back wages and other
benefits and separation pay, taking into account
the foregoing observations; and

3. DIRECTING the National Labor Relations

Commission to resolve the referred issues
within sixty (60) days from its receipt of a copy
of this decision and of the records of the case
and to submit to this Court a report of its
compliance hereof within ten (10) days from
the rendition of its resolution.

Costs against private respondents.

SO ORDERED.

Bellosillo, Vitug, Panganiban, and Quisumbing,

JJ., concur.
SECOND DIVISION
[G.R. No. 132805. February 2, 1999]
PHILIPPINE AIRLINES, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION,
LABOR ARBITER ROMULUS PROTACIO and DR.
HERMINIO A. FABROS, respondents.
DECISION
PUNO, J.:
Petitioner Philippine Airlines, Inc. assails the
decision of the National Labor Relations
Commission dismissing its appeal from the
decision of Labor Arbiter Romulus S. Protacio
which declared the suspension of private
respondent Dr. Herminio A. Fabros illegal and
ordered petitioner to pay private respondent
the amount equivalent to all the benefits he
should have received during his period of
suspension plus P500,000.00 moral damages.
The facts are as follow:
Private respondent was employed as flight
surgeon at petitioner company. He was
assigned at the PAL Medical Clinic at Nichols
and was on duty from 4:00 in the afternoon
until 12:00 midnight.
On February 17, 1994, at around 7:00 in the
evening, private respondent left the clinic to
have his dinner at his residence, which was
about five-minute drive away. A few minutes
later, the clinic received an emergency call from
the PAL Cargo Services. One of its employees,
Mr. Manuel Acosta, had suffered a heart attack.
The nurse on duty, Mr. Merlino Eusebio, called
private respondent at home to inform him of
the emergency. The patient arrived at the clinic
at 7:50 in the evening and Mr. Eusebio
immediately rushed him to the hospital. When
private respondent reached the clinic at around
7:51 in the evening, Mr. Eusebio had already
left with the patient. Mr. Acosta died the
following day.
Upon learning about the incident, PAL Medical
Director Dr. Godofredo B. Banzon ordered the
Chief Flight Surgeon to conduct an
investigation. The Chief Flight Surgeon, in turn,
required private respondent to explain why no
disciplinary sanction should be taken against
him.
In his explanation, private respondent asserted
that he was entitled to a thirty-minute meal
break; that he immediately left his residence
upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few
minutes later; that Mr. Eusebio panicked and
brought the patient to the hospital without
waiting for him.
Finding private respondents explanation
unacceptable, the management charged private
respondent with abandonment of post while on
duty. He was given ten days to submit a written
answer to the administrative charge.
In his answer, private respondent reiterated the
assertions in his previous explanation. He
further denied that he abandoned his post on
February 17, 1994. He said that he only left the
clinic to have his dinner at home. In fact, he
returned to the clinic at 7:51 in the evening
upon being informed of the emergency.
After evaluating the charge as well as the
answer of private respondent, petitioner
company decided to suspend private
respondent for three months effective
December 16, 1994.
Private respondent filed a complaint for illegal
suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A.
Protasio rendered a decision[1] declaring the
suspension of private respondent illegal. It also
ordered petitioner to pay private respondent
the amount equivalent to all the benefits he
should have received during his period of
suspension plus P500,000.00 moral damages.
The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing,
judgment is hereby rendered declaring the
suspension of complainant as illegal, and
ordering the respondents the restitution to the
complainant of all employment benefits
equivalent to his period of suspension, and the
payment to the complainant of P500,000.00 by
way of moral damages.[2]
Petitioner appealed to the NLRC. The NLRC,
however, dismissed the appeal after finding
that the decision of the Labor Arbiter is
supported by the facts on record and the law on
the matter.[3] The NLRC likewise denied
petitioners motion for reconsideration.[4]
Hence, this petition raising the following
arguments:
1. The public respondents acted without or in
excess of their jurisdiction and with grave abuse
of discretion in nullifying the 3-month
suspension of private respondent despite the
fact that the private respondent has committed
an offense that warranted the imposition of
disciplinary action.
2. The public respondents acted without or in
excess of their jurisdiction and with grave abuse
of discretion in holding the petitioner liable for
moral damages:
(a) Despite the fact that no formal hearing
whatsoever was conducted for complainant to
substantiate his claim;
(b) Despite the absence of proof that the
petitioner acted in bad faith in imposing the 3-
month suspension; and
(c) Despite the fact that the Labor Arbiter's
award of moral damages is highly irregular,
considering that it was more than what the
private respondent prayed for.[5]
We find that public respondents did not err in
nullifying the three-month suspension of
private respondent. They, however, erred in
awarding moral damages to private respondent.
First, as regards the legality of private
respondents suspension. The facts do not
support petitioners allegation that private
respondent abandoned his post on the evening
of February 17, 1994. Private respondent left
the clinic that night only to have his dinner at
his house, which was only a few minutes drive
away from the clinic. His whereabouts were
known to the nurse on duty so that he could be
easily reached in case of emergency. Upon
being informed of Mr. Acostas condition,
private respondent immediately left his home
and returned to the clinic. These facts belie
petitioners claim of abandonment.
Petitioner argues that being a full-time
employee, private respondent is obliged to stay
in the company premises for not less than eight
(8) hours. Hence, he may not leave the
company premises during such time, even to
take his meals.
We are not impressed.
Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work.The normal hours
of work of any employee shall not exceed eight
(8) hours a day.
Health personnel in cities and municipalities
with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold
regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals,
except where the exigencies of the service
require that such personnel work for six (6) days
or forty-eight (48) hours, in which case they
shall be entitled to an additional compensation
of at least thirty per cent (30%) of their regular
wage for work on the sixth day. For purposes of
this Article, health personnel shall include:
resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers,
laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all
other hospital or clinic personnel. (emphasis
supplied)
Art. 85. Meal periods.Subject to such
regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer
to give his employees not less than sixty (60)
minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules
Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer
shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular
meals, except in the following cases when a
meal period of not less than twenty (20)
minutes may be given by the employer
provided that such shorter meal period is
credited as compensable hours worked of the
employee;
(a) Where the work is non-manual work in
nature or does not involve strenuous physical
exertion;
(b) Where the establishment regularly operates
not less than sixteen hours a day;
(c) In cases of actual or impending emergencies
or there is urgent work to be performed on
machineries, equipment or installations to
avoid serious loss which the employer would
otherwise suffer; and
(d) Where the work is necessary to prevent
serious loss of perishable goods.
Rest periods or coffee breaks running from five
(5) to twenty (20) minutes shall be considered
as compensable working time.
Thus, the eight-hour work period does not
include the meal break. Nowhere in the law
may it be inferred that employees must take
their meals within the company premises.
Employees are not prohibited from going out of
the premises as long as they return to their
posts on time. Private respondents act,
therefore, of going home to take his dinner
does not constitute abandonment.
We now go to the award of moral damages to
private respondent.
Not every employee who is illegally dismissed
or suspended is entitled to damages. As a rule,
moral damages are recoverable only where the
dismissal or suspension of the employee was
attended by bad faith or fraud, or constituted
an act oppressive to labor, or was done in a
manner contrary to morals, good customs or
public policy.[6] Bad faith does not simply mean
negligence or bad judgment. It involves a state
of mind dominated by ill will or motive. It
implies a conscious and intentional design to do
a wrongful act for a dishonest purpose or some
moral obliquity.[7] The person claiming moral
damages must prove the existence of bad faith
by clear and convincing evidence for the law
always presumes good faith.[8]
In the case at bar, there is no showing that the
management of petitioner company was moved
by some evil motive in suspending private
respondent. It suspended private respondent
on an honest, albeit erroneous, belief that
private respondents act of leaving the company
premises to take his meal at home constituted
abandonment of post which warrants the
penalty of suspension. Also, it is evident from
the facts that petitioner gave private
respondent all the opportunity to refute the
charge against him and to defend himself.
These negate the existence of bad faith on the
part of petitioner. Under the circumstances, we
hold that private respondent is not entitled to
moral damages.
IN VIEW WHEREOF, the petition is PARTIALLY
GRANTED. The portion of the assailed decision
awarding moral damages to private respondent
is DELETED. All other aspects of the decision are
AFFIRMED.
SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing,

and Buena, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 78210 February 28, 1989
TEOFILO ARICA, DANILO BERNABE,
MELQUIADES DOHINO, ABONDIO OMERTA,
GIL TANGIHAN, SAMUEL LABAJO, NESTOR
NORBE, RODOLFO CONCEPCION, RICARDO
RICHA, RODOLFO NENO, ALBERTO BALATRO,
BENJAMIN JUMAMOY, FERMIN DAAROL,
JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON
ACENA, JAIME BUGTAY, and 561 OTHERS,
HEREIN REPRESENTED BY KORONADO B.
APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION,
HONORABLE FRANKLIN DRILON, HONORABLE
CONRADO B. MAGLAYA, HONORABLE
ROSARIO B. ENCARNACION, and STANDARD
(PHILIPPINES) FRUIT CORPORATION,
respondents.
Koronado B. Apuzen and Jose C. Espinas for
petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for
private respondent.
PARAS, J.:
This is a petition for review on certiorari of the
decision of the National Labor Relations
Commission dated December 12, 1986 in NLRC
Case No. 2327 MC-XI-84 entitled Teofilo Arica et
al. vs. Standard (Phil.) Fruits Corporation
(STANFILCO) which affirmed the decision of
Labor Arbiter Pedro C. Ramos, NLRC, Special
Task Force, Regional Arbitration Branch No. XI,
Davao City dismissing the claim of petitioners.
This case stemmed from a complaint filed on
April 9, 1984 against private respondent
Stanfilco for assembly time, moral damages and
attorney's fees, with the aforementioned
Regional Arbitration Branch No. XI, Davao City.
After the submission by the parties of their
respective position papers (Annex "C", pp. 30-
40; Annex "D", Rollo, pp. 41-50), Labor Arbiter
Pedro C. Ramos rendered a decision dated
October 9, 1985 (Annex 'E', Rollo, pp. 51-58) in
favor of private respondent STANFILCO, holding
that:
Given these facts and circumstances, we cannot
but agree with respondent that the
pronouncement in that earlier case, i.e. the
thirty-minute assembly time long practiced
cannot be considered waiting time or work time
and, therefore, not compensable, has become
the law of the case which can no longer be
disturbed without doing violence to the time-
honored principle of res-judicata.
WHEREFORE, in view of the foregoing
considerations, the instant complaint should
therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the
appeal memorandum of complainant and the
opposition of respondents, the First Division of
public respondent NLRC composed of Acting
Presiding Commissioner Franklin Drilon,
Commissioner Conrado Maglaya, Commissioner
Rosario D. Encarnacion as Members,
promulgated its Resolution, upholding the
Labor Arbiters' decision. The Resolution's
dispositive portion reads:
'Surely, the customary functions referred to in
the above- quoted provision of the agreement
includes the long-standing practice and
institutionalized non-compensable assembly
time. This, in effect, estopped complainants
from pursuing this case.
The Commission cannot ignore these hard facts,
and we are constrained to uphold the dismissal
and closure of the case.
WHEREFORE, let the appeal be, as it is hereby
dismissed, for lack of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion
for Reconsideration which was opposed by
private respondent (Annex "I", Rollo, pp. 90-91;
Annex J Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987,
issued a resolution denying for lack of merit
petitioners' motion for reconsideration (Annex
"K", Rollo, p. 97).
Hence this petition for review on certiorari filed
on May 7, 1987.
The Court in the resolution of May 4, 1988 gave
due course to this petition.
Petitioners assign the following issues:
1) Whether or not the 30-minute activity
of the petitioners before the scheduled working
time is compensable under the Labor Code.
2) Whether or not res judicata applies when the
facts obtaining in the prior case and in the case
at bar are significantly different from each other
in that there is merit in the case at bar.
3) Whether or not there is finality in the
decision of Secretary Ople in view of the
compromise agreement novating it and the
withdrawal of the appeal.
4) Whether or not estoppel and laches lie in
decisions for the enforcement of labor
standards (Rollo, p. 10).
Petitioners contend that the preliminary
activities as workers of respondents STANFILCO
in the assembly area is compensable as working
time (from 5:30 to 6:00 o'clock in the morning)
since these preliminary activities are necessarily
and primarily for private respondent's benefit.
These preliminary activities of the workers are
as follows:
(a) First there is the roll call. This is followed by
getting their individual work assignments from
the foreman.
(b) Thereafter, they are individually required to
accomplish the Laborer's Daily Accomplishment
Report during which they are often made to
explain about their reported accomplishment
the following day.
(c) Then they go to the stockroom to get the
working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with
them their tools, equipment and materials.
All these activities take 30 minutes to
accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers
that the instant complaint is not new, the very
same claim having been brought against herein
respondent by the same group of rank and file
employees in the case of Associated Labor
Union and Standard Fruit Corporation, NLRC
Case No. 26-LS-XI-76 which was filed way back
April 27, 1976 when ALU was the bargaining
agent of respondent's rank and file workers.
The said case involved a claim for "waiting
time", as the complainants purportedly were
required to assemble at a designated area at
least 30 minutes prior to the start of their
scheduled working hours "to ascertain the work
force available for the day by means of a roll
call, for the purpose of assignment or
reassignment of employees to such areas in the
plantation where they are most needed."
(Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of
Labor, on May 12, 1978 in the aforecited case
(Associated Labor Union vs. Standard (Phil.)
Fruit Corporation, NLRC Case No. 26-LS-XI-76
where significant findings of facts and
conclusions had already been made on the
matter.
The Minister of Labor held:
The thirty (30)-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.
...
Furthermore, the thirty (30)-minute assembly is
a deeply- rooted, 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. They are not new employees
as to require the company to deliver long
briefings regarding their respective work
assignments. Their houses are situated right on
the area where the farm are located, such that
after the roll call, which does not necessarily
require the personal presence, they can go back
to their houses to attend to some chores. 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 CBA does not
contain any provision to this effect; the record
is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact
that the thirty (30)-minute assembly time was
not primarily intended for the interests of the
employer, but ultimately for the employees to
indicate their availability or non-availability for
work during every working day. (Annex "E",
Rollo, p. 57).
Accordingly, the issues are reduced to the sole
question as to whether public respondent
National Labor Relations Commission
committed a grave abuse of discretion in its
resolution of December 17, 1986.
The facts on which this decision was predicated
continue to be the facts of the case in this
questioned resolution of the National Labor
Relations Commission.
It is clear that herein petitioners are merely
reiterating the very same claim which they filed
through the ALU and which records show had
already long been considered terminated and
closed by this Court in G.R. No. L-48510.
Therefore, the NLRC can not be faulted for
ruling that petitioners' claim is already barred
by res-judicata.
Be that as it may, petitioners' claim that there
was a change in the factual scenario which are
"substantial changes in the facts" makes
respondent firm now liable for the same claim
they earlier filed against respondent which was
dismissed. It is thus axiomatic that the non-
compensability of the claim having been earlier
established, constitute the controlling legal rule
or decision between the parties and remains to
be the law of the case making this petition
without merit.
As aptly observed by the Solicitor General that
this petition is "clearly violative of the familiar
principle of res judicata. There will be no end to
this controversy if the light of the Minister of
Labor's decision dated May 12, 1979 that had
long acquired the character of finality and
which already resolved that petitioners' thirty
(30)-minute assembly time is not compensable,
the same issue can be re-litigated again." (Rollo,
p. 183)
This Court has held:
In this connection account should be taken of
the cognate principle that res judicata operates
to bar not only the relitigation in a subsequent
action of the issues squarely raised, passed
upon and adjudicated in the first suit, but also
the ventilation in said subsequent suit of any
other issue which could have been raised in the the National Labor Relations Commission is
first but was not. The law provides that 'the AFFIRMED.
judgment or order is, with respect to the matter
directly adjudged or as to any other matter that SO ORDERED.
could have been raised in relation thereto,
conclusive between the parties and their Melencio-Herrera (Chairperson), Padilla and
successors in interest by title subsequent to the Regalado, JJ., concur.
commencement of the action .. litigating for the
same thing and in the same capacity.' So, even
if new causes of action are asserted in the
second action (e.g. fraud, deceit, undue
machinations in connection with their execution
of the convenio de transaccion), this would not
preclude the operation of the doctrine of res
judicata. Those issues are also barred, even if
not passed upon in the first. They could have
been, but were not, there raised. (Vda. de
Buncio v. Estate of the late Anita de Leon, 156
SCRA 352 [1987]).

Moreover, as a rule, the findings of facts of

quasi-judicial agencies which have acquired
expertise because their jurisdiction is confined
to specific matters are accorded not only
respect but at times even finality if such
findings are supported by substantial evidence
(Special Events & Central Shipping Office
Workers Union v. San Miguel Corporation, 122
SCRA 557 [1983]; Dangan v. NLRC, 127 SCRA
706 [1984]; Phil. Labor Alliance Council v.
Bureau of Labor Relations, 75 SCRA 162 [1977];
Mamerto v. Inciong, 118 SCRA 265 (1982];
National Federation of Labor Union (NAFLU) v.
Ople, 143 SCRA 124 [1986]; Edi-Staff Builders
International, Inc. v. Leogardo, Jr., 152 SCRA
453 [1987]; Asiaworld Publishing House, Inc. v.
Ople, 152 SCRA 219 [1987]).

The records show that the Labor Arbiters'

decision dated October 9, 1985 (Annex "E",
Petition) pointed out in detail the basis of his
findings and conclusions, and no cogent reason
can be found to disturb these findings nor of
those of the National Labor Relations
Commission which affirmed the same.

PREMISES CONSIDERED, the petition is

DISMISSED for lack of merit and the decision of
FIRST DIVISION
[G.R. No. L-63122. February 20, 1984.]
UNIVERSITY OF PANGASINAN FACULTY UNION,
Petitioner, v. UNIVERSITY OF PANGASINAN
And NATIONAL LABOR RELATIONS
COMMISSION, Respondents.
Tanopo, Serafico, Juanitez & Callanta Law
Office and Hermogenes S. Decano for
Petitioner.
The Solicitor General for Respondents.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review on certiorari
pursuant to Rule 65 of the Rules of Court to
annul and to set aside the decision of
respondent National Labor Relations
Commission (NLRC) dated October 25, 1982,
dismissing the appeal of petitioner in NLRC Case
No. RBI-47-82, entitled "University of
Pangasinan Faculty Union, complainant, versus
University of Pangasinan, Respondent."
chanrobles law library : red
Petitioner is a labor union composed of faculty
members of the respondent University of
Pangasinan, an educational institution duly
organized and existing by virtue of the laws of
the Philippines.
On December 18, 1981, the petitioner, through
its President, Miss Consuelo Abad, filed a
complaint against the private respondent with
the Arbitration Branch of the NLRC, Dagupan
District Office, Dagupan City. The complaint
seeks: (a) the payment of Emergency Cost of
Living Allowances (ECOLA) for November 7 to
December 5, 1981, a semestral break; (b) salary
increases from the sixty (60%) percent of the
incremental proceeds of increased tuition fees;
and (c) payment of salaries for suspended extra
loads.
The petitioner’s members are full-time
professors, instructors, and teachers of
respondent University. The teachers in the
college level teach for a normal duration of ten
(10) months a school year, divided into two (2)
semesters of five (5) months each, excluding
the two (2) months summer vacation. These
teachers are paid their salaries on a regular
monthly basis.
In November and December, 1981, the
petitioner’s members were fully paid their
regular monthly salaries. However, from
November 7 to December 5, during the
semestral break, they were not paid their
ECOLA. The private respondent claims that the
teachers are not entitled thereto because the
semestral break is not an integral part of the
school year and there being no actual services
rendered by the teachers during said period,
the principle of "No work, no pay" applies.
During the same school year (1981-1982), the
private respondent was authorized by the
Ministry of Education and Culture to collect, as
it did collect, from its students a fifteen (15%)
percent increase of tuition fees. Petitioner’s
members demanded a salary increase effective
the first semester of said schoolyear to be taken
from the sixty (60%) percent incremental
proceeds of the increased tuition fees. Private
respondent refused, compelling the petitioner
to include said demand in the complaint filed in
the case at bar. While the complaint was
pending in the arbitration branch, the private
respondent granted an across-the-board salary
increase of 5.86%. Nonetheless, the petitioner
is still pursuing full distribution of the 60% of
the incremental proceeds as mandated by the
Presidential Decree No. 451.
Aside from their regular loads, some of
petitioner’s members were given extra loads to
handle during the same 1981-1982 schoolyear.
Some of them had extra loads to teach on
September 21, 1981, but they were unable to
teach as classes in all levels throughout the
country were suspended, although said days
was proclaimed by the President of the
Philippines as a working holiday. Those with
extra loads to teach on said day claimed they
were not paid their salaries for those loads, but
the private respondent claims otherwise.
The issue to be resolved in the case at bar are
the following:chanrob1es virtual 1aw library
I semestral breaks are in the nature of work
"WHETHER OR NOT PETITIONER’S MEMBERS
ARE ENTITLED TO ECOLA DURING THE
SEMESTRAL BREAK FROM NOVEMBER 7 TO
DECEMBER 5, 1981 OF THE 1981-82 SCHOOL
YEAR.
II
"WHETHER OR NOT 60% OF THE INCREMENTAL
PROCEEDS OF INCREASED TUITION FEES SHALL
BE DEVOTED EXCLUSIVELY TO SALARY
INCREASE,
III
"WHETHER OR NOT ALLEGED PAYMENT OF
SALARIES FOR EXTRA LOADS ON SEPTEMBER 21,
1981 WAS PROVEN BY SUBSTANTIAL
EVIDENCE."cralaw virtua1aw library
Anent the first issue, the various Presidential
Decrees on ECOLAs to wit: PD’s 1614, 1634,
1678 and 1713, provide on "Allowances of
Fulltime Employees . . ." that "Employees shall
be paid in full the required monthly allowance
regardless of the number of their regular
working days if they incur no absences during
the month. If they incur absences without pay,
the amounts corresponding to the absences
may be deducted from the monthly allowance .
. ." ; and on "Leave of Absence Without Pay",
that "All covered employees shall be entitled to
the allowance provided herein when they are
on leave of absence with pay."cralaw virtua1aw
library
It is beyond dispute that the petitioner’s
members are full-time employees receiving
their monthly salaries irrespective of the
number of working days or teaching hours in a
month. However, they find themselves in a
most peculiar situation whereby they are forced
to go on leave during semestral breaks. These
interruptions beyond the employees’ control.
The duration of the semestral break varies from
year to year dependent on a variety of
circumstances affecting at times only the
private respondent but at other times all
educational institutions in the country. As such,
these breaks cannot be considered as absences
within the meaning of the law for which
deductions may be made from monthly
allowances. The "No work, no pay" principle
does not apply in the instant case. The
petitioner’s members received their regular
salaries during this period. It is clear from the
aforequoted provision of law that it
contemplates a "no work" situation where the
employees voluntarily absent themselves.
Petitioners, in the case at bar, certainly do not,
ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained
to take mandatory leave from work. For this
they cannot be faulted nor can they be
begrudged that which is due them under the
law. To a certain extent, the private respondent
can specify dates when no classes would be
held. Surely, it was not the intention of the
framers of the law to allow employers to
withhold employee benefits by the simple
expedient of unilaterally imposing "no work"
days and consequently avoiding compliance
with the mandate of the law for those
days.chanrobles.com.ph : virtual law library
Respondent’s contention that "the fact of
receiving a salary alone should not be the basis
of receiving ECOLA", is, likewise, without merit.
Particular attention is brought to the
Implementing Rules and Regulations of Wage
Order No. 1 to wit.
SECTION 5. Allowance for Unworked Days.
— but goes beyond the classroom: a continuum
"a) All covered employees whether paid on
a monthly or daily basis shall be entitled to their
daily living allowance when they are paid their
basic wage."cralaw virtua1aw library
x x x prepare for the next semester or complete all of
This provision, at once refutes the above
contention. It is evident that the intention of
the law is to grant ECOLA upon the payment of
basic wages. Hence, we have the principle of
"No pay, no ECOLA" the converse of which finds
application in the case at bar. Petitioners
cannot be considered to be on leave without
pay so as not to be entitled to ECOLA, for, as
earlier stated, the petitioners were paid their
wages in full for the months of November and
December of 1981, notwithstanding the
intervening semestral break. This, in itself, is a
tacit recognition of the rather unusual state of
affairs in which teachers find themselves.
Although said to be on forced leave, professors
and teachers are, nevertheless, burdened with
the task of working during a period of time
supposedly available for rest and private
matters. There are papers to correct, students
to evaluate, deadlines to meet, and periods
within which to submit grading reports.
Although they may be considered by the
respondent to be on leave, the semestral break
could not be used effectively for the teacher’s
own purposes for the nature of a teacher’s job
imposes upon him further duties which must be
done during the said period of time. Learning is
a never ending process. Teachers and
professors must keep abreast of developments
all the time. Teachers cannot also wait for the
opening of the next semester to begin their
work. Arduous preparation is necessary for the
delicate task of educating our children.
Teaching involves not only an application of skill
and an imparting of knowledge, but a
responsibility which entails self dedication and
sacrifice. The task of teaching ends not with the
perceptible efforts of the petitioner’s members
where only the visible labor is relieved by
academic intermissions. It would be most unfair
for the private respondent to consider these
teachers as employees on leave without pay to
suit its purposes and, yet, in the meantime,
continue availing of their services as they
the last semester’s requirements. Furthermore,
we may also by analogy apply the principle
enunciated in the Omnibus Rules Implementing
the Labor Code to wit:chanrob1es virtual 1aw
library
Sec. 4. Principles in Determining Hours
Worked. — The following general principles
shall govern in determining whether the time
spent by an employee is considered hours
worked for purposes of this Rule:chanrob1es
virtual 1aw library
x x x
"(d) The time during which an employee is
inactive by reason of interruptions in his work
beyond his control shall be considered time
either if the imminence of the resumption of
work requires the employee’s presence at the
place of work or if the interval is too brief to be
utilized effectively and gainfully in the
employee’s own interest." (Emphasis supplied).
The petitioner’s members in the case at bar, are
exactly in such a situation. The semestral break
scheduled is an interruption beyond petitioner’s
control and it cannot be used "effectively nor
gainfully in the employee’s interest’. Thus, the
semestral break may also be considered as
"hours worked." For this, the teachers are paid
regular salaries and, for this, they should be
entitled to ECOLA. Not only do the teachers
continue to work during this short recess but
much less do they cease to live for which the
cost of living allowance is intended. The legal
principles of "No work, no pay; No pay, no
ECOLA" must necessarily give way to the
purpose of the law to augment the income of
employees to enable them to cope with the
harsh living conditions brought about by
inflation; and to protect employees and their
wages against the ravages brought by these
conditions. Significantly, it is the commitment of
the State to protect labor and to provide means
by which the difficulties faced by the working
force may best be alleviated. To submit to the
respondents’ interpretation of the no work, no
pay policy is to defeat this noble purpose. The
Constitution and the law mandate
otherwise.chanrobles.com:cralaw:red
With regard to the second issue, we are called
upon to interpret and apply Section 3 of
Presidential Decree 451 to wit:chanrob1es
virtual 1aw library
SEC. 3. Limitations. — The increase in tuition or
other school fees or other charges as well as the
new fees or charges authorized under the next
preceding section shall be subject to the
following conditions:jgc:chanrobles.com.ph
"(a) That no increase in tuition or other
school fees or charges shall be approved unless
sixty (60%) per centum of the proceeds is
allocated for increase in salaries or wages of the
members of the faculty and all other employees
of the school concerned, and the balance for
institutional development, student assistance
and extension services, and return to
investments: Provided, That in no case shall the
return to investments exceed twelve (12%) per
centum of the incremental proceeds; . . ."cralaw
virtua1aw library
x x x
This Court had the occasion to rule squarely on
this point in the very recent case entitled,
University of the East v. University of the East
Faculty Association, 117 SCRA 554. We held
that:jgc:chanrobles.com.ph
"In effect, the problem posed before Us is
whether or not the reference in Section 3(a) to
‘increase in salaries or wages of the faculty and
all other employees of the schools concerned’
as the first purpose to which the incremental
proceeds from authorized increases to tuition
fees may be devoted, may be construed to
include allowances and benefits. In the
negative, which is the position of respondents,
it would follow that such allowances must be
taken in resources of the school not derived
from tuition fees.
"Without delving into the factual issue of
whether or not there could be any such other
resources, We note that among the items of
second purpose stated in provision in question
is return in investment. And the law provides
only for a maximum, not a minimum. In other
words, the schools may get a return to
investment of not more than 12%, but if
circumstances warrant, there is no minimum
fixed by law which they should get.
"On this predicate, We are of the considered
view that, if the school happen to have no other
resources to grant allowances and benefits,
either mandated by law or secured by collective
bargaining, such allowances and benefits should
be charged against the return to investments
referred to in the second purpose stated in
Section 3(a) of P.D. 451."cralaw virtua1aw
library
Private respondent argues that the above
interpretation "disregarded the intention and
spirit of the law" which intention is clear from
the "whereas" clauses as
follows:jgc:chanrobles.com.ph
"It is imperative that private educational
institutions upgrade classroom instruction . . .
provide salary and or wage increases and other
benefits . . ."cralaw virtua1aw library
Respondent further contends that PD 451 was
issued to alleviate the sad plight of private
schools, their personnel and all those directly or
indirectly on school income as the decree was
aimed —
". . . to upgrade classroom instruction by
improving their facilities and bring competent
teachers in all levels of education, provide
salary and or wage increases and other benefits
to their teaching, administrative, and other
personnel to keep up with the increasing cost of
living." (Emphasis supplied)
Respondent overlooks the elemental principle
of statutory construction that the general
statements in the whereas clauses cannot
prevail over the specific or particular
statements in the law itself which define or limit
the purposes of the legislation or proscribe
certain acts. True, the whereas clauses of PD
451 provide for salary and or wage increase and
other benefits, however, the same do not
delineate the source of such funds and it is only
in Section 3 which provides for the limitations
wherein the intention of the framers of the law
is clearly outlined. The law is clear. The sixty
(60%) percent incremental proceeds from the
tuition increase are to be devoted entirely to
wage or salary increases which means increases
in basic salary. The law cannot be construed to
include allowances which are benefits over and
above the basic salaries of the employees. To
charge such benefits to the 60% incremental
proceeds would be to reduce the increase in
basic salary provided by law, an increase
intended also to help the teachers and other
workers tide themselves and their families over
these difficult economic times.chanrobles
virtual lawlibrary
This Court is not guilty of usurpation of
legislative functions as claimed by the
respondents. We expressed the opinion in the
University of the East case that benefits
mandated by law and collective bargaining may
be charged to the 12% return on investments
within the 40% incremental proceeds of tuition
increase. As admitted by respondent, we
merely made this statement as a suggestion in
answer to the respondent’s query as to where
then, under the law, can such benefits be
charged. We were merely interpreting the
meaning of the law within the confines of its
provisions. The law provides that 60% should go
to wage increases and 40% to institutional
developments, student assistance, extension
services, and return on investments (ROI).
Under the law, the last item ROI has flexibility
sufficient to accommodate other purposes of
the law and the needs of the university. ROI is
not set aside for any one purpose of the
university such as profits or returns on
investments. The amount may be used to
comply with other duties and obligations
imposed by law which the university exercising
managerial prerogatives finds cannot under
present circumstances, be funded by other
revenue sources. It may be applied to any other
collateral purpose of the university or invested
elsewhere. Hence, the framers of the law
intended this portion of the increases in tuition
fees to be a general fund to cover up for the
university’s miscellaneous expenses and,
precisely, for this reason, it was not so
delimited. Besides, ROI is a return or profit over
and above the operating expenditures of the
university, and still, over and above the profits
it may have had prior to the tuition increase.
The earning capacities of private educational
institutions are not dependent on the increases
in tuition fees allowed by P.D. 451.
Accommodation of the allowances required by
law require wise and prudent management of
all the university resources together with the
incremental proceeds of tuition increases.
Cognizance should be taken of the fact that the
private respondent had, before PD 451,
managed to grant all allowances required by
law. It cannot now claim that it could not afford
the same, considering that additional funds are
even granted them by the law in question. We
find no compelling reason, therefore, to deviate
from our previous ruling in the University of the
East case even as we take the second hard look
at the decision requested by the private
Respondent. This case was decided in 1982
when PDs 1614, 1634, 1678, and 1713 which
are also the various Presidential Decrees on
ECOLA were already in force. PD 451 was
interpreted in the light of these subsequent
legislations which bear upon but do not modify
nor amend, the same. We need not go beyond
the ruling in the University of the East case.
Coming now to the third issue, the respondents
are of the considered view that as evidenced by
the payrolls submitted by them during the
period September 16 to September 30, 1981,
the faculty members have been paid for the
extra loads. We agree with the respondents
that this issue involves a question of fact
properly within the competence of the
respondent NLRC to pass upon. The findings of
fact of the respondent Commission are binding
on this Court there being no indication of their
being unsubstantiated by evidence. We find no
grave abuse in the findings of respondent NLRC
on this matter to warrant reversal. Assuming
arguendo, however, that the petitioners have
not been paid for these extra loads, they are
not entitled to payment following the principles
of "No work, no pay." This time, the rule
applies. Involved herein is a matter different
from the payment of ECOLA under the first
issue. We are now concerned with extra, not
regular loads for which the petitioners are paid
regular salaries every month regardless of the
number of working days or hours in such a
month. Extra loads should be paid for only
when actually performed by the employee.
Compensation is based, therefore, on actual
work done and on the number of hours and
days spent over and beyond their regular hours
of duty. Since there was no work on September
21, 1981, it would now be unfair to grant
petitioner’s demand for extra wages on that
day.chanrobles law library : red
Finally, disposing of the respondent’s charge of
petitioner’s lack of legal capacity to sue, suffice
it to say that this question can no longer be
raised initially on appeal or certiorari. It is quite
belated for the private respondent to question
the personality of the petitioner after it had
dealt with it as a party in the proceedings
below. Furthermore, it was not disputed that
the petitioner is a duly registered labor
organization and as such has the legal capacity
to sue and be sued. Registration grants it the
rights of a legitimate labor organization and
recognition by the respondent University is not
necessary for it to institute this action in behalf
of its members to protect their interests and
obtain relief from grievances. The issues raised
by the petitioner do not involve pure money
claims but are more intricately intertwined with
conditions of employment.
WHEREFORE the petition for certiorari is hereby
GRANTED. The private respondent is ordered to
pay its regular fulltime teachers/employees
emergency cost of living allowances for the
semestral break from November 7 to December
5, 1981 and the undistributed balance of the
sixty (60%) percent incremental proceeds from
tuition increases for the same schoolyear as
outlined above. The respondent Commission is
sustained insofar as it DENIED the payment of
salaries for the suspended extra loads on
September 21, 1981.
SO ORDERED.
Teehankee, Melencio-Herrera, Plana and
Relova, JJ., concur.
G.R. No. 96078 January 9, 1992
HILARIO RADA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION
(Second Division) and PHILNOR CONSULTANTS
AND PLANNERS, INC., respondents.
Cabellero, Calub, Aumentado & Associates Law
Offices for petitioner.
REGALADO, J.:
In this special civil action for certiorari,
petitioner Rada seeks to annul the decision of
respondent National Labor Relations
Commission (NLRC), dated November 19, 1990,
reversing the decision of the labor arbiter which
ordered the reinstatement of petitioner with
backwages and awarded him overtime pay. 1
The facts, as stated in the Comment of private
respondent Philnor Consultants and Planners,
Inc. (Philnor), are as follows:
Petitioner's initial employment with this
Respondent was under a "Contract of
Employment for a Definite Period" dated July 7,
1977, copy of which is hereto attached and
made an integral part hereof as Annex A
whereby Petitioner was hired as "Driver" for the
construction supervision phase of the Manila
North Expressway Extension, Second Stage
(hereinafter referred to as MNEE Stage 2) for a
term of "about 24 months effective July 1, 1977.
xxx xxx xxx
Highlighting the nature of Petitioner's
employment, Annex A specifically provides as
follows:
It is hereby understood that the Employer does
not have a continuing need for the services of
the Employee beyond the termination date of
this contract and that the Employee's services
shall automatically, and without notice,
terminate upon the completion of the above
specified phase of the project; and that it is
further understood that the engagement of
his/her services is coterminus with the same
and not with the whole project or other phases
thereof wherein other employees of similar
position as he/she have been hired. (Par. 7,
emphasis supplied)
Petitioner's first contract of employment
expired on June 30, 1979. Meanwhile, the main
project, MNEE Stage 2, was not finished on
account of various constraints, not the least of
which was inadequate funding, and the same
was extended and remained in progress beyond
the original period of 2.3 years. Fortunately for
the Petitioner, at the time the first contract of
employment expired, Respondent was in need
of Driver for the extended project. Since
Petitioner had the necessary experience and his
performance under the first contract of
employment was found satisfactory, the
position of Driver was offered to Petitioner,
which he accepted. Hence a second Contract of
Employment for a Definite Period of 10 months,
that is, from July 1, 1979 to April 30, 1980 was
executed between Petitioner and Respondent
on July 7, 1979. . . .
In March 1980 some of the areas or phases of
the project were completed, but the bulk of the
project was yet to be finished. By that time
some of those project employees whose
contracts of employment expired or were about
to expire because of the completion of portions
of the project were offered another
employment in the remaining portion of the
project. Petitioner was among those whose
contract was about to expire, and since his
service performance was satisfactory,
respondent renewed his contract of
employment in April 1980, after Petitioner
agreed to the offer. Accordingly, a third
contract of employment for a definite period
was executed by and between the Petitioner
and the Respondent whereby the Petitioner
was again employed as Driver for 19 months,
from May 1, 1980 to November 30, 1981, . . .

This third contract of employment was
subsequently extended for a number of times,
the last extension being for a period of 3
months, that is, from October 1, 1985 to
December 31, 1985, . . .
The last extension, from October 1, 1985 to
December 31, 1985 (Annex E) covered by an
"Amendment to the Contract of Employment
with a Definite Period," was not extended any
further because Petitioner had no more work to
do in the project. This last extension was
confirmed by a notice on November 28, 1985
duly acknowledged by the Petitioner the very
next day, . . .
Sometime in the 2nd week of December 1985,
Petitioner applied for "Personnel Clearance"
with Respondent dated December 9, 1985 and
acknowledged having received the amount of
P3,796.20 representing conversion to cash of
unused leave credits and financial assistance.
Petitioner also released Respondent from all
obligations and/or claims, etc. in a "Release,
Waiver and Quitclaim" . . . 2
Culled from the records, it appears that on May
20, 1987, petitioner filed before the NLRC,
National Capital Region, Department of Labor
and Employment, a Complaint for non-payment
of separation pay and overtime pay. On June 3,
1987, Philnor filed its Position Paper alleging,
inter alia, that petitioner was not illegally
terminated since the project for which he was
hired was completed; that he was hired under
three distinct contracts of employment, each of
which was for a definite period, all within the
estimated period of MNEE Stage 2 Project,
covering different phases or areas of the said
project; that his work was strictly confined to
the MNEE Stage 2 Project and that he was
never assigned to any other project of Philnor;
that he did not render overtime services and
that there was no demand or claim for him for
such overtime pay; that he signed a "Release,
Waiver and Quitclaim" releasing Philnor from all
obligations and claims; and that Philnor's
business is to provide engineering consultancy
services, including supervision of construction
services, such that it hires employees according
to the requirements of the project manning
schedule of a particular contract. 3
On July 2, 1987, petitioner filed an Amended
Complaint alleging that he was illegally
dismissed and that he was not paid overtime
pay although he was made to render three
hours overtime work form Monday to Saturday
for a period of three years.
On July 7, 1987, petitioner filed his Position
Paper claiming that he was illegally dismissed
since he was a regular employee entitled to
security of tenure; that he was not a project
employee since Philnor is not engaged in the
construction business as to be covered by Policy
Instructions No. 20; that the contract of
employment for a definite period executed
between him and Philnor is against public policy
and a clear circumvention of the law designed
merely to evade any benefits or liabilities under
the statute; that his position as driver was
essential, necessary and desirable to the
conduct of the business of Philnor; that he
rendered overtime work until 6:00 p.m. daily
except Sundays and holidays and, therefore, he
was entitled to overtime pay. 4
In his Reply to Respondent's Position Paper,
petitioner claimed that he was a regular
employee pursuant to Article 278(c) of the
Labor Code and, thus, he cannot be terminated
except for a just cause under Article 280 of the
Code; and that the public respondent's ruling in
Quiwa vs. Philnor Consultants and Planners, Inc.
5 is not applicable to his case since he was an
administrative employee working as a company
driver, which position still exists and is essential
to the conduct of the business of Philnor even
after the completion of his contract of
employment. 6 Petitioner likewise avers that
the contract of employment for a definite
period entered into between him and Philnor
was a ploy to defeat the intent of Article 280 of
the Labor Code.

On July 28, 1987, Philnor filed its Respondent's
Supplemental Position Paper, alleging therein
that petitioner was not a company driver since
his job was to drive the employees hired to
work at the MNEE Stage 2 Project to and from
the filed office at Sto. Domingo Interchange,
Pampanga; that the office hours observed in
the project were from 7:00 a.m. to 4:00 p.m.
Mondays through Saturdays; that Philnor
adopted the policy of allowing certain
employees, not necessarily the project driver,
to bring home project vehicles to afford fast
and free transportation to and from the project
field office considering the distance between
the project site and the employees' residence,
to avoid project delays and inefficiency due to
employee tardiness caused by transportation
problem; that petitioner was allowed to use a
project vehicle which he used to pick up and
drop off some ten employees along Epifanio de
los Santos Avenue (EDSA), on his way home to
Marikina, Metro Manila; that when he was
absent or on leave, another employee living in
Metro Manila used the same vehicle in
transporting the same employees; that the time
used by petitioner to and from his residence to
the project site from 5:30 a.m. to 7:00 a.m. and
from 4:00 p.m. to 6:00 p.m., or about three
hours daily, was not overtime work as he was
merely enjoying the benefit and convenience of
free transportation provided by Philnor,
otherwise without such vehicle he would have
used at least four hours by using public
transportation and spent P12.00 daily fare; that
in the case of Quiwa vs. Philnor Consultants and
Planners, Inc., supra, the NLRC upheld Philnor's
position that Quiwa was a project employee
and he was not entitled to termination pay
under Policy Instructions No. 20 since his
employment was coterminous with the
completion of the project.
On August 25, 1987, Philnor filed its
Respondent's Reply/Comments to
Complainant's Rejoinder and Reply, submitting
therewith two letters dated January 5, 1985 and
February 6, 1985, signed by MNEE Stage 2
Project employees, including herein petitioner,
where they asked what termination benefits
could be given to them as the MNEE Stage 2
Project was nearing completion, and Philnor's
letter-reply dated February 22, 1985 informing
them that they are not entitled to termination
benefits as they are contractual/project
employees.
On August 31, 1989, Labor Arbiter Dominador
M. Cruz rendered a decision 7 with the
following dispositive portion:
WHEREFORE, in view of all the foregoing
considerations, judgment is hereby rendered:
(1) Ordering the respondent company to
reinstate the complainant to his former position
without loss of seniority rights and other
privileges with full backwages from the time of
his dismissal to his actual reinstatement;
(2) Directing the respondent company to
pay the complainant overtime pay for the three
excess hours of work performed during working
days from January 1983 to December 1985; and
(3) Dismissing all other claims for lack of
merit.
SO ORDERED.
Acting on Philnor's appeal, the NLRC rendered
its assailed decision dated November 19, 1990,
setting aside the labor arbiter's aforequoted
decision and dismissing petitioner's complaint.
Hence this petition wherein petitioner charges
respondent NLRC with grave abuse of discretion
amounting to lack of jurisdiction for the
following reasons:
1. The decision of the labor arbiter, dated
August 31, 1989, has already become final and
executory;
2. The case of Quiwa vs. Philnor
Consultants and Planners, Inc. is not binding nor
is it applicable to this case;
3. The petitioner is a regular employee
with eight years and five months of continuous
services for his employer, private respondent
Philnor;
4. The claims for overtime services,
reinstatement and full backwages are valid and
meritorious and should have been sustained;
and
5. The decision of the labor arbiter should
be reinstated as it is more in accord with the
facts, the law and evidence.
The petition is devoid of merit.
1. Petitioner questions the jurisdiction of
respondent NLRC in taking cognizance of the
appeal filed by Philnor in spite of the latter's
failure to file a supersedeas bond within ten
days from receipt of the labor arbiter's decision,
by reason of which the appeal should be
deemed to have been filed out of time. It will be
noted, however, that Philnor was able to file a
bond although it was made beyond the 10-day
reglementary period.
While it is true that the payment of the
supersedeas bond is an essential requirement in
the perfection of an appeal, however, where
the fee had been paid although payment was
delayed, the broader interests of justice and the
desired objective of resolving controversies on
the merits demands that the appeal be given
due course. Besides, it was within the inherent
power of the NLRC to have allowed late
payment of the bond, considering that the
aforesaid decision of the labor arbiter was
received by private respondent on October 3,
1989 and its appeal was duly filed on October
13, 1989. However, said decision did not state
the amount awarded as backwages and
overtime pay, hence the amount of the
supersedeas bond could not be determined. It
was only in the order of the NLRC of February
16, 1990 that the amount of the supersedeas
bond was specified and which bond, after an
extension granted by the NLRC, was timely filed
by private respondent.
Moreover, as provided by Article 221 of the
Labor Code, "in any proceeding before the
Commission or any of the Labor Arbiters, the
rules of evidence prevailing in Courts of law or
equity shall not be controlling and it is the spirit
and intention of this Code that the Commission
and its members and the Labor Arbiters shall
use every and all reasonable means to ascertain
the facts in each case speedily and objectively
without regard to technicalities of law or
procedure, all in the interest of due process. 8
Finally, the issue of timeliness of the appeal
being an entirely new and unpleaded matter in
the proceedings below it may not now be raised
for the first time before this Court. 9
2. Petitioner postulates that as a regular
employee, he is entitled to security of tenure,
hence he cannot be terminated without cause.
Private respondent Philnor believes otherwise
and asserts that petitioner is merely a project
employee who was terminated upon the
completion of the project for which he was
employed.
In holding that petitioner is a regular employee,
the labor arbiter found that:
. . . There is no question that the complainant
was employed as driver in the respondent
company continuously from July 1, 1977 to
December 31, 1985 under various contracts of
employment. Similarly, there is no dispute that
respondent Philnor Consultant & Planner, Inc.,
as its business name connotes, has been
engaged in providing to its client(e)le
engineering consultancy services. The record
shows that while the different labor contracts
executed by the parties stipulated definite
periods of engaging the services of the
complainant, yet the latter was suffered to
continue performing his job upon the expiration
of one contract and the renewal of another.
Under these circumstances, the complaint has
obtained the status of regular employee, it
appearing that he has worked without fail for
almost eight years, a fraction of six months
considered as one whole year, and that his
assigned task as driver was necessary and
desirable in the usual trade/business of the
respondent employer. Assuming to be true, as
spelled out in the employment contract, that
the Employer has no "continuing need for the
services of the Employe(e) beyond the
termination date of this contract and that the
Employee's services shall automatically, and
without notice, terminate upon completion of
the above specified phase of the project," still
we cannot see our way clear why the
complainant was hired and his services engaged
contract after contract straight from 1977 to
1985 which, to our considered view, lends
credence to the contention that he worked as
regular driver ferrying early in the morning
office personnel to the company main office in
Pampanga and bringing back late in the
afternoon to Manila, and driving company
executives for inspection of construction
workers to the jobsites. All told, we believe that
the complainant, under the environmental facts
obtaining in the case at bar, is a regular
employee, the provisions of written agreement
to the
contrary notwithstanding and regardless of the
oral understanding of the parties . . . 10
On the other hand, respondent NLRC declared
that, as between the uncorroborated and
unsupported assertions of petitioners and those
of private respondent which are supported by
documents, greater credence should be given
the latter. It further held that:
Complainant was hired in a specific project or
undertaking as driver. While such project was
still on-going he was hired several times with
his employment period fixed every time his
contract was renewed. At the completion of the
specific project or undertaking his employment
contract was not renewed.
We reiterate our ruling in the case of (Quiwa)
vs. Philnor Consultants and Planners, Inc., NLRC
RAB III 5-1738-84, it is being applicable in this
case, viz.:
. . . While it is true that the activities performed
by him were necessary or desirable in the usual
business or trade of the respondent as
consultants, planners, contractor and while it is
also true that the duration of his employment
was for a period of about seven years, these
circumstances did not make him a
regular employee in contemplation of Article
281 of (the) Labor Code. . . . 11
Our ruling in Sandoval Shipyards, Inc. vs.
National Labor Relations Commission, et al. 12
is applicable to the case at bar. Thus:
We hold that private respondents were project
employees whose work was coterminous with
the project or which they were hired. Project
employees, as distinguished from regular or
non-project employees, are mentioned in
section 281 of the Labor Code as those "where
the employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee."
Policy Instructions No. 20 of the Secretary of
Labor, which was issued to stabilize employer-
employee relations in the construction industry,
provides:
Project employees are those employed in
connection with a particular construction
project. Non-project (regular) employees are
those employed by a construction company
without reference to any particular project.
Project employees are not entitled to
termination pay if they are terminated as a
result of the completion of the project or any
phase thereof in which they are employed,
regardless of the number of projects in which
they have been employed by a particular
construction company. Moreover, the company
is not required to obtain clearance from the
Secretary of Labor in connection with such
termination.
The petitioner cited three of its own cases
wherein the National Labor Relations
Commission, Deputy Minister of Labor and
Employment Inciong and the Director of the
National Capital Region held that the layoff of
its project employees was lawful. Deputy
Minister Inciong in TFU Case No. 1530, In Re
Sandoval Shipyards, Inc. Application for
Clearance to Terminate Employees, rendered
the following ruling on February 26, 1979;
We feel that there is merit in the contention of
the applicant corporation. To our mind, the
employment of the employees concerned were
fixed for a specific project or undertaking. For
the nature of the business the corporation is
engaged into is one which will not allow it to
employ workers for an indefinite period.
It is significant to note that the corporation
does not construct vessels for sale or otherwise
which will demand continuous productions of
ships and will need permanent or regular
workers. It merely accepts contracts for
shipbuilding or for repair of vessels form third
parties and, only, on occasion when it has work
contract of this nature that it hires workers to
do the job which, needless to say, lasts only for
less than a year or longer.
The completion of their work or project
automatically terminates their employment, in
which case, the employer is, under the law, only
obliged to render a report on the termination of
the employment. (139-140, Rollo of G.R. No.
65689) (Emphasis supplied)
In Cartagenas, et al. vs. Romago Electric
Company, Inc., et al., 13 we likewise held that:
As an electrical contractor, the private
respondent depends for its business on the
contracts it is able to obtain from real estate
developers and builders of buildings. Since its
work depends on the availability of such
contracts or "projects," necessarily the duration
of the employment's of this work force is not
permanent but co-terminus with the projects to
which they are assigned and from whose
payrolls they are paid. It would be extremely
burdensome for their employer who, like them,
depends on the availability of projects, if it
would have to carry them as permanent
employees and pay them wages even if there
are no projects for them to work on. (Emphasis
supplied.)
It must be stressed herein that although
petitioner worked with Philnor as a driver for
eight years, the fact that his services were
rendered only for a particular project which
took that same period of time to complete
categorizes him as a project employee.
Petitioner was employed for one specific
project.
A non-project employee is different in that the
employee is hired for more than one project. A
non-project employee, vis-a-vis a project
employee, is best exemplified in the case of
Fegurin, et al. vs. National Labor Relations
Commission, et al. 14 wherein four of the
petitioners had been working with the company
for nine years, one for eight years, another for
six years, the shortest term being three years. In
holding that petitioners are regular employees,
this Court therein explained:
Considering the nature of the work of
petitioners, that of carpenter, laborer or mason,
their respective jobs would actually be
continuous and on-going. When a project to
which they are individually assigned is
completed, they would be assigned to the next
project or a phase thereof. In other words, they
belonged to a "work pool" from which the
company would draw workers for assignment
to other projects at its discretion. They are,
therefore, actually "non-project employees."
From the foregoing, it is clear that petitioner is
a project employee considering that he does
not belong to a "work pool" from which the
company would draw workers for assignment
to other projects at its discretion. It is likewise
apparent from the facts obtaining herein that
petitioner was utilized only for one particular
project, the MNEE Stage 2 Project of
respondent company. Hence, the termination
of herein petitioner is valid by reason of the
completion of the project and the expiration of
his employment contract.
3. Anent the claim for overtime
compensation, we hold that petitioner is
entitled to the same. The fact that he picks up
employees of Philnor at certain specified points
along EDSA in going to the project site and
drops them off at the same points on his way
back from the field office going home to
Marikina, Metro Manila is not merely incidental
to petitioner's job as a driver. On the contrary,
said transportation arrangement had been
adopted, not so much for the convenience of
the employees, but primarily for the benefit of
the employer, herein private respondent. This
fact is inevitably deducible from the
Memorandum of respondent company:
The herein Respondent resorted to the above
transport arrangement because from its
previous project construction supervision
experiences, Respondent found out that project
delays and inefficiencies resulted from
employees' tardiness; and that the problem of
tardiness, in turn, was aggravated by
transportation problems, which varied in
degrees in proportion to the distance between
the project site and the employees' residence.
In view of this lesson from experience, and as a
practical, if expensive, solution to employees'
tardiness and its concomitant problems,
Respondent adopted the policy of allowing
certain employees — not necessarily project
drivers — to bring home project vehicles, so
that employees could be afforded fast,
convenient and free transportation to and from
the project field office. . . . 15
Private respondent does not hesitate to admit
that it is usually the project driver who is tasked
with picking up or dropping off his fellow
employees. Proof thereof is the undisputed fact
that when petitioner is absent, another driver is
supposed to replace him and drive the vehicle
and likewise pick up and/or drop off the other
employees at the designated points on EDSA. If
driving these employees to and from the
project site is not really part of petitioner's job,
then there would have been no need to find a
replacement driver to fetch these employees.
But since the assigned task of fetching and
delivering employees is indispensable and
consequently mandatory, then the time
required of and used by petitioner in going from
his residence to the field office and back, that is,
from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m.
to around 6:00 p.m., which the labor arbiter
rounded off as averaging three hours each
working day, should be paid as overtime work.
Quintessentially, petitioner should be given
overtime pay for the three excess hours of work
performed during working days from January,
1983 to December, 1985.
WHEREFORE, subject to the modification
regarding the award of overtime pay to herein
petitioner, the decision appealed from is
AFFIRMED in all other respects.
SO ORDERED.
Melencio-Herrera, Paras and Padilla, JJ., concur.
[G.R. No. 100388. December 14, 2000]
SOCIAL SECURITY SYSTEM, petitioner, vs. THE
COURT OF APPEALS and CONCHITA AYALDE,
respondents.
DECISION
YNARES-SANTIAGO, J.:
In a petition before the Social Security
Commission, Margarita Tana, widow of the late
Ignacio Tana, Sr., alleged that her husband was,
before his demise, an employee of Conchita
Ayalde as a farmhand in the two (2) sugarcane
plantations she owned (known as Hda. No.
Audit B-70 located in Pontevedra, La Carlota
City) and leased from the University of the
Philippines (known as Hda. Audit B-15-M
situated in La Granja, La Carlota City). She
further alleged that Tana worked continuously
six (6) days a week, four (4) weeks a month, and
for twelve (12) months every year between
January 1961 to April 1979. For his labor, Tana
allegedly received a regular salary according to
the minimum wage prevailing at the time. She
further alleged that throughout the given
period, social security contributions, as well as
medicare and employees compensation
premiums were deducted from Tanas wages. It
was only after his death that Margarita
discovered that Tana was never reported for
coverage, nor were his contributions/premiums
remitted to the Social Security System (SSS).
Consequently, she was deprived of the burial
grant and pension benefits accruing to the heirs
of Tana had he been reported for coverage.
Hence, she prayed that the Commission issue
an order directing:
1. respondents Conchita Ayalde and Antero
Maghari as her administrator to pay the
premium contributions of the deceased Ignacio
Tana, Sr. and report his name for SSS coverage;
and
2. the SSS to grant petitioner Margarita Tana
the funeral and pension benefits due her.[1]
The SSS, in a petition-in-intervention, revealed
that neither Hda. B-70 nor respondents Ayalde
and Maghari were registered members-
employers of the SSS, and consequently, Ignacio
Tana, Sr. was never registered as a member-
employee. Likewise, SSS records reflected that
there was no way of verifying whether the
alleged premium contributions were remitted
since the respondents were not registered
members-employers. Being the agency charged
with the implementation and enforcement of
the provisions of the Social Security Law, as
amended, the SSS asked the Commissions leave
to intervene in the case.[2]
In his answer, respondent Antero Maghari
raised the defense that he was a mere
employee who was hired as an overseer of Hda.
B-70 sometime during crop years 1964-65 to
1971-72, and as such, his job was limited to
those defined for him by the employer which
never involved matters relating to the SSS.
Hence, he prayed that the case against him be
dismissed for lack of cause of action.[3]
For her part, respondent Ayalde belied the
allegation that Ignacio Tana, Sr. was her
employee, admitting only that he was hired
intermittently as an independent contractor to
plow, harrow, or burrow Hda. No. Audit B-15-
M. Tana used his own carabao and other
implements, and he followed his own schedule
of work hours. Ayalde further alleged that she
never exercised control over the manner by
which Tana performed his work as an
independent contractor. Moreover, Ayalde
averred that way back in 1971, the University of
the Philippines had already terminated the
lease over Hda. B-15-M and she had since
surrendered possession thereof to the
University of the Philippines. Consequently,
Ignacio Tana, Sr. was no longer hired to work
thereon starting in crop year 1971-72, while he
was never contracted to work in Hda. No. Audit
B-70. She also prayed for the dismissal of the
case considering that Ignacio Tana, Sr. was
never her employee.[4]
After hearing both parties, the Social Security
Commission issued a Resolution on January 28,
1988, the dispositive portion of which reads:
After a careful evaluation of the testimonies of
the petitioner and her witnesses, as well as the
testimony of the respondent together with her
documentary evidences, this Commission finds
that the late Ignacio Tana was employed by
respondent Conchita Ayalde from January 1961
to March 1979. The testimony of the petitioner
which was corroborated by Agaton Libawas and
Aurelio Tana, co-workers of the deceased
Ignacio Tana, sufficienty established the latters
employment with the respondent.
As regards respondent Antero Maghari, he is
absolved from liability because he is a mere
employee of Conchita Ayalde.
PREMISES CONSIDERED, this Commission finds
and so holds that the late Ignacio Tana had
been employed continuously from January 1961
to March 1979 in Hda. B-70 and Hda. B-15-M
which are owned and leased, respectively, by
respondent Conchita (Concepcion) Ayalde with
a salary based on the Minimum Wage prevailing
during his employment.
Not having reported the petitioners husband for
coverage with the SSS, respondent Conchita
(Concepcion) Ayalde is, therefore, liable for the
payment of damages equivalent to the death
benefits in the amount of P7,067.40 plus the
amount of P750.00 representing funeral benefit
or a total of P7,817.40.
Further, the SSS is ordered to pay to the
petitioner her accrued pension covering the
period after the 5-year guaranteed period
corresponding to the employers liability.
SO ORDERED.[5]
Respondent Ayalde filed a motion for
reconsideration[6]which the Commission
denied for lack of merit in an Order dated
November 3, 1988.[7]
Not satisfied with the Commissions ruling,
Ayalde appealed to the Court of Appeals,
docketed as CA-G.R. SP No. 16427, raising the
following assignment of errors:
I
The Social Security Commission erred in not
finding that there is sufficient evidence to show
that:
(a) The deceased Ignacio Tana, Sr. never worked
in the farmland of respondent-appellant
situated in Pontevedra, La Carlota City,
otherwise known as Hacienda No. Audit B-70,
(Pontevedra B-70 Farm for short), in any
capacity, whether as a daily or monthly laborer
or as independent contractor;
(b) During the time that respondent-appellant
was leasing a portion of the land of the
University of the Philippines, otherwise known
as Hacienda Audit No. B-15-M, (La Granja B-15
Farm for short), the deceased Ignacio Tana, Sr.
was hired thereat on a pakyaw basis, or as an
independent contractor, performing the
services of an arador (Plower), for which he was
proficient, using his own carabao and farming
implements on his own time and discretion
within the period demanded by the nature of
the job contracted.
II
The Social Security Commission erred in holding
that there is no evidence whatsoever to show
that respondent-appellant was no longer
leasing La Granja B-15 Farm.
III
The Social Security Commission erred in not
holding that the deceased Ignacio Tana, having
been hired as an independent contractor on
pakyaw basis, did not fall within the coverage of
the Social Security Law.[8]
The Court of Appeals rendered judgment in
favor of respondent-appellant Conchita Ayalde
and dismissed the claim of petitioner Margarita
Tan.
The SSS, as intervenor-appellee, filed a Motion
for Reconsideration, which was denied on the
ground that the arguments advanced are mere
reiterations of issues and arguments already
considered and passed upon in the decision in
question which are utterly insufficient to justify
a modification or reversal of said decision.[9]
Hence, this petition for review on certiorari on
the following assigned errors:
1) The Court of Appeals was in error in ruling
that an employee working under the pakyaw
system is considered under the law to be an
independent contractor.
2) The Court of Appeals was in error in not
giving due consideration to the fundamental
tenet that doubts in the interpretation and
implementation of labor and social welfare laws
should be resolved in favor of labor.
3) The Court of Appeals was in error in
disregarding the settled rule that the factual
findings of administrative bodies on matters
within their competence shall not be disturbed
by the courts.
4) The Court of Appeals was in error in ruling
that even granting arguendo that Ignacio Tana
was employed by Conchita Ayalde, such
employment did not entitle him to compulsory
coverage since he was not paid any regular daily
wage or basic pay and he did not work for an
uninterrupted period of at least six months in a
year in accordance with Section 8(j) (1) of the SS
Law.
The pivotal issue to be resolved in this petition
is whether or not an agricultural laborer who
was hired on pakyaw basis can be considered
an employee entitled to compulsory coverage
and corresponding benefits under the Social
Security Law.
Petitioner, Social Security System (or SSS),
argues that the deceased Ignacio Tana, Sr., who
was hired by Conchita Ayalde on pakyaw basis
to perform specific tasks in her sugarcane
plantations, should be considered an employee;
and as such, his heirs are entitled to pension
and burial benefits.
The Court of Appeals, however, ruled
otherwise, reversing the ruling of the Social
Security Commission and declaring that the late
Ignacio Tana, Sr. was an independent
contractor, and in the absence of an employer-
employee relationship between Tana and
Ayalde, the latter cannot be compelled to pay
to his heirs the burial and pension benefits
under the SS Law.
At the outset, we reiterate the well-settled
doctrine that the existence of an employer-
employee relationship is ultimately a question
of fact.[10] And while it is the general rule that
factual issues are not within the province of the
Supreme Court, said rule is not without
exception. In cases, such as this one, where
there are conflicting and contradictory findings
of fact, this Court has not hesitated to scrutinize
the records to determine the facts for itself.[11]
Our disquisition of the facts shall be our guide
as to whose findings are supported by
substantial evidence.
The mandatory coverage under the SSS Law
(Republic Act No. 1161, as amended by PD 1202
and PD 1636) is premised on the existence of an
employer-employee relationship, and Section
8(d) defines an employee as any person who
performs services for an employer in which
either or both mental and physical efforts are
used and who receives compensation for such
services where there is an employer-employee
relationship. The essential elements of an
employer-employee relationship are: (a) the
selection and engagement of the employee; (b)
the payment of wages; (c) the power of
dismissal; and (d) the power of control with
regard to the means and methods by which the
work is to be accomplished, with the power of
control being the most determinative
factor.[12]
There is no question that Tana was selected and
his services engaged by either Ayalde herself, or
by Antero Maghari, her overseer. Corollarily,
they also held the prerogative of dismissing or
terminating Tanas employment. The dispute is
in the question of payment of wages. Claimant
Margarita Tana and her corroborating witnesses
testified that her husband was paid daily wages
per quincena as well as on pakyaw basis.
Ayalde, on the other hand, insists that Tana was
paid solely on pakyaw basis. To support her
claim, she presented payrolls covering the
period January of 1974 to January of 1976;[13]
and November of 1978 to May of 1979.[14]
A careful perusal of the records readily show
that the exhibits offered are not complete, and
are but a mere sampling of payrolls. While the
names of the supposed laborers appear therein,
their signatures are nowhere to be found. And
while they cover the years 1975, 1976 and
portions of 1978 and 1979, they do not cover
the 18-year period during which Tana was
supposed to have worked in Ayaldes
plantations. Also an admitted fact is that these
exhibits only cover Hda. B70, Ayalde having
averred that all her records and payrolls for the
other plantation (Hda. B-15-M) were either
destroyed or lost.[15]
To our mind, these documents are not only
sadly lacking, they are also unworthy of
credence. The fact that Tanas name does not
appear in the payrolls for the years 1975, 1976
and part of 1978 and 1979, is no proof that he
did not work in Hda. B70 in the years 1961 to
1974, and the rest of 1978 and 1979. The
veracity of the alleged documents as payrolls
are doubtful considering that the laborers
named therein never affixed their signatures to
show that they actually received the amounts
indicated corresponding to their names.
Moreover, no record was shown pertaining to
Hda. B-15-M, where Tana was supposed to have
worked. Even Ayalde admitted that she hired
Tana as arador and sometimes as laborer during
milling in Hda. B-15-M.[16] In light of her
incomplete documentary evidence, Ayaldes
denial that Tana was her employee in Hda. B-70
or Hda. B-15-M must fail.
In contrast to Ayaldes evidence, or lack thereof,
is Margarita Tanas positive testimony,
corroborated by two (2) other witnesses. On
the matter of wages, they testified as follows:
Margarita Tana:
Q. During the employment of your late
husband, was he paid any wages?
A. Yes, he was paid.
Q. What was the manner of payment of his
salary, was it on pakyaw or daily basis?
A. Daily basis.
Q. How many times did he receive his salary in a
months time?
A. 2 times.
Q. You mean, payday in Hda. B-70 is every 15
days?
A. Yes, sir.
xxxxxxxxx
ATTY. GALVAN:
To prove that it is material to the main question
because if ever the hacienda maintains
complete payrolls of their employees, then the
burden of proof lies in the petitioner..
HEARING OFFICER:
Let the witness answer, if she knows.

WITNESS:
There was no payroll, only pad paper.
ATTY. GALVAN: (continuing)
Q. Were the names of workers of the hacienda
all listed in that pad paper every payday?
A. Yes, we just sign on pad paper because we
have no payroll to be signed.
xxxxxxxxx
Q. What do you understand by payroll?
A. Payroll is the list where the whole laborers
are listed and receive their salaries.
Q. And how did that differ from the pad paper
which you said you signed?
A. There is a difference.
Q. What is the difference?
A. In the payroll, at the end there is a column
for signature but in the pad paper, we only sign
directly.
Q. Did it contain the amount that you receive?
A. Yes, sir.
Q. And the date corresponding to the payroll
pad?
A. I am not sure but it only enumerates our
names and then we were given our salaries.
Q. Now, did you have a copy of that?
ATTY. GALVAN:
Objection, Your Honor, it is not the petitioner
who had a copy, it is usually the owner because
the preparation of the payrolls is done by the
employer who..
ATTY. UNGCO:
That is why Im asking ..
HEARING OFFICER:
Let the witness answer. Objection overruled.
WITNESS:
I dont have.
xxxxxxxxx
Q. When you are receiving daily wage of P4.00
how much was your quincenal together with
your husband?
A. The highest salary I received for my own was
P30.00 in one quincena.
Q. What about the salary of your husband, how
much?
A. The same.
Q. Was this P30.00 per quincena later on
increased?
A. There was an increase because formerly it
was P4.00 now it is P8.00.
Q. In 1979 how much was your husbands salary
per quincena?
A. In one quincena my husband receives P60.00
while I only receive P30.00.[17]
AGATON LIBAWAS:
Q. During your employment, do you sign
payrolls everytime you draw your salary?
A. We sign on intermediate pad.
Q. You mean, the practice of the hacienda is to
have the names of the laborers receiving that
salaries listed on that intermediate pad?
A. Yes, sir.[18]
AURELIO TANA:
Q. By the way, how many times did you receive
your salaries in a month?
A. We receive our wages twice a month that is,
every 15 days.
Q. Did you sign payrolls everytime you received
your salaries?
A. In the pad paper as substitute payroll.
Q. Do you know if all the workers of the
hacienda were listed in that payrolls?
A. Yes, sir.
Q. Who was in charge in giving your salaries?
A. Antero Maghari.[19]
These witnesses did not waver in their assertion
that while Tana was hired by Ayalde as an
arador on pakyaw basis, he was also paid a daily
wage which Ayaldes overseer disbursed every
fifteen (15) days. It is also undisputed that they
were made to acknowledge receipt of their
wages by signing on sheets of ruled paper,
which are different from those presented by
Ayalde as documentary evidence. In fine, we
find that the testimonies of Margarita Tana,
Agaton Libawas and Aurelio Tana prevail over
the incomplete and inconsistent documentary
evidence of Ayalde.
In the parallel case of Opulencia Ice Plant and
Storage v. NLRC, the petitioners argued that
since Manuel P. Esitas name does not appear in
the payrolls of the company it necessarily
means that he was not an employee. This Court
held:
Petitioners further argue that complainant
miserably failed to present any documentary
evidence to prove his employment. There was
no timesheet, pay slip and/or payroll/cash
voucher to speak of. Absence of these material
documents are necessarily fatal to complainants
cause.
We do not agree. No particular form of
evidence is required to prove the existence of
an employer-employee relationship. Any
competent and relevant evidence to prove the
relationship may be admitted. For, if only
documentary evidence would be required to
show that relationship, no scheming employer
would ever be brought before the bar of justice,
as no employer would wish to come out with
any trace of the illegality he has authored
considering that it should take much weightier
proof to invalidate a written instrument. Thus,
as in this case where the employer-employee
relationship between petitioners and Esita was
sufficiently proved by testimonial evidence, the
absence of time sheet, time record or payroll
has become inconsequential.[20] (Underscoring
ours)
Clearly, then, the testimonial evidence of the
claimant and her witnesses constitute positive
and credible evidence of the existence of an
employer-employee relationship between Tana
and Ayalde. As the employer, the latter is duty-
bound to keep faithful and complete records of
her business affairs, not the least of which
would be the salaries of the workers. And yet,
the documents presented have been selective,
few and incomplete in substance and content.
Consequently, Ayalde has failed to convince us
that, indeed, Tana was not her employee.
The argument is raised that Tana is an
independenent contractor because he was
hired and paid wages on pakyaw basis. We find
this assertion to be specious for several
reasons.
First, while Tana was sometimes hired as an
arador or plower for intermittent periods, he
was hired to do other tasks in Ayaldes
plantations. Ayalde herself admitted as much,
although she minimized the extent of Tanas
labors. On the other hand, the claimant and her
witnesses were direct and firm in their
testimonies, to wit:
MARGARITA TANA:
Q. Was your late husbands work continuous or
not?
A. His work was continuous except on Sundays.
Q. Mrs. Witness, in January 1961, how many
days in a week did your late husband work?
A. 4 weeks in January 1961.
Q. And how many months for that year did he
work?
A. 12 months.
Q. Is this working pattern of your husband,
considering that you testified that he worked
continuously, the same all throughout his
employment from 1961 to 1978?
A. Yes, he worked continuously from 1961 to
1978 for 6 days a week, 4 weeks a month and
12 months each year.
Q. Mrs. Witness, how many months did your
husband work in 1979 considering that he died
in 1979?
A. 3 months.
Q. What was the nature of the work of your late
husband from 1961 until his death in 1979?
A. Cutting canes, hauling canes with the use of
canecarts, plowing, hauling fertilizers, weeding
and stubble cleaning.
xxxxxxxxx
Q. Now, the other co-workers of yours, you said
they were Agaton Libawas, Narciso Dueas, Juan
Dueas, and Aurelio Tana, what were their jobs?
A. Hauling canes by the use of bull carts and
cutting canes. Their works are the same with
that of my husbands.
Q. But you mentioned among the duties of your
husband as arador meaning plowing the fields?
A. Yes, he was also plowing because that is one
of his duties.[21]
AGATON LIBAWAS:
Q. How about petitioner Margarita Tana and
the late Ignacio Tana, were they regular
workers, or extra workers?
A. They were regular workers.
Q. In your case, Mr. Witness, considering that
according to you, you are only a relief worker,
please inform the Commission how many
months each year from 1961 to 1984 did you
work in Hda. B-70 and Hda. B-15M with
Conchita Ayalde?
A. During milling season, I worked 2 months,
during cultivation if they are short of plowers
then they would call me to work for at least 3
months as a plower.
Q. So, all in all, each year, from 1961 to 1984
your average working months in Hda. B-70 and
B-15M are 5 months each year?
A. Yes, sir.
Q. Mr. Witness, to prove that you have worked
there, will you please inform at least 5 laborers
of Hda. B-70 and B-15M of Conchita Ayalde?
A. Juan Dueas, Narciso Dueas, Aurelio Tana,
Ignacio and Margarita Tana.

xxxxxxxxx
Q. Will you please inform the Commission if the
deceased Ignacio Tana which is according to
you, was a regular worker of the 2 haciendas, if
how many months did he work during lifetime
from 1961 until he died in 1979?
A. His work was continuous.
Q. And by continuous you mean he worked
straight 12 months each year except in 1979?
A. He worked only for 10 months because the 2
months are already preparation for cultivation.
xxxxxxxxx
Q. And according to you, in a years time, you
worked only for at least 5 months in Hda. B-70
and B-15M, is that correct?
A. Yes.
Q. And during this time that you are working in
your riceland you will agree with me that you
do not know whether the laborers of this Hda.
B-70 and Had B-15M are really working because
you are devoting your time in your riceland, is
that correct?
A. I knew because the place of their work is just
near my house, it is along the way.
Q. How about when the canes are already tall,
can you actually see the workers in Hda. B-70
and B-15M when you are busy at your riceland?
A. Yes, because they have to pass in my house.
Q. Is there no other passage in that hacienda
except that road in front of your house?
A. Yes.
Q. Are you sure about that?
A. Yes, I am sure.[22]
AURELIO TANA:
Q. Do you know what is the work of the
petitioner during the time when you were
together working in the field?
A. We were working together, like cutting and
loading canes, hoeing, weeding, applying
fertilizers, digging canals and plowing.
Q. During your employment in the said
hacienda where were you residing?
A. There inside the hacienda.
Q. What about the petitioner?
A. The same.
Q. How far is your house from the house of the
petitioner?
A. About 20 arms-length.
Q. How far is Hda. B-70 from Hda. B-15.
A. It is very near it is divided by the road.
Q. What road are you referring to?
A. Highway road from Barangay Buenavista to
La Granja.
Q. During your employment will you please
inform the Commission the frequency of work
of the late Ignacio Tana?
A. 4 weeks a month, 6 days a week, 12 months
a year.
Q. Why is it that you are in a position to inform
the Commission about the period of
employment of Ignacio Tana?
A. Because we were together working.[23]
It is indubitable, therefore, that Tana worked
continuously for Ayalde, not only as arador on
pakyaw basis, but as a regular farmhand, doing
backbreaking jobs for Ayaldes business. There is
no shred of evidence to show that Tana was
only a seasonal worker, much less a migrant
worker. All witnesses, including Ayalde herself,
testified that Tana and his family resided in the
plantation. If he was a mere pakyaw worker or
independent contractor, then there would be
no reason for Ayalde to allow them to live
inside her property for free. The only logical
explanation is that he was working for most
part of the year exclusively for Ayalde, in return
for which the latter gratuitously allowed Tana
and his family to reside in her property.
The Court of Appeals, in finding for Ayalde,
relied on the claimants and her witnesses
admission that her husband was hired as an
arador on pakyaw basis, but it failed to
appreciate the rest of their testimonies. Just
because he was, for short periods of time, hired
on pakyaw basis does not necessarily mean that
he was not employed to do other tasks for the
remainder of the year. Even Ayalde admitted
that Tana did other jobs when he was not hired
to plow. Consequently, the conclusion culled
from their testimonies to the effect that Tana
was mainly and solely an arador was at best a
selective appreciation of portions of the entire
evidence. It was the Social Security Commission
that took into consideration all the
documentary and testimonial evidence on
record.
Secondly, Ayalde made much ado of her claim
that Tana could not be her employee because
she exercised no control over his work hours
and method of performing his task as arador. It
is also an admitted fact that Tana, Jr. used his
own carabao and tools. Thus, she contends
that, applying the control test, Tana was not an
employee but an independent contractor.
A closer scrutiny of the records, however,
reveals that while Ayalde herself may not have
directly imposed on Tana the manner and
methods to follow in performing his tasks, she
did exercise control through her overseer.
Be that as it may, the power of control refers
merely to the existence of the power. It is not
essential for the employer to actually supervise
the performance of duties of the employee; it is
sufficient that the former has a right to wield
the power.[24] Certainly, Ayalde, on her own or
through her overseer, wielded the power to
hire or dismiss, to check on the work, be it in
progress or quality, of the laborers. As the
owner/lessee of the plantations, she possessed
the power to control everyone working therein
and everything taking place therein.
Jurisprudence provides other equally important
considerations which support the conclusion
that Tana was not an independent contractor.
First, Tana cannot be said to be engaged in a
distinct occupation or business. His carabao and
plow may be useful in his livelihood, but he is
not independently engaged in the business of
farming or plowing. Second, he had been
working exclusively for Ayalde for eighteen (18)
years prior to his demise. Third, there is no
dispute that Ayalde was in the business of
growing sugarcane in the two plantations for
commercial purposes. There is also no question
that plowing or preparing the soil for planting is
a major part of the regular business of Ayalde.
Under the circumstances, the relationship
between Ayalde and Tana has more of the
attributes of employer-employee than that of
an independent contractor hired to perform a
specific project. In the case of Dy Keh Beng v.
International Labor,[25] we cited our long-
standing ruling in Sunripe Coconut Products Co.
v. Court of Industrial Relations, to wit:
When a worker possesses some attributes of an
employee and others of an independent
contractor, which make him fall within an
intermediate area, he may be classified under
the category of an employee when the
economic facts of the relations make it more
nearly one of employment than one of
independent business enterprise with respect
to the ends sought to be accomplished.
(Underscoring Ours)[26]
We find the above-quoted ruling to be
applicable in the case of Tana. There is
preponderance of evidence to support the
conclusion that he was an employee rather than
an independent contractor.
The Court of Appeals also erred when it ruled,
on the alternative, that if ever Tana was an
employee, he was still ineligible for compulsory
coverage because he was not paid any regular
daily wage and he did not work for an
uninterrupted period of at least six months in a
year in accordance with Section 8(j) (I) of the
Social Security Law. There is substantial
testimonial evidence to prove that Tana was
paid a daily wage, and he worked continuously
for most part of the year, even while he was
also occasionally called on to plow the soil on a
pakyaw basis. As a farm laborer who has
worked exclusively for Ayalde for eighteen (18)
years, Tana should be entitled to compulsory
coverage under the Social Security Law,
whether his service was continuous or broken.
Margarita Tana alleged that SSS premiums were
deducted from Tanas salary, testifying, thus:
Q. Were there deductions from the salaries of
your husband while he was employed with the
respondent from 1961 to 1979?
A. Yes, there were deductions but I do not know
because they were the ones deducting it.
Q. Why do you know that his salaries were
deducted for SSS premiums?
A. Because Antero Maghari asked me and my
husband to sign SSS papers and he told us that
they will take care of everything.
Q. How much were the deductions every
payday?
A. I do not know how much because our daily
wage was only P4.00.[27]
Agaton Libawas, also testified:
Q. Mr. Witness, in your 15-day wages do you
notice any deductions from it?
A. There were deductions and we were
informed that it was for SSS.
Q. Mr. Witness, since when were there
deductions from your salaries?
A. Since 1961.
Q. Up to when?
A. Up to 1979.
Q. Mr. Witness, are you a member of the SSS?
A. No.
Q. How about petitioner, if you know?
A. No, also.
Q. What happened to the deductions did you
not ask your employer?
A. We asked but we were answered that we
were being remitted for our SSS.
Q. Did you not verify?
A. No, because I just relied on their
statement.[28]
Ayalde failed to counter these positive
assertions. Even on the assumption that there
were no deductions, the fact remains that Tana
was and should have been covered under the
Social Security Law. The circumstances of his
employment place him outside the ambit of the
exception provided in Section 8(j) of Republic
Act No. 1611, as amended by Section 4 of R.A.
2658.
WHEREFORE, in view of all the foregoing, the
Decision of the Court of Appeals in C.A.-G.R. SP
No. 16427 and the Resolution dated June 14,
1991 are hereby REVERSED and SET ASIDE. The
Resolution of the Social Security Commission in
SSC Case No. 8851 is REINSTATED.

No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan,

and Pardo, JJ., concur.
G.R. No. L-1309 July 26, 1948
THE SHELL COMPANY OF PHILIPPINE ISLANDS,
LIMITED, recurrente,
vs.
NATIONAL LABOR UNION, recurrida.
Messrs. Ross, Selph, Carrascoso and Janda in
representation of the appellant.
Mr. Paguia and Mr. Villanueva in
representation of the respondent.
BRIONES, J .:
Acting on a petition from the labor body called
the "National Labor Union," the Industrial
Relations Court has issued a ruling in which,
inter alia, the oil firm "The Shell Company of
Philippine Islands, To their workers who work at
night (from sunset until they get up the next
day) an additional compensation of 50% on
their regular wages if they worked during the
day. It seems that the comany needs the night
service of a certain number of workers, since
the planes coming from abroad usually land and
take off at night, which is why it is necessary to
do night work for the supply of gasoline and
lubricants, and for Other things. The oil
company has been excepted against that
decision of there the present resource of
certiorari so that we revoquemos it.
The appellant argues and argues that not only is
there no legal provision that empowers the
Industrial Relations Court to order the payment
of additional compensation to workers who
work at night but, on the contrary,
Commonwealth Law No. 444 Exempts the
employer from such an obligation since this law
provides for cases in which the payment of
overtime is compulsory, and such cases do not
include night work.
The Workers' Union, for its part, contends that
the power at issue forms part of the broad and
effective powers conferred upon the said
tribunal by Commonwealth Law No. 103, the
Organic Charter of the Industrial Relations
Tribunal; And that Commonwealth Act No. 444
invoked has no application to the present case,
since it is necessarily limited in scope, referring
specifically and exclusively to the maximum
daily working time allowed in industrial
establishments - the day of 8 hours.
Our conclusion is that the workers'
union appealed has the reason on its
part. For a clear and thorough
elucidation of the points discussed, it is
convenient, even at the risk of
lengthening this paper, to transcribe
the relevant legal provisions that are
articles 1, 4 and 13 of Commonwealth
Law No. 103. Helas here:
SECTION 1. The Judge: his appointment,
qualifications, compensation, tenure. — There
is hereby created a Court of Industrial Relations,
which shall have jurisdiction over the entire
Philippines, to consider, investigate, decide, and
settle any question, matter, controversy or
dispute arising between, and/or affecting,
employers and employees or laborers, and
landlords and tenants or farm-laborers, and
regulate the relation between them, subject to,
and in accordance with, the provisions of this
Act. The Court shall keep a record of all its
proceedings and shall be presided over by a
Judge to be appointed by the President of the
Philippines with the consent of the Commission
on Appointments of the National Assembly. The
Judge of the Court shall hold office during good
behavior until he reaches the age of seventy
years, or becomes incapacitated to discharge
the duties of his office. His qualifications shall
be the same as those provided in the
Constitution for members of the Supreme Court
and he shall receive an annual compensation of
ten thousand pesos and shall be entitled to
traveling expenses and per diems when
performing official duties outside of the City of
Manila. The Department of Justice shall have
executive supervision over the Court.
SEC. 4. Strikes and lockouts. — The Court shall
take cognizance for purpose of prevention,
arbitration, decision and settlement, of any
industrial or agricultural dispute causing or
likely to cause a strike or lockout, arising form
differences as regards wages, shares or
compensation, hours of labor or conditions of
tenancy or employment, between employers
and employees or laborers and between
landlords and tenants or farm-laborers,
provided that the number of employees,
laborers or tenants or farm-laborers involved
exceeds thirty, and such industrial or
agricultural dispute is submitted to the Court by
the Secretary of Labor, or by any or both of the
parties to the controversy and certified by the
Secretary of Labor as existing and proper to be
dealt with by the Court for the sake of public
interest. In all such cases, the Secretary of Labor
or the party or parties submitting the disputes,
shall clearly and specifically state in writing the
questions to be decided. Upon the submission
of such a controversy or question by the
Secretary of Labor, his intervention therein as
authorized by law, shall cease.
The Court shall, before hearing the dispute and
in the course of such hearing, endeavor to
reconcile the parties and induce them to settle
the dispute by amicable agreement. If any
agreement as to the whole or any part of the
dispute is arrived at by the parties, a
memorandum of its terms shall be made in
writing, signed and acknowledged by the
parties thereto before the Judge of the Court or
any official acting in his behalf and authorized
to administer oaths or acknowledgments, or,
before a notary public. The memorandum shall
be filed in the office of the Clerk of the Court,
and, unless otherwise ordered by the Court,
shall, as between the parties to the agreement,
have the same effect as, and be deemed to be,
a decision or award.
SEC. 13. Character of the award. — In making
an award, order or decision, under the
provisions of section four of this Act, the Court
shall not be restricted to the specific relief
claimed or demands made by the parties to the
industrial or agricultural dispute, but may
include in the award, order or decision any
matter or determination which my be deemed
necessary or expedient for the purpose of
setting the dispute or of preventing further
industrial or agricultural disputes.
It is evident from the provisions transcribed as
follows: (a) that when a dispute arises between
the principal and the employee or worker, vgr.
On matters of wages, the Industrial Relations
Court has jurisdiction throughout the territory
of the Philippines to consider, investigate and
resolve said dispute, setting such wages as it
deems fair and reasonable; (B) that for the
purposes of prevention, arbitration, decision
and settlement, the Industrial Relations
Tribunal itself has jurisdiction to hear any
disputes - industrial or agricultural - resulting
from any differences with respect to wages,
shares or compensations, hours of Work,
conditions of employment or of the partnership
between employers and employees or workers
and between owners and landowners or
agricultural workers, prior to the fulfillment of
certain requirements and conditions, when it is
seen that said dispute causes or can cause a
strike; (C) In the exercise of its powers specified
above, the Industrial Relations Court is not
limited, in deciding the dispute, to grant the
remedy or remedies requested by the parties to
the dispute, but may include in the order or
decision Any matter or determination for the
purpose of settling the dispute or to prevent
further industrial or agricultural disputes.
In the case in question, there is undoubtedly an
industrial dispute. While the company, the Shell
company, is not willing to pay its workers at
night higher salaries than the workers, the
"NationalLabor Union", to which Shell workers
are affiliated, demands another type of salary
for the service Night - 50% more. This is the
dispute, industrial litigation. Now, what has the
Court of Industrial Relations done after the
conflict has been submitted to its jurisdiction?
For it is precisely what is said in the
Commonwealth Law No. 103, an organic charter
of its creation and operation, namely to
consider, investigate and prosecute the dispute,
then resolve it in the sense in which it has been
resolved, that is, by remunerating the work At
night with 50% more of the day's wages. And
this is perfectly legal both within the scope of
Article 1 of Law No. 103 which empowers the
Industrial Relations Court to decide any dispute
over wages and compensation in the manner it
deems reasonable and convenient, as within
the framework of Article 4 of the same law that
authorizes said court to prosecute and decide
any industrial or agricultural lawsuit or
controversy determines the outbreak of a strike
or shop to cause it. However, what is done by
the Trbunal of Industrial Relations in this case is
also legal within the framework of article 13 of
the same law No. 103, an article which, as seen,
not only empowers said court to grant the
remedy But also to go beyond, that is, to grant
remedies not expressly requested, provided
that they are directed to resolve the dispute at
once or to prevent the outbreak of further
disputes or strikes.
It is evident that with these broad powers the
State has proposed to equip the Industrial
Relations Tribunal to the maximum extent of its
usefulness and efficiency, making it not a mere
academic agency, but truly active, dynamic and
efficient - in a word, the official machinery Par
excellence in the formidable and thorny task of
resolving industrial, and religious conflicts of a
certain kind, thereby preventing and avoiding
those strikes and strikes that both afflict and
harm not only businessmen and workers but, in
general, community. In his concurrent opinion
delivered in the authoritative case of Ang Tibay
v. Court of Industrial Relations 1 (RG No.
46496), Magistrate Laurel has very rightly
expressed the fundamental idea that underlies
the creation of said court, with the following
pronouncement:
In Commonwealth Act No. 103, and by it, our
government no longer performs the role of
mere mediator or intervenor but that of
supreme arbiter. (Las cursivas son nuestras.).
The appellant argues, however, that although it
is true that in case of dispute the Industrial
Relations Court has, by virtue of its organic law,
the power to fix wages, that power is not
absolute, but is subject to certain Restrictions
and cut-offs, provided by the law commonly
known by law for the eight-hour day,
Commonwealth Act No. 444, the pertinent
articles of which are dealt with in full below:
SECTION 1. The legal working day for any
person employed by another shall be of not
more than eight hours daily. When the work is
not continuous, the time during which the
laborer is not working and can leave his working
place and can rest completely shall not be
counted.
SEC. 3. Work may be performed beyond eight
hours a day in case of actual or impending
emergencies caused by serious accidents, fire,
flood, typhoon, earthquake, epidemic, or other
disaster or calamity in order to prevent loss to
life and property or imminent danger to public
safety; or in case urgent work to be performed
on the machines, equipment, or installations in
order to avoid a serious loss which the
employer would otherwise suffer, or some
other just cause of a similar nature; but in all
such cases the laborers and employees shall be
entitled to receive compensation for the
overtime work performed at the same rate as
their regular wages or salary, plus at least
twenty-five per centum additional.
In case of national emergency the government
is empowered to establish rules and regulations
for the operation of the plants and factories and
to determine the wages to be paid the laborers.
SEC. 4. No person, firm, or corporation,
business establishment or place or center of
labor shall compel an employee or laborer to
work during Sundays and legal holidays, unless
he is paid an additional sum of at least twenty-
five per centum of his regular remuneration:
Provided however, That this prohibition shall
not apply to public utilities performing some
public service such as supplying gas, electricity,
power, water, or providing means of
transportation or communication.
However, the lawyers of the appellant argue -
these articles specify the cases in which the
payment of extra or additional compensation is
authorized and are only, namely: (a) in case of
"overtime" or work in excess of the Regular
hours for imperative reasons of urgency in the
event of a disaster or accident, or to prevent
loss or repair; (B) in case of work for Sundays
and holidays; (C) in case of emergency, and
there is nothing to do with night work; Then the
order in question is illegal, as it is not
authorized by law. "In the absence" - the
lawyers of the appellant stress - legislation
authorizing the payment of extra compensation
for work done at night, the Court of Industrial
Relations has no power or authority to order
the petitioner company to pay extra
compensation for work done by its laborers At
night , in the case of an attestation , in the case
of an attestation , in the case of an individual, in
which case, Commonwealth Act No. 444 can not
be enlarged by implication or otherwise.
Expression facit cessare tacitum .
The argument is wrong. Law No. 444 is not
applicable to the present case, it being evident
that it has a specific purpose, namely: (a) to set
the maximum working day in 8 hours; (B) to
indicate certain exceptional cases in which the
work can be authorized outside that day; (C)
provide a bonus, which must not be less than
25% of the regular salary, for overtime or work
in excess of 8 hours.
In the case of Manila Electric, petitioner-
appellant, against The Public Utities Employees'
Association, 2 appeal, L-1206 (45 Off. Gaz.,
1760), this Court has stated that the power
conferred by Article 1 of the Act Of
Commonwealth No. 103 to the Industrial
Relations Tribunal to try and decide disputes
and industrial disputes between capital and
labor, including that of fixing wages and
compensation of employees and workers, has
been restricted by Article 4 of Commonwealth
Law No 444, which at the same time limits the
minimum of the additional compensation which
the court may grant for work on Sundays and
official holidays to 25% of the worker's regular
salary or compensation, exempts from payment
of such additional compensation to the entities
Of public utility that provide some public
service, such as those that supply gas,
electricity, lethal force, water, or provide means
of transport or communication. Such restriction
is an exception to the general power of the
court to set, in cases of dispute, the wages and
compensation to be paid by employers to
employees and workers; And since Article 4
refers only to salary or compensation for work
during the days of Sundays and official holidays,
it is obvious that it can not refer to salary or
additional compensation for work outside the
eight-hour period which is usually carried out
from the beginning Hours of the morning to late
hours, as it is one thing to work on Sundays and
official holidays, and another very different
thing is to work at night outside the eight-hour
day on weekdays. Applying the legal maximum "
express unius est exclusio alterius ," it can be
argued, without fear of error, that a law
providing a specific exception to its general
provisions, such as additional compensation for
work on Sunday days and official holidays,
Another, such as the additional compensation
for night work on weekdays. "Here wemay
safely assume that all other exceptions were
intended To be excluded. " (Wabash R. Co.,
United States, 178 Fed., 5, 101 CCA 133; Cella
Commision Co. v. Bohlinger, 147 Fed., 419; 78
CCA 467; Kunkalman vs. Gibson, 171 Ind., 503;
84 NE 985, Hering vs. Clement, 133 App. Div.,
293; 117 NY, supp. 747.).
The nightly work that Shell demands from its
workers is not an "overtime", in the sense that
this word is used in Law No. 444, but is a full
working day , also of 8 hours: alone Which,
instead of being performed by day, is done at
night. In other words, the night job here is not
just an extension, an overtime or an overtime of
regular day work, but it is another kind of work,
absolutely independent of the day's work. That
is why there are two shifts: the shift of workers
who work by day; And the shift of those who
work at night. So it is not strange that the
legislator did not include this type of work
among the cases of "overtime" indicated in the
mentioned law No. 444.
The question that, in our opinion, must be
determined is whether among the general
faculties of the Court of Industrial Relations that
are admitted without dipusta, is to consider the
day at night as a full day of work; To estimate it
as more burdensome than the day's journey;
And consequently, to provide and order that it
be paid with 50% more of the regular daily
wages. Our answer is affirmative: all this is
included among the general powers of the
Court of Industrial Relations. If this court has, in
cases of dispute, the power to fix the wages it
deems fair and reasonable for day labor, there
is no reason why it should not have the same
power with respect to night wages; It is as much
work as one. And with respect to the
appreciation that night work is heavier and
burdensome than day work and therefore
deserves higher remuneration, there are no
grounds for revoking or altering it. There is no
possible argument against the universal fact
that regular, normal and ordinary labor is day
labor, and that night work is very exceptional
and justified only by certain imperatively
unavoidable reasons. For something mankind
has always worked during the day.
Reasons for hygiene, medicine, morality,
culture, sociology, establish that the work of
nocho has many disadvantages, and when there
is no choice but to do so, it is only fair that you
pay better than usual to compensate for a
certain Point to the worker of such
inconveniences. Undoubtedly, night work not
only affects the worker's health in the long run,
it deprives the worker of certain things that
make life relatively pleasant, such as a complete
and uninterrupted rest and certain moments of
solace , Leisure or spiritual and cultural
expansion that could have at the end of the
work in the evening and during the early hours
of the night. It is said that the worker can rest
during the day after having worked all night;
But can the rest of the day give the body that
tonic and that complete restorative effect
which can only provide the natural rest at
night? It is also said that some prefer to work at
night under our scorching weather, thus
avoiding the heat of the day. We fear, however,
that this is better spoken than practiced. We
believe that from time immemorial the
universal rule is that man works at night more
by irremediable necessity than by pleasant
convenience.
To vulgar, universal opinion, we must
add the previous opinion, the expert
criterion. The opinion of the writers and
experts militates decisively in favor of
the thesis that night work is harder and
more costly than day labor, considering
for this with marked repugnance and
consequently compelling capitalist
management to establish a higher scale
Of wages as an incentive to the workers
to accept it . We could cite several
authorities, but not to extend this paper
too much we chose to transcribe only
some, namely:
. . . Then, it must be remembered that it is
distinctly unphysiological to turn the night into
day and deprive the body of the beneficial
effects of sunshine. The human organism
revolts against this procedure. Added to
artificial lighting are reversed and unnatural
times of eating, resting, and sleeping. Much of
the inferiority of nightwork can doubtless be
traced to the failure of the workers to secure
proper rest and sleep, by day. Because of
inability or the lack of opportunity to sleep,
nightworkers often spend their days in
performing domestic duties, joining the family
in the midday meal, 'tinkering about the place',
watching the baseball game, attending the
theater or taking a ride in the car. It is not
strange that nightworkers tend to be less
efficient than dayworkers and lose more time. .
. (The Management of Labor Relations, by
Watkins & Dodd, page 524.).
Nightwork. — Nightwork has gained a measure
of prominence in the modern industrial system
in connection with continuous industries, that
is, industries in which the nature of the
processes makes it necessary to keep
machinery and equipment in constant
operation. Even in continuous industries the
tendency is definitely in the direction of FOUR
shifts of 6 hours each, with provision for an
automatic change of shift for all workers at
stated intervals. Some discussion has taken
place with regard to the lengths of the period
any workers should be allowed to remain on
the night shift. A weekly change of shifts is
common, specially where three or four shifts
are in operation; in other cases the change is
made fortnightly or monthly; in still other
instances, no alternation is provided for, the
workers remaining on day — or nightwork
permanently, except where temporary changes
are made for individual convenience.
There is sharp difference of opinion concerning
the relative merits of these systems. Advocates
of the weekly change of shifts contend that the
strain of nightwork and the difficulty of getting
adequate sleep during the day make it unwise
for workers to remain on the"graveyard" shift
for more than a week at a time. Opponents
urge that repeated changes make it more
difficult to settle down to either kind of shift
and that after the first week nightwork
becomes less trying while the ability to sleep by
day increases. Workers themselves react in
various ways to the different systems. This
much, however, is certain: Few persons react
favorably to nightwork, whether the shift be
continuous or alternating. Outside of
continuous industries, nightwork can scarcely
be justified, and, even in these, it presents
serious disadvantages which must be
recognized in planing for industrial efficiency,
stabilization of the working force, the
promotion of industrial good-will, and the
conservation of the health and vitality of the
workers.
Nightwork cannot be regarded as
desirable, either from the point of view
of the employer or of the wage earner.
It is uneconomical unless overhead
costs are unusually heavy. Frequently
the scale of wages is higher as an
inducement to employees to accept
employment on the night shift, and the
rate of production is generally lower.
(Management of Labor Relations, by
Watkins & Dodd, pp. 522-524; emphasis
ours.)
. . . The lack of sunlight tends to produce
anemia and tuberculosis and to predispose to
other ills. Nightwork brings increased liability to
eyestrain and accident. Serious moral dangers
also are likely to result from the necessity of
traveling the streets alone at night, and from
the interference with normal home life. From
an economic point of view, moreover, the
investigations showed that nightwork was
unprofitable, being inferior to day work both in
quality and in quantity. Wherever it had been
abolished, in the long run the efficiency both of
the management and of the workers was
raised. Furthermore, it was found that
nightwork laws are a valuable aid in enforcing
acts fixing the maximum period of employment.
(Principles of Labor Legislation, by Commons
and Andrews, 4th Revised Edition, p. 142.)
Special regulation of nightwork for adult men is
a comparatively recent development. Some
European countries have adopted laws placing
special limitations on hours of nightwork for
men, and others prohibit such work except in
continuous processes. (Principles of Labor
legislation, 4th Revised Edition by Common &
Andrews, p. 147.)
Nightwork has almost invariably been looked
upon with disfavor by students of the problem
because of the excessive strain involved,
especially for women and young persons, the
large amount of lost time consequent upon
exhaustion of the workers, the additional strain
and responsibility upon the executive staff, the
tendency of excessively fatigued workers to
"keep going" on artificial stimulants, the general
curtailment of time for rest, leisure, and cultural
improvement, and the fact that night workers,
although precluded to an extent from the
activities of day life, do attempt to enter into
these activities, with resultant impairment of
physical well-being. It is not contended, of
course, that nightwork could be abolished in
the continuous-process industries, but it is
possible to put such industries upon a three- or
four-shifts basis, and to prohibit nightwork for
women and children. (Labor's Progress and
Problems, Vol. I, p. 464, by Professors Millis and
Montgomery.)
Nightwork. — Civilized peoples are beginning to
recognize the fact that except in cases of
necessity or in periods of great emergency,
nightwork is socially undesirable. Under our
modern industrial system, however, nightwork
has greatly aided the production of
commodities, and has offered a significant
method of cutting down the ever-increasing
overhead costs of industry. This result has led
employers to believe that such work is
necessary and profitable. Here again one meets
a conflict of economic and social interests.
Under these circumstances it is necessary to
discover whether nightwork has deleterious
effects upon the health of laborers and tends to
reduce the ultimate supply of efficient labor. If
it can proved that nightwork affects adversely
both the quality and quantity of productive
labor, its discontinuance will undoubtedly be
sanctioned by employers. From a social point of
view, even a relatively high degree of efficiency
in night operations must be forfeited if it is
purchased with rapid exhaustion of the health
and energy of the workers. From an economic
point of view, nightwork may be necessary if
the employer is to meet the demand for his
product, or if he is to maintain his market in the
face of increasing competition or mounting
variable production costs.
Industrial experience has shown that the
possession of extra-ordinary physical strength
and self-control facilitates the reversal of the
ordinary routine of day work and night rest,
with the little or no unfavorable effect on
health and efficiency. Unusual vitality and self-
control, however, are not common possessions.
It has been found that the most serious
obstacle to a reversal of the routine is the lack
of self-discipline. Many night workers enter into
the numerous activities of day life that preclude
sleep, and continue to attempt to do their work
at night. Evidence gathered by the British
Health of Munition Workers' Committee places
permanent night workers, whether judged on
the basis of output or loss of time, in a very
unfavorable positions as compared with day
workers.
Systems of nightwork differ. There is the
continuous system, in which employees labor
by night and do not attend the establishment at
all by day, and the discontinuous system, in
which the workers change to the day turn at
regular intervals, usually every other week.
There are, of course, minor variations in these
systems, depending upon the nature of the
industry and the wishes of management. Such
bodies as the British Health Munition Workers'
Committee have given us valuable conclusions
concerning the effect of nightwork. Continuous
nightwork is definitely less productive than the
discontinuous system. The output of the
continuous day shift does not make up for this
loss in production.
There is, moreover, a marked difference
between the rates of output of night and day
shifts on the discontinuous plan. In each case
investigated the inferiority of night labor was
definitely established. This inferiority is
evidently the result of the night worker's failure
to secure proper amounts of sleep and rest
during the day. The system of continuous shifts,
especially for women, is regarded by all
investigators as undesirable. Women on
continuous nightwork are likely to perform
domestic duties, and this added strain Paras, Interim Pres., Fair, Pablo,
undoubtedly accounts for the poorer results of Perfecto, Bengzon, Padilla and Tuason,
their industrial activities. The tendency to MM., Are satisfied.
devote to amusement and other things the time
that should be spent in rest and sleep is
certainly as common among men as among
women workers and accounts largely for the
loss of efficiency and time on the part of both
sexes in nightwork.

The case against nightwork, then, may be said

to rest upon several grounds. In the first place,
there are the remotely injurious effects of
permanent nightwork manifested in the later
years of the worker's life. Of more immediate
importance to the average worker is the
disarrangement of his social life, including the
recreational activities of his leisure hours and
the ordinary associations of normal family
relations. From an economic point of view,
nightwork is to be discouraged because of its
adverse effect upon efficiency and output. A
moral argument against nightwork in the case
of women is that the night shift forces the
workers to go to and from the factory in
darkness. Recent experiences of industrial
nations have added much to the evidence
against the continuation of nightwork, except in
extraordinary circumstances and unavoidable
emergencies. The immediate prohibition of
nightwork for all laborers is hardly practicable;
its discontinuance in the case of women
employees is unquestionably desirable. 'The
night was made for rest and sleep and not for
work' is a common saying among wage-earning
people, and many of them dream of an
industrial order in which there will be no night
shift. (Labor Problems, 3rd Edition, pp. 325-328,
by Watkins & Dodd.).

In the merits of the above, the appeal of

certiorari interposed is denied and the
judgment of the Industrial Reconstruction Court
is confirmed, with costs in charge of the
appellant. That is how it is commanded.