G.R. No. 81958 June 30, 1988 property, (2) in order to foster the common good.
property, (2) in order to foster the common good. It is not capable of an exact definition but has
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as
Administrator of the Philippine Overseas Employment Administration, respondents.
Gutierrez & Alo Law Offices for petitioner.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged
principally in the recruitment of Filipino workers, male and female, for overseas
placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the
Department of Labor and Employment, in the character of "GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in
this petition for certiorari and prohibition. Specifically, the measure is assailed for "discrimination
against males or females;" 2 that it "does not apply to all Filipino workers but only to domestic
helpers and females with similar skills;" 3 and that it is violative of the right to travel. It is held likewise
to be an invalid exercise of the lawmaking power, police power being legislative, and not executive, in
character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing
for worker participation "in policy and decision-making processes affecting their rights and benefits
as may be provided by law." 4 Department Order No. 1, it is contended, was passed in the absence of
prior consultations. It is claimed, finally, to be in violation of the Charter's non-impairment clause, in
addition to the "great and irreparable injury" that PASEI members face should the Order be further
enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the
Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states
of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In
submitting the validity of the challenged "guidelines," the Solicitor General invokes the police power
of the Philippine State.
It is admitted that Department Order No. 1 is in the nature of a police power measure. The only
question is whether or not it is valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It has been defined as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote
the general welfare." 5 As defined, it consists of (1) an imposition of restraint upon liberty or
been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it
could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits." 6
It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood
and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most
vital functions of governance. Marshall, to whom the expression has been credited, 7 refers to it
succinctly as the plenary power of the State "to govern its citizens." 8
"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly
termed the "law of overwhelming necessity." It may be said to be that inherent and plenary power in
the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of
society." 9
It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the
conception that men in organizing the state and imposing upon its government limitations to
safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of
citizens to obstruct unreasonably the enactment of such salutary measures calculated to ensure
communal peace, safety, good order, and welfare." 10 Significantly, the Bill of Rights itself does not
purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the greatest
of all rights, is not unrestricted license to act according to one's will." 11 It is subject to the far more
overriding demands and requirements of the greater number.
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its
awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that
event, it defeats the purpose for which it is exercised, that is, to advance the public good. Thus, when
the power is used to further private interests at the expense of the citizenry, there is a clear misuse of
the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be nullified.
There is no question that Department Order No. 1 applies only to "female contract workers," 14 but it
does not thereby make an undue discrimination between the sexes. It is well-settled that "equality
before the law" under the Constitution 15does not import a perfect Identity of rights among all men
and women. It admits of classifications, provided that (1) such classifications rest on substantial
distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing
conditions; and (4) they apply equally to all members of the same class. 16
The Court is satisfied that the classification made-the preference for female workers — rests on
substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our
female labor force abroad, especially domestic servants, amid exploitative working conditions
marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment
suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by
testimonies of returning workers, are compelling motives for urgent Government action. As precisely
the caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In
fulfilling that duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no evidence that,
except perhaps for isolated instances, our men abroad have been afflicted with an Identical
predicament. The petitioner has proffered no argument that the Government should act similarly
with respect to male workers. The Court, of course, is not impressing some male chauvinistic notion
that men are superior to women. What the Court is saying is that it was largely a matter of evidence
(that women domestic workers are being ill-treated abroad in massive instances) and not upon some
fanciful or arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of
unquestionable demonstration and evidence this Court accepts. The Court cannot, however, say the
same thing as far as men are concerned. There is simply no evidence to justify such an inference.
Suffice it to state, then, that insofar as classifications are concerned, this Court is content that
distinctions are borne by the evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are generally final on the Court. Under a
republican regime, it is the executive branch that enforces policy. For their part, the courts decide, in
the proper cases, whether that policy, or the manner by which it is implemented, agrees with the
Constitution or the laws, but it is not for them to question its wisdom. As a co-equal body, the
judiciary has great respect for determinations of the Chief Executive or his subalterns, especially
when the legislature itself has specifically given them enough room on how the law should be
effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with
this at greater length shortly, that Department Order No. 1 implements the rule-making powers
granted by the Labor Code. But what should be noted is the fact that in spite of such a fiction of
finality, the Court is on its own persuaded that prevailing conditions indeed call for a deployment
ban.
There is likewise no doubt that such a classification is germane to the purpose behind the measure.
Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for
Filipino female overseas workers" 17 this Court has no quarrel that in the midst of the terrible
mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good
and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely
so long as those conditions exist. This is clear from the Order itself ("Pending review of the
administrative and legal measures, in the Philippines and in the host countries . . ." 18), meaning to say
that should the authorities arrive at a means impressed with a greater degree of permanency, the
ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability, depending on
the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. — The Secretary of Labor and Employment (DOLE) may,
upon recommendation of the Philippine Overseas Employment Administration
(POEA), lift the suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare
and protection of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas
workers. That it does not apply to "all Filipina workers" 20 is not an argument for unconstitutionality.
Had the ban been given universal applicability, then it would have been unreasonable and arbitrary.
For obvious reasons, not all of them are similarly circumstanced. What the Constitution prohibits is
the singling out of a select person or group of persons within an existing class, to the prejudice of
such a person or group or resulting in an unfair advantage to another person or group of persons. To
apply the ban, say exclusively to workers deployed by A, but not to those recruited by B, would
obviously clash with the equal protection clause of the Charter. It would be a classic case of what
Chase refers to as a law that "takes property from A and gives it to B." 21 It would be an unlawful
invasion of property rights and freedom of contract and needless to state, an invalid act. 22 (Fernando
says: "Where the classification is based on such distinctions that make a real difference as infancy,
sex, and stage of civilization of minority groups, the better rule, it would seem, is to recognize its
validity only if the young, the women, and the cultural minorities are singled out for favorable
treatment. There would be an element of unreasonableness if on the contrary their status that calls
for the law ministering to their needs is made the basis of discriminatory legislation against them. If
such be the case, it would be difficult to refute the assertion of denial of equal protection." 23 In the
case at bar, the assailed Order clearly accords protection to certain women workers, and not the
contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment.
From scattered provisions of the Order, it is evident that such a total ban has hot been contemplated.
We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of
similar skills defined herein to the following [sic] are authorized under these
guidelines and are exempted from the suspension.
 5.1 Hirings by immediate members of the family of Heads of State
and Government;
5.2 Hirings by Minister, Deputy Minister and the other senior
government officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly
accredited international organizations.
5.4 Hirings by employers in countries with whom the Philippines
have [sic] bilateral labor agreements or understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--
Vacationing domestic helpers and/or workers of similar skills shall be allowed to
process with the POEA and leave for worksite only if they are returning to the same
employer to finish an existing or partially served employment contract. Those
workers returning to worksite to serve a new employer shall be covered by the
suspension and the provision of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may,
upon recommendation of the Philippine Overseas Employment Administration
(POEA), lift the suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines,
and/or,
2. Existing mechanisms providing for sufficient safeguards to
ensure the welfare and protection of Filipino workers. 24
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not impair the right. The right
to travel is subject, among other things, to the requirements of "public safety," "as may be provided
by law." 25 Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic
policy to "afford protection to labor," 26 pursuant to the respondent Department of Labor's rule-
making authority vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable
simply because of its impact on the right to travel, but as we have stated, the right itself is not
absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise
of legislative power. It is true that police power is the domain of the legislature, but it does not mean
that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself
vests the Department of Labor and Employment with rulemaking powers in the enforcement
whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and
decision-making processes affecting their rights and benefits" 29 is not well-taken. The right granted
by this provision, again, must submit to the demands and necessities of the State's power of
regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all. 30
"Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and humane.
It is bad enough that the country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these circumstances, the Government is
duty-bound to insure that our toiling expatriates have adequate protection, personally and
economically, while away from home. In this case, the Government has evidence, an evidence the
petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its
duty, it has precisely ordered an indefinite ban on deployment.
The Court finds furthermore that the Government has not indiscriminately made use of its authority.
It is not contested that it has in fact removed the prohibition with respect to certain countries as
manifested by the Solicitor General.
The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier
purposes targetted by the Government. 31 Freedom of contract and enterprise, like all other
freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been
fully accepted as a controlling economic way of life.
This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government
regulation. The interest of the State is to provide a decent living to its citizens. The Government has
convinced the Court in this case that this is its intent. We do not find the impugned Order to be
tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.
G.R. No. 77875 February 4, 1993 August 21, 1984, individual respondents, represented by the union, made a formal
notice regarding the deductions to petitioner thru Mr. Reynaldo Abad, Manager for
PHILIPPINE AIRLINES, INC., petitioner, Catering. . . .
vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN, PHILIPPINE 3. As there was no action taken on said representation, private respondents filed a
AIRLINES EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS formal grievance on November 4, 1984 pursuant to the grievance machinery Step 1
COMMISSION, respondents. of the Collective Bargaining Agreement between petitioner and the union. . . . The
topics which the union wanted to be discussed in the said grievance were the
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D. illegal/questionable salary deductions and inventory of bonded goods and
Ungos, Jr. for petitioner. merchandise being done by catering service personnel which they believed should
not be their duty.
Adolpho M. Guerzon for private respondents.
4. The said grievance was submitted on November 21, 1984 to the office of Mr.
Reynaldo Abad, Manager for Catering, who at the time was on vacation leave. . . .

REGALADO, J.: 5. Subsequently, the grievants (individual respondents) thru the shop steward
wrote a letter on December 5, 1984 addressed to the office of Mr. Abad, who was
still on leave at the time, that inasmuch as no reply was made to their grievance
The instant petition for certiorari seeks to set aside the decision of The National Labor Relations
which "was duly received by your secretary" and considering that petitioner had
Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11, 1986,1 containing the
only five days to resolve the grievance as provided for in the CBA, said grievance as
following disposition:
believed by them (private respondents) was deemed resolved in their favor. . . .
WHEREFORE, in view of the foregoing consideration, the Decision appealed from is
6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the
set aside and another one entered, declaring the suspension of complainants to be
grievants and scheduled a meeting on December 12, 1984. . . .
illegal and consequently, respondent PAL is directed to pay complainants their
salaries corresponding to the respective period(s) of their suspension, and to delete
the disciplinary action from complainants' service records. 2 7. Thereafter, the individual respondents refused to conduct inventory works.
Alberto Santos, Jr. did not conduct ramp inventory on December 7, 10 and 12.
Gilbert Antonio did not conduct ramp inventory on December 10. In like manner,
These material facts recited in the basic petition are virtually undisputed and we reproduce the same
Regino Duran and Houdiel Magadia did not conduct the same on December 10 and
hereunder:
12.
1. Individual respondents are all Port Stewards of Catering Sub-Department,
8. At the grievance meeting which was attended by some union representatives,
Passenger Services Department of petitioner. Their duties and responsibilities,
Mr. Abad resolved the grievance by denying the petition of individual respondents
among others, are:
and adopted the position that inventory of bonded goods is part of their duty as
catering service personnel, and as for the salary deductions for losses, he
Prepares meal orders and checklists, setting up standard
rationalized:
equipment in accordance with the requirements of the type of
service for each flight; skiing, binning, and inventorying of
1. It was only proper that employees are charged for the amount
Commissary supplies and equipment.
due to mishandling of company property which resulted to losses.
However, loss may be cost price 1/10 selling price.
2. On various occasions, several deductions were made from their salary. The
deductions represented losses of inventoried items charged to them for
9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad,
mishandling of company properties . . . which respondents resented. Such that on
on January 3, 1985 wrote by an inter-office memorandum addressed to the
 grievants, individual respondents herein, for them to explain on (sic) why no
disciplinary action should be taken against them for not conducting ramp inventory.
...
10. The directive was complied with . . . . The reason for not conducting ramp
inventory was put forth as:
4. Since the grievance step 1 was not decided and no action was
done by your office within 5 days from November 21, 1984, per
provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is
deemed resolved in PALEA's favor.
11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a
penalty of suspension ranging from 7 days to 30 days were (sic) imposed depending
on the number of infractions committed. *
12. After the penalty of suspension was meted down, PALEA filed another grievance
asking for lifting of, or at least, holding in abeyance the execution of said penalty.
The said grievance was forthwith denied but the penalty of suspension with respect
to respondent Ramos was modified, such that his suspension which was originally
from January 15, 1985 to April 5, 1985 was shortened by one month and was lifted
on March 5, 1985. The union, however, made a demand for the reimbursement of
the salaries of individual respondents during the period of their suspension.
13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for
illegal suspension was filed before the
Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on
March 17, 1986, ruled in favor of petitioner by dismissing the complaint. . . . 3
Private respondents appealed the decision of the labor arbiter to respondent commission which
rendered the aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's
motion for reconsideration having been denied, it interposed the present petition.
The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC
acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the
aforementioned decision.
Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not
go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based
his or its determination, but is limited to issues of jurisdiction and grave abuse of discretion.4 It has
not been shown that respondent NLRC has unlawfully neglected the performance of an act which the
law specifically enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner from
the exercise of a right to which it is entitled.
The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective
Bargaining Agreement, (hereinafter, CBA), to wit:
Sec. 2 — Processing of Grievances
xxx xxx xxx
STEP 1 — Any employee who believes that he has a justifiable grievance shall take
the matter up with his shop steward. If the shop steward feels there is justification
for taking the matter up with the Company, he shall record the grievance on the
grievance form heretofore agreed upon by the parties. Two (2) copies of the
grievance form properly filled, accepted, and signed shall then be presented to and
discussed by the shop steward with the division head. The division head shall
answer the grievance within five (5) days from the date of presentation by inserting
his decision on the grievance form, signing and dating same, and returning one
copy to the shop steward. If the division head fails to act within the five (5)-day
regl(e)mentary period, the grievance must be resolved in favor of the aggrieved
party. If the division head's decision is not appealed to Step II, the grievance shall
be considered settled on the basis of the decision made, and shall not be eligible for
further appeal.5(Emphasis ours.)
Petitioner submits that since the grievance machinery was established for both labor and
management as a vehicle to thresh out whatever problems may arise in the course of their
relationship, every employee is duty bound to present the matter before management and give the
latter an opportunity to impose whatever corrective measure is possible. Under normal
circumstances, an employee should not preempt the resolution of his grievance; rather, he has the
duty to observe the status quo.6
Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the
obligation, just as management has, to settle all labor disputes through friendly negotiations. Thus,
Section 2 of the CBA should not be narrowly interpreted. 7 Before the prescriptive period of five days
begins to run, two concurrent requirements must be met, i.e., presentment of the grievance and
its discussion between the shop steward and the division head who in this case is Mr. Abad. Section 2
is not self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive
period.8
Petitioner has sorely missed the point.
It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the
Constitution imposes such sympathy, but because of the one-sided relation between labor and
capital.9 The constitutional mandate for the promotion of labor is as explicit as it is demanding. The
purpose is to place the workingman on an equal plane with management — with all its power and
influence — in negotiating for the advancement of his interests and the defense of his rights. 10 Under
the policy of social justice, the law bends over backward to accommodate the interests of the
working class on the humane justification that those with less privileges in life should have more
privileges in law. 11
It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section 2
of the CBA aforequoted, the division head shall act on the grievance within five (5) days from the date
of presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved party."
It is not disputed that the grievants knew that division head Reynaldo Abad was then "on leave"
when they filed their grievance which was received by Abad's secretary. 13 This knowledge, however,
should not prevent the application of the CBA.
If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay
the resolution of labor problems, the complaints of the workers in particular, and hide under the
cloak of its officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If
this should be allowed, the workingmen will suffer great injustice for they will necessarily be at the
mercy of their employer. That could not have been the intendment of the pertinent provision of the
CBA, much less the benevolent policy underlying our labor laws.
ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed
decision of respondent National Labor Relations Commission is AFFIRMED. This judgment is
immediately executory.

On this score, respondent NLRC aptly ruled: SO ORDERED.

. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act
on the grievance of complainants within five days from 21 November 1984.
Therefore, when Reynaldo Abad, failed to act within the reglementary period,
complainants, believing in good faith that the effect of the CBA had already set in,
cannot be blamed if they did not conduct ramp inventory for the days thereafter. In
this regard, respondent PAL argued that Reynaldo Abad was on leave at the time
the grievance was presented. This, however, is of no moment, for it is hard to
believe that everything under Abad's authority would have to stand still during his
absence from office. To be sure, it is to be expected that someone has to be left to
attend to Abad's duties. Of course, this may be a product of inadvertence on the
part of PAL management, but certainly, complainants should not be made to suffer
the consequences. 14

Contrary to petitioner's submission,15 the grievance of employees is not a matter which requires the
personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have assigned an
officer-in-charge to look into the grievance and possibly make his recommendation to Mr. Abad. It is
of no moment that Mr. Abad immediately looked into the grievance upon returning to work, for it
must be remembered that the grievants are workingmen who suffered salary deductions and who
rely so much on their meager income for their daily subsistence and survival. Besides, it is
noteworthy that when these employees first presented their complaint on August 21, 1984,
petitioner failed to act on it. It was only after a formal grievance was filed and after Mr. Abad
returned to work on December 7, 1984 that petitioner decided to turn an ear to their plaints.

As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to
petitioner's inadvertence,16 but it is clearly too much of an injustice if the employees be made to bear
the dire effects thereof. Much as the latter were willing to discuss their grievance with their
employer, the latter closed the door to this possibility by not assigning someone else to look into the
matter during Abad's absence. Thus, private respondents should not be faulted for believing that the
effects of the CBA in their favor had already stepped into the controversy.

G.R. No. L-13778 April 29, 1960
PHILIPPINE EDUCATION CO., INC., petitioner,
vs.
UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU) and THE COURT OF INDUSTRIAL
RELATIONS,respondents.
Marcial Esposo for petitioner.
Eulogio R. Lerum for respondent Union. Jose B. Bolisay for respondent CIR.
MONTEMAYOR, J.:
The Philippine Education Company, Inc. is appealing the order of the Court of Industrial Relations,
dated February 7, 1958, directing it to reinstate its former employee, Ernesto Carpio, to his former or
equivalent position, without backpay, and from the resolution of the same court in banc, dated
March 22, 1958, denying the company's motion for reconsideration.
Ernesto Carpio and other employees of the company, members of the Union of Philippine Education
Employees (NLU) joined a strike staged on January 16, 1953. After the labor dispute was settled, the
Industrial Court ordered the reinstatement of the strikers, including Carpio. The company, however,
opposed the reinstatement of Carpio for the reason that a criminal complaint had been filed against
him in the Municipal Court of Manila for theft of magazines allegedly belonging to the company. He
was convicted and sentenced to two months and one day of arresto mayor. On appeal to the Court of
First Instance, Carpio was acquitted on the ground of reasonable doubt.
The question of Carpio's reinstatement was heard by the Industrial Court where the parties
submitted as evidence the transcript of the stenographic notes taken during the hearing in the
criminal case before the Court of First Instance of Manila, the exhibits presented in said case, as well
as the decisions of the Municipal Court convicting him, and that of the Court of First Instance
acquitting him, or rather dismissing the case against him on reasonable doubt. After said hearing, the
Industrial Court agreed with the finding of the Court of First Instance that the offense had not been
proven beyond reasonable doubt and held that Carpio's acquittal entitled him to reinstatement,
though without backpay.
We have examined the aforementioned evidence, and we are inclined to agree with the Municipal
Court that Carpio's guilt had been duly established. At least, the preponderance of evidence was
against his innocence. The question for determination is whether the whether the acquittal of an
employee, specially on the ground of reasonable doubt, in a criminal case for theft involving articles
and merchandise belonging to his employer, entitles said employee to reinstatement.
In the case of National Labor Organization of Employees and Laborers vs. Court of Industrial
Relations, 95 Phil., 727; Off. Gaz. (9) 4219, we said:
. . . the acquittal of a employee in a criminal case is no bar to the Court of Industrial
Relations, after proper hearing, finding the same employee guilty of facts inimical to the
interests of his employer and justifying loss of confidence in him by said employer, thereby
warranting his dismissal or the refusal of the Company to reinstate him. The reason for this
is not difficult to see. The evidence required by law to establish guilt and to warrant
conviction in a criminal case substantially differs from the evidence necessary to establish
responsibility or liability in a civil or non-criminal case. The difference is in the amount and
weight of evidence and also in degree. In a criminal case, the evidence or proof must be
beyond reasonable doubt while in a civil or non criminal case it is merely preponderance of
evidence. In further support of this principle we may refer to Art. 29 of the New Civil Code
(Rep. Act 386) which provides that when the accused in a criminal case is acquitted on the
ground of reasonable doubt a civil action for damages for the same act or omission may be
instituted where only a preponderance of evidence is necessary to establish liability. From all
this it is clear that the Court of Industrial Relations was justified in denying the petition of
Rivas and Tolentino for reinstatement in the cement company, because of their illegal
possession of hand grenades intended by them for purposes of sabotage in connection with
the strike on March 16, 1952.
Then in the case of National Labor Union vs. Standard Vacuum Oil Company, 73 Phil., 279, the City
Fiscal refused to prosecute two employees charged with theft for lack of evidence and yet this
Tribunal upheld their dismissal from the employer company on the ground that their employer had
ample reason to distrust them.
The relation of employer and employee, specially where the employee has access to the employer's
property in the form of articles and merchandise for sale, necessarily involves trust and confidence. If
said merchandise are lost and said loss is reasonably attributed to said employee, and he is charged
with theft, even if he is acquitted of the form of articles and merchandise for sale, necessarily
involves trust and confidence. If said merchandise are lost and said loss is reasonably attributed to
said employee, and he is charged with theft, even if he is acquitted of the charge on reasonable
doubt, when the employer has lost its confidence in him, it would be highly unfair to require said
employer to continue employing him or to reinstate him, for in that case the former might find it
necessary for its protection to employ another person to watch and keep an eye on him. In the
present case, Carpio was refused reinstatement not because of any union affiliation or activity or
because the company has been guilty of any unfair labor practice. As already stated, Carpio was
convicted in the Municipal Court and although he was acquitted on reasonable doubt in the Court of
First Instance, the company had ample reason to distrust him. Under the circumstances, we cannot in
conscience require the company to reemploy or reinstate him.
In view of the foregoing, the appealed orders of the Industrial Court of February 7, 1958 and March
22, 1958 are hereby reversed. No costs.
G.R. No. 78090 July 26, 1991
PACIFIC MILLS, INC., petitioner,
vs.
ZENAIDA ALONZO, respondent.
Napoleon L. Apostol for petitioner.
NARVASA, J.:
From July 30, 1973, Zenaida Alonzo was employed as a ring frame operator in the Pacific Mills, Inc.
until September 30, 1982 when she was discharged by Management.
The record shows that in the early afternoon of September 22, 1982, Zenaida challenged Company
Inspector Ernesto Tamondong to a fight, saying: "Putang Ina mo, lumabas ka, tarantado, kalalaki
mong tao, duwag ka . . Ipagugulpi kita sa labas at kaya kitang ipakaladkad dito sa loob ng compound
palabas ng gate sa mga kamag-anak ko." And suiting action to the word, she thereupon boxed
Tamondong in the stomach. The motive for the assault was Zenaida's resentment at having been
reprimanded, together with other employees, two days earlier by Tamondong for wasting time by
engaging in Idle chatter.1 Tamondong forthwith reported the incident to the firm's Administrative
Manager2 as well as the Chairman of Barangay Balombato, Quezon City. 3
On September 30, 1982, Zenaida Alonzo was given a Memorandum by the company's Executive Vice
President & General Manager terminating her employment as of October 1, 1982 on various grounds:
poor work, habitual absences and tardiness, wasting time, insubordination and gross disrespect. The
service of that memorandum of dismissal on her was not preceded by any complaint, hearing or
other formality. These were apparently considered unnecessary by Management 4 in view of the
provision in the Company Rules and Regulations (embodied in the Collective Bargaining Agreement
between the company and the union representing the employees) that:
Fighting or attempting to inflict harm to another employee, will render (sic) the aggressor to
outright dismissal.
It was only at the hearing of the complaint for illegal dismissal (and non-payment of proportionate
13th month pay) instituted by Zenaida on October 4, 1982 in the NCR Arbitration Branch, that
evidence was presented by the company not only of the assault by Zenaida on her superior but also
of many other violations by her of company rules and regulations, in an attempt to substantiate the
validity of her dismissal from work.
The Labor Arbiter found that Alonzo had indeed verbally abused and struck her superior, Tamondong,
and rejected her contention that the assault was not punishable since it was "not work-connected
and was provoked/instigated by Ernesto Tamondong."5 The Arbiter also declared as "fully established
the previous infractions of complainant," these being "a matter of record and not denied by
complainant (Zenaida)."
The Arbiter was of the view, however, that Alonzo was entitled to relief, because (a) the penalty
imposed was "harsh and severe and not commensurate with the offense, . . . suspension of three (3)
months . . (being) the proper, just and reasonable penalty . . .;" and because (b) the company had
failed "to investigate complainant before she was dismissed." The Arbiter thus ordered Pacific Mills,
Inc., Zenaida's employer:
. . . to reinstate complainant without loss of seniority rights and to pay her backwages from
January 1, 1983 until fully reinstated, the period from October 1, 1982 to December 31, 1982
complainant being under suspension without pay . . . (as well as) to pay complainant's 13th
month pay in the amount of THREE HUNDRED FIFTY-ONE PESOS ONLY (P351.00).
Acting on the employer's appeal, the National Labor Relations Commission rendered judgment on
March 23, 1987, sustaining the Labor Arbiter's findings. It however limited the award of back wages
to Zenaida only to three (3) years, in accordance with this Court's judgment in Feati University Faculty
Club (PAFLU) vs. Feati University, 58 SCRA 396.6
Pacific Mills Inc. has instituted in this Court the special civil action of certiorari at bar praying for
nullification of the judgment of the NLRC for having been rendered with grave abuse of discretion.
In the comment thereon,7 required of him by the Court, the Solicitor General opined that:
. . . both the Labor Arbiter and the NLRC apparently failed to take into consideration the fact
that Zenaida Alonzo was dismissed not because of this isolated act (of assault against her
superior) but rather because of numerous and repeated violations of company rules and
regulations. It was only this last incident which compelled Pacific Mills, Inc. to finally
terminate her services. It is the totality of the infractions committed by the employee which
should have been considered in determining whether or not there is just cause for her
dismissal.
Zenaida Alonzo was caught several times leaving her place of work to chat with her co-
employees.1âwphi1 This is reprehensible conduct since, as ring frame operator, she must be
at her post during work hours to prevent the occurrence of incidents which could damage
the machine. The company inspector precisely warned her against doing this. She had also
been repeatedly reprimanded for insubordination, habitual tardiness, wasting time and not
wearing the required company uniform, In spite of these infractions the company bore with
her services and did not see fit to dismiss her. Her assault on the company inspector was
apparently the last straw which compelled Pacific Mills, Inc. to terminate her services.
Accordingly, the Solicitor General recommended "payment of separation pay equivalent to three (3)
years backwages but without reinstatement" and of "proportionate 13th month pay."
For their part, the Chief Legal Officer of the NLRC,8 and the private respondent,9 insist that since the
dismissal of Zenaida Alonzo was not preceded by any notice of the charges and a hearing thereon,
the judgment of the NLRC must be sustained.
Decisive of this controversy is the judgment of the Court en banc in Wenphil Corporation v. NLRC,
promulgated on February 8, 1989,10 in which the following policy pronouncements were made:
The Court holds that the policy of ordering the reinstatement to the service of an employee
without loss of seniority and the payment of his wages during the period of his separation
until his actual reinstatement but not exceeding three (3) years without qualification or
deduction, when it appears he was not afforded due process, although his dismissal was
found to be for just and authorized cause in an appropriate proceeding in the Ministry of
Labor and Employment, should be re-examined. It will be highly prejudicial to the interests
of the employer to impose on him the services of an employee who has been shown to be
guilty of the charges that warranted his dismissal from employment. Indeed, it will
demoralize the rank and file if the undeserving, if not undesirable, remains in the service.
before the Labor Arbiter in which Zenaida Alonzo had of course taken active part, it had succeeded in
satisfactorily proving the commission by Zenaida of many violations of company rules and regulations
justifying termination of her employment. Under the circumstances, it is clear that, as the Solicitor
General has pointed out, the continuance in the service of the latter is patently inimical to her
employer's interests and that, citing San Miguel Corporation v. NLRC,11 the law, in protecting the
rights of the laborer authorizes neither oppression nor self-destruction of the employer. And it was
oppressive and unjust in the premises to require reinstatement of the employee.
WHEREFORE, the petition is granted and the challenged decision of the respondent Commission
dated March 23, 1987 and that of the Labor Arbiter thereby affirmed, are NULLIFIED AND SET ASIDE.
However, the petitioner is ordered to pay private respondent a proportionate part of the 13th month
pay due her, amounting to P351.00 as well as to indemnify her in the sum of P1,000.00. No costs.
SO ORDERED.

Thus in the present case, where the private respondent, who appears to be of violent
temper, caused trouble during office hours and even defied his superiors as they tried to
pacify him, should not be rewarded with reemployment and back wages. It may encourage
him to do even worse and will render a mockery of the rules of discipline that employees are
required to observe. Under the circumstances, the dismissal of the private respondent for
just cause should be maintained. He has no right to return to his former employer.

However, the petitioner (employer) must nevertheless be held to account for failure to
extend to private respondent his right to an investigation before causing his dismissal. The
rule is explicit as above discussed. The dismissal of an employee must be for just or
authorized cause and after due process (Section 1, Rule XIV, Implementing Regulations of
the Labor Code). Petitioner committed an infraction of the second requirement. Thus, it
must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing . . . (respondent) from employment.
Considering the circumstances of this case petitioner must indemnify the private respondent
the amount of P1,000.00. The measure of tills award depends on the facts of each case and
the gravity of the omission committed by the employer.

The Court perceives no sufficient cause, it has indeed been cited to none by the respondents, to
decline to apply the Wenphil doctrine to the case at bar.

While it is true that Pacific Mills, Inc. had not complied with the requirements of due process prior to
removing Zenaida Alonzo from employment, it is also true that subsequently, in the proceedings
G.R. No. 78409 September 14, 1989
NORBERTO SORIANO, petitioner,
vs.
OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT KNUTSEN O.A.S., and NATIONAL
LABOR RELATIONS COMMISSION (Second Division), respondents.
R. C. Carrera Law Firm for petitioner.
Elmer V. Pormento for private respondents.
FERNAN, C.J.:
This is a petition for certiorari seeking to annul and set aside the decision of public respondent
National Labor Relations Commission affirming the decision of the Philippine Overseas Employment
Administration in POEA Case No. (M)85-12-0953 entitled "Norberto Soriano v. Offshore Shipping and
Manning Corporation and Knut Knutsen O.A.S.", which denied petitioner's claim for salary differential
and overtime pay and limited the reimbursement of his cash bond to P15,000.00 instead of
P20,000.00.
In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed Second
Marine Engineer, sought employment and was hired by private respondent Knut Knutsen O.A.S.
through its authorized shipping agent in the Philippines, Offshore Shipping and Manning Corporation.
As evidenced by the Crew Agreement, petitioner was hired to work as Third Marine Engineer on
board Knut Provider" with a salary of US$800.00 a month on a conduction basis for a period of fifteen
(15) days. He admitted that the term of the contract was extended to six (6) months by mutual
agreement on the promise of the employer to the petitioner that he will be promoted to Second
Engineer. Thus, while it appears that petitioner joined the aforesaid vessel on July 23, 1985 he signed
off on November 27, 1985 due to the alleged failure of private respondent-employer to fulfill its
promise to promote petitioner to the position of Second Engineer and for the unilateral decision to
reduce petitioner's basic salary from US$800.00 to US$560.00. Petitioner was made to shoulder his
return airfare to Manila.
In the Philippines, petitioner filed with the Philippine Overseas Employment Administration (POEA for
short), a complaint against private respondent for payment of salary differential, overtime pay,
unpaid salary for November, 1985 and refund of his return airfare and cash bond allegedly in the
amount of P20,000.00 contending therein that private respondent unilaterally altered the
employment contract by reducing his salary of US$800.00 per month to US$560.00, causing him to
request for his repatriation to the Philippines. Although repatriated, he claims that he failed to
receive payment for the following:
1. Salary for November which is equivalent to US$800.00;
2. Leave pay equivalent to his salary for 16.5 days in the sum of US$440.00;
3. Salary differentials which is equivalent to US$240.00 a month for four (4) months
and one (1) week in the total sum of US$1,020,00;
4. Fixed overtime pay equivalent to US$240.00 a month for four (4) months and one
(1) week in the sum of US$1,020.00;
5. Overtime pay for 14 Sundays equivalent to US$484.99;
6. Repatriation cost of US$945.46;
7. Petitioner's cash bond of P20,000.00. 1
In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment
Administration or POEA found that petitioner-complainant's total monthly emolument is US$800.00
inclusive of fixed overtime as shown and proved in the Wage Scale submitted to the Accreditation
Department of its Office which would therefore not entitle petitioner to any salary differential; that
the version of complainant that there was in effect contract substitution has no grain of truth
because although the Employment Contract seems to have corrections on it, said corrections or
alterations are in conformity with the Wage Scale duly approved by the POEA; that the withholding of
a certain amount due petitioner was justified to answer for his repatriation expenses which
repatriation was found to have been requested by petitioner himself as shown in the entry in his
Seaman's Book; and that petitioner deposited a total amount of P15,000.00 only instead of
P20,000.00 cash bond.2
Accordingly, respondent POEA ruled as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, respondents are hereby ordered to pay
complainant, jointly and severally within ten (10) days from receipt hereof the
amount of P15,000.00 representing the reimbursement of the cash bond deposited
by complainant less US$285.83 (to be converted to its peso equivalent at the time
of actual payment).
Further, attorney's fees equivalent to 10 % of the aforesaid award is assessed
against respondents.
All other claims are hereby dismissed for lack of merit.
SO ORDERED. 3
Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National Labor
Relations Commission. Complainant-petitioner's appeal was dismissed for lack of merit while
respondents' appeal was dismissed for having been filed out of time.
Petitioner's motion for reconsideration was likewise denied. Hence this recourse.
Petitioner submits that public respondent committed grave abuse of discretion and/or acted without
or in excess of jurisdiction by disregarding the alteration of the employment contract made by private
respondent. Petitioner claims that the alteration by private respondent of his salary and overtime
rate which is evidenced by the Crew Agreement and the exit pass constitutes a violation of Article 34
of the Labor Code of the Philippines. 6
On the other hand, public respondent through the Solicitor General, contends that, as explained by
the POEA: "Although the employment contract seems to have corrections, it is in conformity with the
Wage Scale submitted to said office. 7
Apparently, petitioner emphasizes the materiality of the alleged unilateral alteration of the
employment contract as this is proscribed by the Labor Code while public respondent finds the same
to be merely innocuous. We take a closer look at the effects of these alterations upon petitioner's
right to demand for his differential, overtime pay and refund of his return airfare to Manila.
A careful examination of the records shows that there is in fact no alteration made in the Crew
Agreement 8 or in the Exit Pass. 9 As the original data appear, the figures US$800.00 fall under the
column salary, while the word "inclusive" is indicated under the column overtime rate. With the
supposed alterations, the figures US$560.00 were handwritten above the figures US$800.00 while
the figures US$240.00 were also written above the word "inclusive".
As clearly explained by respondent NLRC, the correction was made only to specify the salary and the
overtime pay to which petitioner is entitled under the contract. It was a mere breakdown of the total
amount into US$560.00 as basic wage and US$240.00 as overtime pay. Otherwise stated, with or
without the amendments the total emolument that petitioner would receive under the agreement as
approved by the POEA is US$800.00 monthly with wage differentials or overtime pay included. 10
Moreover, the presence of petitioner's signature after said items renders improbable the possibility
that petitioner could have misunderstood the amount of compensation he will be receiving under the
contract. Nor has petitioner advanced any explanation for statements contrary or inconsistent with
what appears in the records. Thus, he claimed: [a] that private respondent extended the duration of
the employment contract indefinitely, 11 but admitted in his Reply that his employment contract was
extended for another six (6) months by agreement between private respondent and himself: 12 [b]
that when petitioner demanded for his overtime pay, respondents repatriated him 13which again was
discarded in his reply stating that he himself requested for his voluntary repatriation because of the
bad faith and insincerity of private respondent; 14 [c] that he was required to post a cash bond in the
amount of P20,000.00 but it was found that he deposited only the total amount of P15,000.00; [d]
that his salary for November 1985 was not paid when in truth and in fact it was petitioner who owes
private respondent US$285.83 for cash advances 15 and on November 27, 1985 the final pay slip was
executed and signed; 16 and [e] that he finished his contract when on the contrary, despite proddings
that he continue working until the renewed contract has expired, he adamantly insisted on his
termination.
Verily, it is quite apparent that the whole conflict centers on the failure of respondent company to
give the petitioner the desired promotion which appears to be improbable at the moment because
the M/V Knut Provider continues to be laid off at Limassol for lack of charterers. 17
It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the very
purpose for which they were passed. This Court has in many cases involving the construction of
statutes always cautioned against narrowly interpreting a statute as to defeat the purpose of the
legislator and stressed that it is of the essence of judicial duty to construe statutes so as to avoid such
a deplorable result (of injustice or absurdity) and that therefore "a literal interpretation is to be
rejected if it would be unjust or lead to absurd results." 18
There is no dispute that an alteration of the employment contract without the approval of the
Department of Labor is a serious violation of law.
Specifically, the law provides:
Article 34 paragraph (i) of the Labor Code reads:
Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or
holder of authority:
xxxx
(i) To substitute or alter employment contracts approved and verified by the
Department of Labor from the time of actual signing thereof by the parties up to
and including the period of expiration of the same without the approval of the
Department of Labor.
In the case at bar, both the Labor Arbiter and the National Labor Relations Commission correctly
analyzed the questioned annotations as not constituting an alteration of the original employment
contract but only a clarification thereof which by no stretch of the imagination can be considered a
violation of the above-quoted law. Under similar circumstances, this Court ruled that as a general
proposition, exceptions from the coverage of a statute are strictly construed. But such construction
nevertheless must be at all times reasonable, sensible and fair. Hence, to rule out from the
exemption amendments set forth, although they did not materially change the terms and conditions
of the original letter of credit, was held to be unreasonable and unjust, and not in accord with the
declared purpose of the Margin Law. 19

The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both parties. In
the instant case, the alleged amendment served to clarify what was agreed upon by the parties and
approved by the Department of Labor. To rule otherwise would go beyond the bounds of reason and
justice.

As recently laid down by this Court, the rule that there should be concern, sympathy and solicitude
for the rights and welfare of the working class, is meet and proper. That in controversies between a
laborer and his master, doubts reasonably arising from the evidence or in the interpretation of
agreements and writings should be resolved in the former's favor, is not an unreasonable or unfair
rule. 20 But to disregard the employer's own rights and interests solely on the basis of that concern
and solicitude for labor is unjust and unacceptable.

Finally, it is well-settled that factual findings of quasi-judicial agencies like the National Labor
Relations Commission which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but at times even finality if such findings are
supported by substantial evidence.21

In fact since Madrigal v. Rafferty 22 great weight has been accorded to the interpretation or
construction of a statute by the government agency called upon to implement the same. 23

WHEREFORE, the instant petition is DENIED. The assailed decision of the National Labor Relations
Commission is AFFIRMED in toto.

SO ORDERED.
G.R. No. 46727 September 27, 1939
PAMBUSCO EMPLOYEES' UNION, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS, composed to Honorables Francisco Zulueta, Leopoldo
Rovira, and Jose Generoso, and PAMPANGA BUS COMPANY, INC., respondents.
Jose Alejandrino for petitioner.
Manuel Escudero for respondent court.
L.D. Lockwood for respondent Pampanga Bus Co., Inc.
LAUREL, J.:
This is a petition for a writ of certiorari to review the decision of the Court of Industrial Relations
promulgated on January 14, 1939, denying the demands of the Pambusco Employees' Union, Inc.
The following are the pertinent facts which have given occasion to this industrial dispute: On March
26, 1938, the Pambusco Employees' Union, Inc., addressed a thirteen- point petition to the
management of the Pampanga Bus Co. Upon the failure of the company officials to act upon the
petition, a strike was declared by the workers on April 14, 1938. However, through the timely
mediation of the Department of Labor, a provisional agreement was reached, by virtue of which the
strike was called off, eight demands were granted, and the remaining five were submitted to the
Court of Industrial Relations for settlement. One of these demands, in the language of the petitioner,
is that the respondent Pampanga Bus Co. "pay to all Company drivers affiliated with the Pambusco
Employees' Union, Inc., all the back overtime pay due them under the law." After trial on the
disputed demands, the Court of Industrial Relations decided inter alia that the claim for back
overtime pay could not be allowed.
bonuses and overtime pay they receive for extra work, and asking, in view thereof, that the
law be not applied to them (Exhibits 6, 6-a to 6-g).
After the enactment of Act No. 4242 several transportation companies operating motor
buses filed with Commissioner of Labor petitions for a readjustment of the hours of labor
specified in section 1 of the Act on the basis of maintaining the status quo as to the hours
the drivers were required to be actually on duty in order to enable them to make the
prescribed hours daily that the exigencies of the service required. The petitions were based
on the impracticability of applying the provisions of the law to drivers of public service
vehicles without disrupting the public service and causing pecuniary loss to both employers
and employees alike, and the resulting difficulties on the part of the drivers. The testimony
of Atty. Carlos Alvear on this point in uncontradicted. He testified that in 1935, he was
president of the Philippine Motor Association composed of bus operators operating in the
Philippines, of which the respondent is a member. Major Olson, who was at the time the
executive secretary of the association, and himself took up the matter with the Secretary of
the Interior and the Secretary of Labor after the passage of the Act extending the operation
of the Eight Labor Law to drivers. In their conference with the Commissioner of Labor, they
were told to take advantage of the provisions of the law in which they may apply for the
readjustment of the working hours, and in conformity with that suggestion, the executive
secretary of the association filed a formal petition, Exhibit 10, on September 5, 1935. When
this was filed the Department of Labor further suggested that the drivers of each company
file and address a petition of similar nature designating their representatives who will
represent them in a conference that the Commissioner of Labor may call for the purpose.
With the filing of the petition, the conferees were assured by the Under-Secretary of Labor
that the enforcement of the Eight Hour Labor Law in so far as the drivers were concerned,
will be held in abeyance until such time as the meeting or investigations are held. It is not
clear as to whether investigations and hearings were finally made but the evidence indicates
that the petition was never decided and the companies continued its schedule of hours.

The pertinent portion of the decision of the respondent Court of Industrial Relations is as follows:
Sections 3 and 4 of Act No. 4123 read as follows:

The evidence is clear that even before the final approval of Act No. 4242 amending Act No.
"SEC. 3. The Commissioner of Labor, with the advice of two representatives of the employers
4123, the Eight Hour Labor Law, by extending the provisions of the latter to other class of
concerned, designated by the latter, and of two representatives of the laborers concerned,
laborers including drivers of public service vehicles, a petition was addressed by 44 drivers of
designated by these, shall, at the request of an interested party, decide in each case
the company to the Governor-General asking him to veto the bill amending the law whether or not it is proper to increase or decrease the number of hours of labor fixed in
extending it to drivers for the reason stated in their petition (Exhibit 5 and 5-a). About the
section one of this Act, either because the organization or nature of the work require it, or
6th day of September, 1935, a petition was again addressed by 97 drivers of the company to
because of lack or insufficiency of competent laborers for certain work in a locality, or
the Commissioner of Labor requesting adjustment of working hours to permit them to retain
because the relieving of the laborers must be done under certain conditions, or by reason of
their present status with the company as nearly as possible under the law (Exhibits 4, 4-a, 4-
any other exceptional circumstances or conditions of the work or industry concerned; but
b, 4-c, 4-d and 4-e). This petition was prepared after a meeting of the employees was held
the number of hours of labor shall in no case exceed twelve daily or seventy-two weekly.
and was drawn with the help of the manager of the respondent about the last days of
August, 1935. In September, 1937, about 347 employees of the different departments of the
"SEC. 4. Employees or laborers desiring an increase or decrease of the number of hours of
company again addresses a petition to the Director of Labor expressing their satisfaction
labor shall address an application to this effect to the Commissioner of Labor, stating their
with the hours they work and the pay they receive for their labor including the special
 reasons. Upon receipt of an application of this kind, the Commissioner of Labor shall call a
meeting of the employers and laborers of the establishment or industry concerned, for the
designation of advisers as provided in the preceding section hereof. The Commissioner of
Labor or his authorized representative, together with the advisers, shall make an
investigation of the facts, giving special attention, in the first place, to the human aspect,
and in the second place, to the economic aspect of the matter, and he may for this purpose
administer oaths, take affidavits examine witnesses and documents and
issue subpoenas and subpoenas duces tecum. The decision of the Commissioner of Labor
may be reconsidered by him at any time."
It seems clear that the petitions of both employers and employees for the non-enforcement
of the Eight Hour Labor Law were made in accordance with these provisions of the law.
Exhibit 9 of the respondent which is a communication addressed by the Under-Secretary of
Labor on September 6, 1935, to the A.L. Ammen Transportation Company, Inc., defines the
attitude taken by the Department of Labor in connection with those petitions. It advises the
company to submit an application under sections 3 and 4 of Act No. 4123 above-quoted for
an increase of working hours of such laborers as may fall under the amendment and that
pending final solution of said application, the Department of Labor will not make any
attempt to enforce said amendment. As has already been stated it is not clear whether final
action or decision has been made on the applications with respect to the drivers of the
respondent; that it is undeniable fact that up to the outbreak of the dispute, the law was not
observed nor enforced in the company; and that upon mutual agreement arrived at by the
parties on April 14, 1938, the company worked out a schedule beginning May 1, 1938,
placing all its employees under an eight-hour schedule.
In view of the foregoing fact, the court is the opinion that the drivers are not entitled to the
overtime pay demanded for the whole period the law was not observed or enforced in the
company. They are entitled to payment of wages for hours worked in excess of the legal
hours only beginning May 1, 1938.
On January 30, 1939, the petitioner filed a motion for reconsideration which was denied by the Court
of Industrial Relations, sitting in banc, with the following observations:
We have reviewed carefully the evidence on record with regard to the claim for back
overtime pay we find that it amply supports the findings and conclusions set forth in support
of the motion for reconsideration are virtually a repetition of the reasons advanced in the
memorandum of the petitioner filed before the case was decided and were already
discussed and considered in the decision. The evidence permits no other conclusion than
that the employees were not coerced not intimidated by the respondent on the repeated
occasions they signed and presented to the Department of Labor their petitions for non-
enforcement of the Eight Hour Labor Law. The employees were indubitably aware of certain
hardships the enforcement of the law at that time would bring to them and these prompted
their attitude of preferring the continuation of the schedule of hours observed prior to the
enactment of the legislation extending the benefits of the Eight Hour Labor Law to drivers of
motor vehicles in public utility enterprises. Whatever pecuniary advantage they would have
gained by the strict observance of the law by the company should they be made to work
more than eight hours a day was apparently waived or given up by them in exchange of their
personal convenience and of the additional monthly pay the respondent gave to those
employees who were assigned to routes where the daily working hours exceeded the
maximum fixed by law. The evidence that the company paid additional salaries not only to
drivers but also to its conductors who were assigned to such routes stands uncontradicted
and no attempt even was made by the petitioner to deny it. Without need of passing on the
question as to whether the provisions of the law are mandatory or not, in the light of the
above facts and applying the rules of equity invoked by the union, we are constrained to
hold that the petitioners are not rightly entitled to the payment sought.
In Kapisanan ng mga Manggagawa sa Pantranco vs. Pangasinan Transportation Co. (39 Off. Gaz.,
1217), we have held that, to be entitled to the benefits of section 5 of Act No. 4123, fulfillment of the
mandate of the law is necessary, this being a matter of public interest. Where both parties, as in this
case, we have violated the law, this court must decline to extend the strong arm of equity, as neither
party is entitled to its aid. This is especially true in view of the findings of fact made by the Court of
Industrial Relations which we should not disturb.
We are not, to be sure insensible to the argument that industrial disputes should be decided with an
eye on the welfare of the working class, who, in the inter-play of economic forces, is said to find itself
in the "end of the stick." In the case at bar, however, we find no reason for disturbing the action
taken by the respondent Court of Industrial Relations, which is a special court enjoined to "act
according to justice and equity and substantial merits of the case, without regard to technicalities or
legal forms and shall not be bound by any technical rules of legal evidence but may inform its mind in
such manner as it may deem just and equitable" (sec. 20, Commonwealth Act No. 103).
The petition is dismissed, without pronouncement regarding costs. So ordered.
G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ PHILIPPINES, INC.
(formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the
change of the divisor in the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National
Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and
obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's
decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code,
subject only to the exclusions and limitations specified in Article 82 and such other
legal restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and
(3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation
and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the
Labor Code, that their sales personnel are not field personnel and are therefore entitled to holiday
pay, and that the use of 251 as divisor is an established employee benefit which cannot be
diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the
holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He
adjudged, however, that the company's sales personnel are field personnel and, as such, are not
entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor
should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator
treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution
dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no
jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor
Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the
rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the
case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned
from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from
251 to 261 days and whether or not the previous use of 251 as divisor resulted in overpayment for
overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the
Labor Code. The respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as
"non-agritultural employees who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to
the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales
personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining whether or not these sales personnel, even if
they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend
the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to report
for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the
realm of work in the field as defined in the Code but an exercise of purely
management prerogative of providing administrative control over such personnel.
This does not in any manner provide a reasonable level of determination on the
actual field work of the employees which can be reasonably ascertained. The
theoretical analysis that salesmen and other similarly-situated workers regularly
report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m.,
creating the assumption that their field work is supervised, is surface projection.
Actual field work begins after 8:00 a.m., when the sales personnel follow their field
itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to
their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their
hours of work in the field, the extent or scope and result of which are subject to
their individual capacity and industry and which "cannot be determined with
reasonable certainty." This is the reason why effective supervision over field work
of salesmen and medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are excluded from the ten
holidays with pay award. (Rollo, pp. 36-37)
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
Sec. 1. Coverage — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the
petitioner nevertheless attempted to show that its affected members are not covered by the
abovementioned rule. The petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated
March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not
add another element to the Labor Code definition of field personnel. The clause "whose time and
performance is unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be determined with
reasonable certainty." The former clause is still within the scope and purview of Article 82 which
defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the
field can be determined with reasonable certainty, query must be made as to whether or not such
employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales
personnel's time and performance are supervised. The purpose of this schedule is merely to ensure
that the sales personnel are out of the office not later than 8:00 a.m. and are back in the office not
earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent in
field work by an employee through the imposition of sanctions on absenteeism contained in the
company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter
based on their performance is proof that their actual hours of work in the field can be determined
with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales
target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good
merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely because
of the difficulty in measuring their actual hours of field work. These employees are evaluated by the
result of their work and not by the actual hours of field work which are hardly susceptible to
determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had
occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a salesman,
to a greater extent, works individually. There are no restrictions respecting the time
he shall work and he can earn as much or as little, within the range of his ability, as
his ambition dictates. In lieu of overtime he ordinarily receives commissions as
extra compensation. He works away from his employer's place of business, is not
subject to the personal supervision of his employer, and his employer has no way of
knowing the number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same
rationale for their exclusion as field personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award
of holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10
holidays and the employees should reimburse the amounts overpaid by Filipro due to the use of 251
days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten holidays
certainly adds to or accelerates the basis of conversion and computation by ten
days. With the inclusion of ten holidays as paid days, the divisor is no longer 251
but 261 or 262 if election day is counted. This is indeed an extremely difficult legal
question of interpretation which accounts for what is claimed as falling within the
concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there was a
consequent need to abandon that 251 divisor. To maintain it would create an
impossible situation where the employees would benefit with additional ten days
with pay but would simultaneously enjoy higher benefits by discarding the same
ten days for purposes of computing overtime and night time services and
considering sick and vacation leave credits. Therefore, reimbursement of such
overpayment with the use of 251 as divisor arises concomitant with the award of
ten holidays with pay. (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already included
in the monthly paid employee's salary and in the computation of his daily rate. This is the thrust of
our pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered
Bank, in computing overtime compensation for its employees, employs a "divisor"
of 251 days. The 251 working days divisor is the result of subtracting all Saturdays,
Sundays and the ten (10) legal holidays from the total number of calendar days in a
year. If the employees are already paid for all non-working days, the divisor should
be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months
———————————
251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by
respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise
the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and night differential pay and commutation of
sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for
computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower
daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of
the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the
dividend, which represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual
salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of
10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 +
1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent
Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave
benefits, the computation of which are all based on the daily rate, since the daily rate is still the same
before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days
as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be resolved in
favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303, indicating that the 10 holidays were
likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the
chance to rectify its error, if ever there was one but did not do so. It is now too late to allege payment
by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from
November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision
was favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition
raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is
not an appellant may assign errors in his brief where his purpose is to maintain the judgment on
other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief
unless he has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La
Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]).
Nevertheless, in order to fully settle the issues so that the execution of the Court's decision in this
case may not be needlessly delayed by another petition, the Court resolved to take up the matter of
effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when
the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not
from the date of effectivity of the Labor Code. Although the Court does not entirely agree with
Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984],
hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February
16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday
pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor
Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction
amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the
above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction
enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the
promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid
rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the
effect to be given to a legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an appropriate case, declares
its invalidity, it is entitled to obedience and respect. Parties may have acted under it
and may have changed their positions. What could be more fitting than that in a
subsequent litigation regard be had to what has been done while such legislative or
executive act was in operation and presumed to be valid in all respects. It is now
accepted as a doctrine that prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that precisely because the
judiciary is the government organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have elapsed before
it can exercise the power of judicial review that may lead to a declaration of nullity.
It would be to deprive the law of its quality of fairness and justice then, if there be
no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a
statute, prior to such a determination of [unconstitutionality], is an operative fact
and may have consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent ruling
as to invalidity may have to be considered in various aspects, — with respect to
particular relations, individual and corporate, and particular conduct, private and
official." (Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374
[1940]). This language has been quoted with approval in a resolution in Araneta
v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co., Inc. v. Flores (99
Phil. 738 [1956]). An even more recent instance is the opinion of Justice Zaldivar
speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp.
434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness
and resulting unfairness must be avoided. It is now almost the end of 1991. To require various
companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a
fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on
the implicit validity of the implementing rule and policy instruction before this Court nullified them,
and thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may
have been moved to grant other concessions to its employees, especially in the collective bargaining
agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among
the highest paid in the industry. With this consideration, it would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from
October 23, 1984, the date of promulgation of the IBAA case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in
computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from
October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED.

SO ORDERED.
G.R. Nos. 117442-43 January 11, 1995
FEM'S ELEGANCE LODGING HOUSE, FENITHA SAAVEDRA and IRIES ANTHONY
SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional Arbitration Branch, Region X, National
Labor Relations Commission, Cagayan de Oro City, ALFONSO GALLETO, GEORGE VEDAD, ROLAND
PANTONIAL, REYNALDO DELAORAO, FELICISIMO BAQUILID, CECILIO SAJOL, ANNABEL CASTRO,
BENJAMIN CABRERA, RHONDEL PADERANGA, ZENAIDA GUTIB, AIDA IMBAT and MARIA GRACE
ATUEL, respondents.
RESOLUTION
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of court with temporary restraining
order to reverse and set aside the Order dated September 21, 1994 of the Labor Arbiter in the NLRC
RAB X Cases Nos. 10-04-00232 (-00233)-94.
Petitioner FEM's elegance Lodging House is a business enterprise engaged in providing lodging
accommodations. It is owned by petitioner Fenitha Saavedra and managed by petitioner Iries
Anthony Saavedra. Private respondents are former employees of petitioners whose services were
terminated between March and April, 1994.
Sometime after their dismissal from the employment of petitioners, private respondents separately
filed two cases against petitioners before the National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. X, Cagayan de Oro City, docketed as NLRC RAB X Cases Nos. 10-04-00232-
(0023)-94. Private respondents sought for unpaid benefits such as minimum wage, overtime pay, rest
day pay, holiday pay, full thirteenth-month pay and separation pay (Rollo, pp. 40-42).
On May 31, 1994, a pre-arbitration conference of the cases took place before the Labor Arbiter. It
was agreed therein: (1) that both labor cases should be consolidated; and (2) that the parties would
file their respective position papers within thirty days from said date or until June 30, 1994, after
which the cases would be deemed submitted for resolution (Rollo, p. 14).
On June 29, petitioners filed their position paper. On July 7, they inquired from the NLRC whether
private respondents had filed their position paper. The receiving clerk of the NLRC confirmed that as
of said date private respondents had not yet filed their position paper.
The following events then transpired: on July 8, petitioners filed a Motion to dismiss for failure of
private respondents to file their position paper within the agreed period (Rollo, p. 38); on July 15,
private respondents belatedly filed their position paper; on July 18, petitioners filed a Motion to
Expunge [private respondents'] Position Paper from the records of the case (Rollo, p. 45); and on
August 23, the Labor Arbiter issued a notice of clarificatory hearing, which was set for September 7
(Rollo, p. 47). Prior to the hearing, petitioners filed a Motion to Resolve [petitioners'] Motion to
dismiss and Motion to Expunge [private respondent'] Position Paper from the Records of the Case
(Rollo, p. 48).
On September 21, the Labor Arbiter issued the order denying the motions filed by petitioners. He
held that a fifteen-day delay in filing the position paper was not unreasonable considering that the
substantive rights of litigants should not be sacrificed by technicality. He cited Article 4 of the Labor
Code of the Philippines, which provides that all doubts in the interpretation thereof shall be resolved
in favor of labor. He said that even under Section 15, Rule 5 of the Revised Rules of Court, a delay in
the filing of a position paper is not a ground for a motion to dismiss under the principle of exclusio
unius est excludio alterius (Rollo, pp. 51-52).
Hence, the present petition where petitioners charged the Labor Arbiter with grave abuse of
discretion for issuing the order in contravention of Section 3, Rule V of The New Rules of Procedure of
the NLRC, Said section provides:
Submission of Position Papers/Memorandum. — . . . Unless otherwise requested in
writing by both parties, the Labor Arbiter shall direct both parties to
submit simultaneously their position papers/memorandum with the supporting
documents and affidavits within fifteen (15) calendar days from the date of the last
conference, with proof of having furnished each other with copies thereof
(Emphasis supplied).
Petitioners claimed that they were denied due process and that the Labor Arbiter should have cited
private respondents in contempt for their failure to comply with their agreement in the pre-
arbitration conference.
We dismiss the petition for failure of petitioners to exhaust their remedies, particularly in seeking
redress from the NLRC prior to the filing of the instant petition. Article 223 of the Labor code of the
Philippines provides that decisions, awards or orders of the Labor Arbiter are appealable to the NLRC.
Thus, petitioners should have first appealed the questioned order of the Labor Arbiter to the NLRC,
and not to this court. their omission is fatal to their cause.
However, even if the petition was given due course, we see no merit in petitioners' arguments. The
delay of private respondents in the submission of their position paper is a procedural flaw, and the
admission thereof is within the discretion of the Labor Arbiter.
Well-settled is the rule that technical rules of procedure are not binding in labor cases, for procedural
lapses may be disregarded in the interest of substantial justice, particularly where labor matters are
concerned (Ranara v. National Labor Relations commission, 212 SCRA 631 [1992]).
The failure to submit a position paper on time is not on of the grounds for the dismissal of a
complaint in labor cases (The New Rules of procedure of the NLRC, Rule V, Section 15). It cannot
therefore be invoked by petitioners to declare private respondents as non-suited. This stance is in
accord with Article 4 of the Labor Code of the Philippines, which resolves that all doubts in the
interpretation of the law and its implementing rules and regulations shall be construed in favor of
labor. Needless to state, our jurisprudence is rich with decisions adhering to the State's basic policy of
extending protection to Labor where conflicting interests between labor and management exist
(Aquino v. National Labor Relations Commission, 206 SCRA 118 [1992]).

Petitioners cannot claim that they were denied due process inasmuch as they were able to file their
position paper. The proper party to invoke due process would have been private respondents, had
their position paper been expunged from the records for mere technicality. Since petitioners assert
that their defense is meritorious, it is to their best interest that the cases be resolved on the merits.
In this manner, the righteousness of their cause can be vindicated.

IN VIEW OF THE FOREGOING, the Court Resolved to DISMISS the petition for lack of merit.

SO ORDERED.