Labstandlaw - Part 6

[LABOR] July 24, 2014
Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 114337 September 29, 1995

NITTO ENTERPRISES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents.
KAPUNAN, J.:
1
This petition for certiorari under Rule 65 of the Rules of Court seeking to annul the decision rendered by public
respondent National Labor Relations Commission, which reversed the decision of the Labor Arbiter.
Briefly, the facts of the case are as follows:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto Capili
sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship
2
agreement for a period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of
P66.75 which was 75% of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working
on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital.
Later that same day, after office hours, private respondent entered a workshop within the office premises which
was not his work station. There, he operated one of the power press machines without authority and in the process
injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of private respondent.
3
The following day, Roberto Capili was asked to resign in a letter which reads:
August 2, 1990
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano gamitin
and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng tool at may
disgrasya at nadamay pa ang isang sekretarya ng kompanya.
Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng hapon siya ay pumasok
sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at kinalikot ang makina at
nadisgrasya niya ang kanyang sariling kamay.
Nakagastos ang kompanya ng mga sumusunod:
Emergency and doctor fee P715.00
Medecines (sic) and others 317.04
Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang tahi ng
kanyang kamay.
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng Agosto, 1990.
Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang kamay,
pagkatapos ng siyam na araw mula ika-2 ng Agosto.
Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama ng
kanyang comfirmasyon at pag-ayon na ang lahat sa itaas ay totoo.
Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala sa hindi
pagsunod sa alintuntunin ng kompanya.
(Sgd.) Roberto Capili
Roberto Capili
On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in
4
consideration of the sum of P1,912.79.
Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration Branch,
National Capital Region a complaint for illegal dismissal and payment of other monetary benefits.
On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private respondent as valid
and dismissing the money claim for lack of merit. The dispositive portion of the ruling reads:
WHEREFORE, premises considered, the termination is valid and for cause, and the money claims
dismissed for lack of merit.
1|Page

The respondent however is ordered to pay the complainant the amount of P500.00 as financial
assistance.
SO ORDERED.
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capilian was valid. First,
private respondent who was hired as an apprentice violated the terms of their agreement when he acted with gross
negligence resulting in the injury not only to himself but also to his fellow worker. Second, private respondent had
shown that "he does not have the proper attitude in employment particularly the handling of machines without
6
authority and proper training.
On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision of the Labor
Arbiter, the dispositive portion of which reads:
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby directed to
reinstate complainant to his work last performed with backwages computed from the time his
wages were withheld up to the time he is actually reinstated. The Arbiter of origin is hereby
directed to further hear complainant's money claims and to dispose them on the basis of law and
evidence obtaining.
SO ORDERED.
The NLRC declared that private respondent was a regular employee of petitioner by ruling thus:
As correctly pointed out by the complainant, we cannot understand how an apprenticeship
agreement filed with the Department of Labor only on June 7, 1990 could be validly used by the
Labor Arbiter as basis to conclude that the complainant was hired by respondent as a plain
"apprentice" on May 28, 1990. Clearly, therefore, the complainant was respondent's regular
employee under Article 280 of the Labor Code, as early as May 28,1990, who thus enjoyed the
security of tenure guaranteed in Section 3, Article XIII of our 1987 Constitution.
The complainant being for illegal dismissal (among others) it then behooves upon respondent,
pursuant to Art. 227(b) and as ruled in Edwin Gesulgon vs. NLRC, et al. (G.R. No. 90349, March
5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of complainant was for a valid cause.
8
Absent such proof, we cannot but rule that the complainant was illegally dismissed.
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private respondent's
representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:
NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of the Writ, you
are hereby commanded to proceed to the premises of [petitioner] Nitto Enterprises and Jovy
Foster located at No. l 74 Araneta Avenue, Portero, Malabon, Metro Manila or at any other places
where their properties are located and effect the reinstatement of herein [private respondent] to his
work last performed or at the option of the respondent by payroll reinstatement.
You are also to collect the amount of P122,690.85 representing his backwages as called for in the
dispositive portion, and turn over such amount to this Office for proper disposition.
Petitioner filed a motion for reconsideration but the same was denied.
Hence, the instant petition for certiorari.
The issues raised before us are the following:
I
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE.
II
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE
EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE
RESPONDENT.
We find no merit in the petition.
2|Page

Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be considered an
apprentice since no apprenticeship program had yet been filed and approved at the time the agreement was
executed.
Petitioner further insists that the mere signing of the apprenticeship agreement already established an employerapprentice relationship.
Petitioner's argument is erroneous.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement. Apprenticeship agreements, including the main rates of
apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The
period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for
wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the
applicable minimum wage, may be entered into only in accordance with apprenticeship program
duly approved by the Minister of Labor and Employment. The Ministry shall develop standard
model programs of apprenticeship. (emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on
May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder." On the same
date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and
Employment. However, the apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the
absence of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced
the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated that
apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with
the apprenticeship program duly approved by the Minister of Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore,
a condition sine quo non before an apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a
preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice
relationship.
Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program through
the participation of employers, workers and government and non-government agencies" and "to establish
apprenticeship standards for the protection of apprentices." To translate such objectives into existence, prior
approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any
such apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and
agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in
the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he
was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. He should
rightly be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph:Provided, That, any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
(Emphasis supplied)
and pursuant to the constitutional mandate to "protect the rights of workers and promote their welfare."
Petitioner further argues that, there is a valid cause for the dismissal of private respondent.
There is an abundance of cases wherein the Court ruled that the twin requirements of due process, substantive
10
and procedural, must be complied with, before valid dismissal exists. Without which, the dismissal becomes
void.
3|Page

The twin requirements of notice and hearing constitute the essential elements of due process. This simply means
that the employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance
of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must accord the employee to enable him to
11
prepare adequately for his defense including legal representation.
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC:
12
The law requires that the employer must furnish the worker sought to be dismissed with two (2)
written notices before termination of employee can be legally effected: (1) notice which apprises
the employee of the particular acts or omissions for which his dismissal is sought; and (2) the
subsequent notice which informs the employee of the employer's decision to dismiss him (Sec. 13,
BP 130; Sec. 2-6 Rule XIV, Book V, Rules and Regulations Implementing the Labor Code as
amended). Failure to comply with the requirements taints the dismissal with illegality. This
procedure is mandatory, in the absence of which, any judgment reached by management is void
and in existent (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC,
168 SCRA 122; Ruffy vs. NLRC. 182 SCRA 365 [1990]).
The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days after he was
made to sign a Quitclaim, a clear indication that such resignation was not voluntary and deliberate.
Private respondent averred that he was actually employed by petitioner as a delivery boy ("kargador" or
"pahinante").
He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation letter and
quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that anyway, he did not
13
have a choice.
Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's alleged
resignation and subsequent execution of a Quitclaim and Release. A judicious examination of both events belies
any spontaneity on private respondent's part.
WHEREFORE, finding no abuse of discretion committed by public respondent National Labor Relations
Commission, the appealed decision is hereby AFFIRMED.
SO ORDERED.
Padilla, Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur.
Footnotes
1 Rollo, pp. 12-15.
2 Records, p 12.
3 Id., at 13.
4 Id., at 14.
5 Id., at .47-48.
6 Id., p. 47.
7 Rollo, pp. 14-15.
8 Ibid.
9 Sec. 18, Art. II, The 1987 Constitution of the Republic of the Philippines.
10 Century Textile Mills, Inc. v. NLRC, 161 SCRA 528 (1988); Gold City-Integrated Port
Services, Inc. v. NLRC, 189 SCRA 811 (1990); Kwikway Engineering Works v. NLRC, 195
SCRA 526 (1991).
11 Abiera v. National Labor Relations Commission, 215 SCRA 476 (1992).
12 210 SCRA 277 (1992).
13 Original Record, p. 39.
4|Page

THIRD DIVISION
[G.R. No. 122917. July 12, 1999]

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL
ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN
JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO,
CORAZON C. DELOS REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN, ROBERT
MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL MAMAUAG, VIOLETA G. MONTES,
ALBINO TECSON, MELODY V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R.
CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL PILAR,
MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE
RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO & RICO
TIMOSA, petitioners vs. NATIONAL LABOR RELATIONS COMMISSION & FAR EAST BANK AND
TRUST COMPANY, respondents.
DECISION
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same terms
and conditions of employment as qualified able-bodied employees. Once they have attained the status of regular
workers, they should be accorded all the benefits granted by law, notwithstanding written or verbal contracts to the
contrary. This treatment is rooted not merely on charity or accommodation, but on justice for all.
The Case
[1]
[2]
Challenged in the Petition for Certiorari before us is the June 20, 1995 Decision of the National Labor
[3]
Relations Commission (NLRC), which affirmed the August, 22 1994 ruling of Labor Arbiter Cornelio L.
[4]
Linsangan. The labor arbiters Decision disposed as follows:
WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint for lack of merit.
Also assailed is the August 4, 1995 Resolution
[5]
of the NLRC, which denied the Motion for Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise:
[6]
Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various periods from 1988 to
1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded
agreement called Employment Contract for Handicapped Workers. (pp. 68 & 69, Records) The full text of said
agreement is quoted below:
EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly organized and existing under
and by virtue of the laws of the Philippines, with business address at FEBTC Building, Muralla, Intramuros, Manila,
represented herein by its Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter referred to as the
BANK);
- and ________________, ________________ years old, of legal age, _____________, and residing at
__________________ (hereinafter referred to as the (EMPLOYEE).
WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need to provide disabled and
handicapped persons gainful employment and opportunities to realize their potentials, uplift their socio-economic
well being and welfare and make them productive, self-reliant and useful citizens to enable them to fully integrate
in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-up by disabled and handicapped persons,
particularly deaf-mutes, and the BANK ha[s] been approached by some civic-minded citizens and authorized
government agencies [regarding] the possibility of hiring handicapped workers for these positions;
5|Page

WHEREAS, the EMPLOYEE is one of those handicapped workers who [were] recommended for possible
employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises and in compliance with Article 80 of the
Labor Code of the Philippines as amended, the BANK and the EMPLOYEE have entered into this Employment
Contract as follows:
1.
The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE agrees to diligently and
faithfully work with the BANK, as Money Sorter andCounter.
2.
The EMPLOYEE shall perform among others, the following duties and responsibilities:
i
Sort out bills according to color;
ii.
Count each denomination per hundred, either manually or with the aid of a counting machine;
iii.
Wrap and label bills per hundred;
iv.
Put the wrapped bills into bundles; and
v.
Submit bundled bills to the bank teller for verification.
3.
The EMPLOYEE shall undergo a training period of one (1) month, after which the BANK shall determine
whether or not he/she should be allowed to finish the remaining term of this Contract.
4.
The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day, subject to adjustment in the
th
sole judgment of the BANK, payable every 15 and end of the month.
5.
The regular work schedule of the EMPLOYEE shall be five (5) days per week, from Mondays thru Fridays, at
eight (8) hours a day. The EMPLOYEE may be required to perform overtime work as circumstance may warrant,
for which overtime work he/she [shall] be paid an additional compensation of 125% of his daily rate if performed
during ordinary days and 130% if performed during Saturday or [a] rest day.
6.
The EMPLOYEE shall likewise be entitled to the following benefits:

th
i.
Proportionate 13 month pay based on his basic daily wage.
ii.
Five (5) days incentive leave.
iii.
SSS premium payment.
7.
The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK Rules and Regulations
and Policies, and to conduct himself/herself in a manner expected of all employees of the BANK.
8.
The EMPLOYEE acknowledges the fact that he/she had been employed under a special employment
program of the BANK, for which reason the standard hiring requirements of the BANK were not applied in his/her
case. Consequently, the EMPLOYEE acknowledges and accepts the fact that the terms and conditions of the
employment generally observed by the BANK with respect to the BANKs regular employee are not applicable to
the EMPLOYEE, and that therefore, the terms and conditions of the EMPLOYEEs employment with the BANK
shall be governed solely and exclusively by this Contract and by the applicable rules and regulations that the
Department of Labor and Employment may issue in connection with the employment of disabled and handicapped
workers. More specifically, the EMPLOYEE hereby acknowledges that the provisions of Book Six of the Labor
Code of the Philippines as amended, particularly on regulation of employment and separation pay are not
applicable to him/her.
9.
The Employment Contract shall be for a period of six (6) months or from ____ to ____ unless earlier
terminated by the BANK for any just or reasonable cause. Any continuation or extension of this Contract shall be
in writing and therefore this Contract will automatically expire at the end of its terms unless renewed in writing by
the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ____ day of
_________________, ____________ at Intramuros, Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in 1990, nineteen (19); in
1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their employment[s] were renewed every six months
such that by the time this case arose, there were fifty-six (56) deaf-mutes who were employed by respondent
under the said employment agreement. The last one was Thelma Malindoy who was employed in 1992 and
whose contract expired on July 1993.
xxx
xxx
xxx
Disclaiming that complainants were regular employees, respondent Far East Bank and Trust Company
maintained that complainants who are a special class of workers the hearing impaired employees were hired
temporarily under [a] special employment arrangement which was a result of overtures made by some civic and
political personalities to the respondent Bank; that complainant[s] were hired due to pakiusap which must be
considered in the light of the context of the respondent Banks corporate philosophy as well as its career and
working environment which is to maintain and strengthen a corps of professionals trained and qualified officers and
regular employees who are baccalaureate degree holders from excellent schools which is an unbending policy in
the hiring of regular employees; that in addition to this, training continues so that the regular employee grows in the
corporate ladder; that the idea of hiring handicapped workers was acceptable to them only on a special
arrangement basis; that it adopted the special program to help tide over a group of handicapped workers such as
deaf-mutes like the complainants who could do manual work for the respondent Bank; that the task of counting and
sorting of bills which was being performed by tellers could be assigned to deaf-mutes; that the counting and sorting
6|Page

of money are tellering works which were always logically and naturally part and parcel of the tellers normal
functions; that from the beginning there have been no separate items in the respondent Bank plantilla for sorters or
counters; that the tellers themselves already did the sorting and counting chore as a regular feature and integral
part of their duties (p. 97, Records); that through the pakiusap of Arturo Borjal, the tellers were relieved of this
task of counting and sorting bills in favor of deaf-mutes without creating new positions as there is no position either
in the respondent or in any other bank in the Philippines which deals with purely counting and sorting of bills in
banking operations.
Petitioners specified when each of them was hired and dismissed, viz:
NAME OF PETITIONER
1. MARITES BERNARDO
2. ELVIRA GO DIAMANTE
3. REBECCA E. DAVID
4. DAVID P. PASCUAL
5. RAQUEL ESTILLER
6. ALBERT HALLARE
7. EDMUND M. CORTEZ
8. JOSELITO O. AGDON
9. GEORGE P. LIGUTAN, JR.
10. CELSO M. YAZAR
11. ALEX G. CORPUZ
12. RONALD M. DELFIN
13. ROWENA M. TABAQUERO
14. CORAZON C. DELOS REYES
15. ROBERT G. NOORA
16. MILAGROS O. LEQUIGAN
17. ADRIANA F. TATLONGHARI
18. IKE CABANDUCOS
19. COCOY NOBELLO
20. DORENDA CATIMBUHAN
21. ROBERT MARCELO
22. LILIBETH Q. MARMOLEJO
23. JOSE E. SALES
24. ISABEL MAMAUAG
25. VIOLETA G. MONTES
26. ALBINO TECSON
27. MELODY V. GRUELA
28. BERNADETH D. AGERO
29. CYNTHIA DE VERA
30. LANI R. CORTEZ
31. MA. ISABEL B. CONCEPCION
32. DINDO VALERIO
33. ZENAIDA MATA
34. ARIEL DEL PILAR
35. MARGARET CECILIA CANOZA
36. THELMA SEBASTIAN
37. MA. JEANETTE CERVANTES
38. JEANNIE RAMIL
39. ROZAIDA PASCUAL
40. PINKY BALOLOA
41. ELIZABETH VENTURA
42. GRACE S. PARDO
43. RICO TIMOSA
WORKPLACE
Date Hired
Intramuros
Intramuros
Intramuros
Bel-Air
Intramuros
West
Bel-Air
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
West
West
West
West
Intramuros
Intramuros
West
West
Bel-Air
Bel-Air
West
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
West
Intramuros
Bel-Air
West
West
West
Intramuros
12 NOV 90
24 JAN 90
16 APR 90
15 OCT 88
2 JUL 92
4 JAN 91
15 JAN 91
5 NOV 90
6 SEPT 89
8 FEB 93
15 FEB 93
22 FEB 93
22 FEB 93
8 FEB 93
15 FEB 93
1 FEB 93
22 JAN 93
24 FEB 93
22 FEB 93
15 FEB 93
[8]
31 JUL 93
15 JUN 90
6 AUG 92
8 MAY 92
2 FEB 90
7 NOV 91
28 OCT 91
19 DEC 90
26 JUN 90
15 OCT 88
6 SEPT 90
30 MAY 93
10 FEB 93
24 FEB 93
27 JUL 90
12 NOV 90
6 JUN 92
23 APR 90
20 APR 89
3 JUN 91
12 MAR 90
4 APR 90
28 APR 93
[7]
Date Dismissed
17 NOV 93
11 JAN 94
23 OCT 93
21 NOV 94
4 JAN 94
9 JAN 94
3 DEC 93
17 NOV 93
19 JAN 94
8 AUG 93
15 AUG 93
22 AUG 93
22 AUG 93
8 AUG 93
15 AUG 93
1 AUG 93
22 JUL 93
24 AUG 93
22 AUG 93
15 AUG 93
1 AUG 93
21 NOV 93
12 OCT 93
10 NOV 93
15 JAN 94
10 NOV 93
3 NOV 93
27 DEC 93
3 DEC 93
10 DEC 93
6 FEB 94
30 NOV 93
10 AUG 93
24 AUG 93
4 FEB 94
17 NOV 93
7 DEC 93
12 OCT 93
29 OCT 93
2 DEC 93
FEB 94 [SIC]
13 MAR 94
28 OCT 93
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence, this
[9]
recourse to this Court.
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees under
Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows:
We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were
hired as an accommodation to [the] recommendation of civic oriented personalities whose employment[s] were
covered by xxx Employment Contract[s] with special provisions on duration of contract as specified under Art.
80. Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the
[10]
parties.
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, considering the
prevailing circumstances/milieu of the case.
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
7|Page

I. The Honorable Commission committed grave abuse of discretion in holding that the petitioners - money sorters
and counters working in a bank - were not regular employees.
II. The Honorable Commission committed grave abuse of discretion in holding that the employment contracts
signed and renewed by the petitioners - which provide for a period of six (6) months - were valid.
III. The Honorable Commission committed grave abuse of discretion in not applying the provisions of the Magna
Carta for the Disabled (Republic Act No. 7277), on proscription against discrimination against disabled
[11]
persons.
In the main, the Court will resolve whether petitioners have become regular employees.
This Courts Ruling
The petition is meritorious. However, only the employees, who worked for more than six months and whose
contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal.
Preliminary Matter: Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the NLRC is
not allowed in a petition for certiorari. Specifically, it maintains that the Court cannot pass upon the findings of
public respondents that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular employees, we shall not change
the facts found by the public respondent. Our task is merely to determine whether the NLRC committed grave
abuse of discretion in applying the law to the established facts, as above-quoted from the assailed Decision.
Main Issue: Are Petitioners Regular Employees?
Petitioners maintain that they should be considered regular employees, because their task as money sorters
and counters was necessary and desirable to the business of respondent bank. They further allege that their
contracts served merely to preclude the application of Article 280 and to bar them from becoming regular
employees.
Private respondent, on the other hand, submits that petitioners were hired only as special workers and
[12]
should not in any way be considered as part of the regular complement of the Bank. Rather, they were special
workers under Article 80 of the Labor Code. Private respondent contends that it never solicited the services of
petitioners, whose employment was merely an accommodation in response to the requests of government
officials and civic-minded citizens. They were told from the start, with the assistance of government
representatives, that they could not become regular employees because there were no plantilla positions for
money sorters, whose task used to be performed by tellers. Their contracts were renewed several times, not
because of need but merely for humanitarian reasons. Respondent submits that as of the present, the special
position that was created for the petitioners no longer exist[s] in private respondent [bank], after the latter had
decided not to renew anymore their special employment contracts.
At the outset, let it be known that this Court appreciates the nobility of private respondents effort to provide
employment to physically impaired individuals and to make them more productive members of society. However,
we cannot allow it to elude the legal consequences of that effort, simply because it now deems their employment
irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably
show that the petitioners, except sixteen of them, should be deemed regular employees. As such, they have
acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a
consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one
month, after which the employer shall determine whether or not they should be allowed to finish the 6-month term
of the contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable
cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term.
According to private respondent, the employment contracts were prepared in accordance with Article 80 of the
Labor Code, which provides:
ART. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:
(a) The names and addresses of the handicapped workers to be employed;
(b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the
applicable legal minimum wage;
(c) The duration of employment period; and
8|Page

(d) The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized
representatives.
The stipulations in the employment contracts indubitably conform with the aforecited provision. Succeeding
[13]
events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), however, justify the
application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the
contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the
handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary
to the bank. More important, these facts show that they were qualified to perform the responsibilities of their
positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be
given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna
Carta provides:
Section 5. Equal Opportunity for Employment.No disabled person shall be denied access to opportunities for
suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of
employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily removes the employment contracts
from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they
are thus covered by Article 280 of the Labor Code, which provides:
ART. 280. Regular and Casual Employment. -- The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered as regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
[14]
The test of whether an employee is regular was laid down in De Leon v. NLRC,
in which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also if the employee has been performing the job for at least one
year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with respect to such activity, and while such
activity exists.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than six
months. Thus, the following twenty-seven petitioners should be deemed regular employees: Marites Bernardo,
Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez,
Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G.
Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B.
Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida
Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making
permanent casuals of our lowly employees by the simple expedient of extending to them probationary
[15]
appointments, ad infinitum. The contract signed by petitioners is akin to a probationary employment, during
which the bank determined the employees fitness for the job. When the bank renewed the contract after the lapse
[16]
of the six-month probationary period, the employees thereby became regular employees. No employer is
allowed to determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services
[17]
may be terminated only for a just or authorized cause. Because respondent failed to show such cause, these
twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement
[18]
without loss of seniority rights and other privileges. Considering the allegation of respondent that the job of
money sorting is no longer available because it has been assigned back to the tellers to whom it originally
[19]
[20]
belonged, petitioners are hereby awarded separation pay in lieu of reinstatement.
9|Page

Because the other sixteen worked only for six months, they are not deemed regular employees and hence not
entitled to the same benefits.
Applicability of the Brent Ruling

[21]
Respondent bank, citing Brent School v. Zamora in which the Court upheld the validity of an employment
contract with a fixed term, argues that the parties entered into the contract on equal footing. It adds that the
petitioners had in fact an advantage, because they were backed by then DSWD Secretary Mita Pardo de Tavera
and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were
disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is based on Article 80
of the Labor Code. But as noted earlier, petitioners proved themselves to be qualified disabled persons who,
under the Magna Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed
by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners are qualified for their
positions. The validation of the limit imposed on their contracts, imposed by reason of their disability, was a glaring
instance of the very mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with public
[22]
interest. Provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty
to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting
[23]
with each other. Clearly, the agreement of the parties regarding the period of employment cannot prevail over
the provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must be treated as
qualified able-bodied employees.
Respondents reason for terminating the employment of petitioners is instructive. Because the Bangko
Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours from
8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it reasons that this
task could not be done by deaf mutes because of their physical limitations as it is very risky for them to travel at
[24]
night. We find no basis for this argument. Travelling at night involves risks to handicapped and able-bodied
persons alike. This excuse cannot justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely accommodated employees. This fact does not change the
nature of their employment. As earlier noted, an employee is regular because of the nature of work and the length
of service, not because of the mode or even the reason for hiring them.
Equally unavailing are private respondents arguments that it did not go out of its way to recruit petitioners,
[25]
and that its plantilla did not contain their positions. InL. T. Datu v. NLRC, the Court held that the determination
of whether employment is casual or regular does not depend on the will or word of the employer, and the
procedure of hiring x x x but on the nature of the activities performed by the employee, and to some extent, the
length of performance and its continued existence.
Private respondent argues that the petitioners were informed from the start that they could not become
regular employees. In fact, the bank adds, they agreed with the stipulation in the contract regarding this
point. Still, we are not persuaded. The well-settled rule is that the character of employment is determined not by
[26]
stipulations in the contract, but by the nature of the work performed. Otherwise, no employee can become
regular by the simple expedient of incorporating this condition in the contract of employment.
[27]
In this light, we iterate our ruling in Romares v. NLRC:
Article 280 was emplaced in our statute books to prevent the circumvention of the employees right to be secure in
his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the
concept of regular employment defined therein. Where an employee has been engaged to perform activities which
are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular
employee and is entitled to security of tenure notwithstanding the contrary provisions of his contract of
employment.
x x x
xxx
xxx
At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in subsequent
cases, this Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in term
employment should not be the activities that the employee is called upon to perform but the day certain agreed
upon the parties for the commencement and termination of their employment relationship. But this Court went on
to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition
of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and
morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class,
but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled
Persons are not based merely on charity or accommodation, but on justice and the equal treatment
of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a
hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment
contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes,
10 | P a g e

that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights
like any other regular employees.
In this light, we note the Office of the Solicitor Generals prayer joining the petitioners cause.
[28]
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995 Decision and the
August 4, 1995 Resolution of the NLRC areREVERSED and SET ASIDE. Respondent Far East Bank and Trust
Company is hereby ORDERED to pay back wages and separation pay to each of the following twenty-seven (27)
petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller,
Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales,
Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani
R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes,
Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby
directed to compute the exact amount due each of said employees, pursuant to existing laws and regulations,
within fifteen days from the finality of this Decision. No costs.
SO ORDERED.
Romero, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
[1]
Rollo, pp. 3-39.

Rollo, pp. 46-65.
[3]
Penned by Presiding Comm. Lourdes C. Javier and concurred in by Comm. Joaquin A. Tanodra. The other member, Comm.
Ireneo B. Bernardo, dissented.
[4]
Rollo, p. 113.
[5]
Rollo, pp. 73-74.
[6]
NLRC Decision, pp. 2-10; rollo, pp. 47-55.
[7]
Petition, p. 12; rollo, p. 14.
[8]
This is a typographical error on the part of the petitioner, for it is unlikely that the Contract of Employment was terminated the
day after it was executed. In fact, Annex C of petitioners Position Paper, which was submitted before the labor arbiter, shows
that Petitioner Robert Marcelo was hired on July 31, 1992, not 1993 (Rollo, p. 100.).
[9]
The case was deemed submitted for resolution on December 1, 1998, when the Memorandum of the private respondent was
received by the Court. The case was given due course on December 8, 1997.
[10]
NLRC Decision, p. 18; rollo, p. 63.
[11]
Petitioners Memorandum, p. 3; rollo, p. 474.
[12]
Respondents Memorandum, p. 10; rollo, p. 523.
[13]
Approved on March 24, 1992.
[14]
176 SCRA 615, 621, August 21, 1989, per Fernan, CJ.
[15]
CENECO v. NLRC, 236 SCRA 108, September 1, 1994, per Puno, J.
[16]
Ibid.; Article 281, Labor Code.
[17]
Articles 282 to 284 of the Code.
[18]
Article 279 of the Labor Code as amended.
[19]
[20]
Zarate v. Olegario, 263 SCRA 1, October 7, 1996.
[21]
181 SCRA 802, February 6, 1990.
[22]
Article 1700 of the Civil Code provides: The relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. x x x.
[23]
Pakistan Airlines Corporation v. Ople, 190 SCRA 90, September 28, 1990, per Feliciano, J. See also Servidad v. NLRC,
GR No. 128682, March 18, 1999; Villa v. NLRC, 284 SCRA 105, January 14, 1998.
[24]
[25]
253 SCRA 440, 450, February 9, 1996, per Kapunan, J.
[26]
A.M. Oreta & Co. v. NLRC, 176 SCRA 208, August 10, 1989.
[27]
GR No. 122327, August 19, 1998, per Martinez, J.
[28]
Manifestation of the Office of the Solicitor General; rollo, pp. 354-375.
[2]
11 | P a g e

SUPREME COURT
Manila
EN BANC
G.R. No. L-4148
July 16, 1952
MANILA TERMINAL COMPANY, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL AID
ASSOCIATION,respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner,
undertook the arrastre service in some of the piers in Manila's Port Area at the request and under the control of the
United States Army. The petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation of
P3 per day for the day shift and P6 per day for the night shift. On February 1, 1946, the petitioner began the
postwar operation of the arrastre service at the present at the request and under the control of the Bureau of
Customs, by virtue of a contract entered into with the Philippine Government. The watchmen of the petitioner
continued in the service with a number of substitutions and additions, their salaries having been raised during the
month of February to P4 per day for the day shift and P6.25 per day for the nightshift. On March 28, 1947,
Dominador Jimenez, a member of the Manila Terminal Relief and Mutual Aid Association, sent a letter to the
Department of Labor, requesting that the matter of overtime pay be investigated, but nothing was done by the
Department. On April 29, 1947, Victorino Magno Cruz and five other employees, also member of the Manila
Transit Mutual Aid Association, filed a 5-point demand with the Department of Labor, including overtime pay, but
the Department again filed to do anything about the matter. On May 27, 1947, the petitioner instituted the system
of strict eight-hour shifts. On June 19, 1947, the Manila Port Terminal Police Association, not registered in
accordance with the provisions of Commonwealth Act No. 213, filed a petition with the Court of Industrial
Relations. On July 16, 1947, the Manila Terminal Relief and Mutual Aid Association was organized for the first
time, having been granted certificate No. 375 by the Department of Labor. On July 28, 1947, Manila Terminal
Relief and Mutual Aid Association filed an amended petition with the Court of Industrial Relations praying, among
others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the commencement of
their employment. On May 9, 1949, by virtue of Customs Administrative Order No. 81 and Executive Order No. 228
of the President of the Philippines, the entire police force of the petitioner was consolidated with the Manila Harvor
Police of the Customs Patrol Service, a Government agency under the exclusive control of the Commissioner of
Customs and the Secretary of Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be
referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April 1, 1950, as amended on April
18, 1950, while dismissing other demands of the Association for lack of jurisdiction, ordered the petitioner to pay to
its police force
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as additional overtime
compensation for the period from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m. during the same
period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal holidays during the same
period;
(d) Additional compensation of 50 per cent for work performed on Sundays and legal holidays from May 24, 1947
to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29, 1947 to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been integrated into the Manila Harbor
Police, Judge Yanson ruled that the court has no jurisdiction because it affects the Bureau of Customs, an
instrumentality of the Government having no independent personality and which cannot be sued without the
consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for reconsideration in so far its
other demands were dismissed. Judge Yanson, concurred in by Judge Jose S. Bautista, promulgated on July 13,
1950, a resolution denying both motions for reconsideration. Presiding Judge Arsenio C. Roldan, in a separate
opinion concurred in by Judge Modesto Castillo, agreed with the decision of Judge Yanson of April 1, 1950, as to
the dismissal of other demands of the Association, but dissented therefrom as to the granting of overtime pay. In a
12 | P a g e

separate decisive opinion, Judge Juan S. Lanting concurred in the dismissal of other demands of the Association.
With respect to overtime compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for overtime on regular days (not
Sunday and legal holidays)during the period from the date of entrance to duty to May 24, 1947, such
compensation to consists of the amount corresponding to the four hours' overtime at the regular rate and an
additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner should pay to its watchmen the
compensation that corresponds to the overtime (in excess of 8 hours) at the regular rate only, that is, without any
additional amount, thus modifying the decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and therefore the decision should be
reversed with the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions may be briefly summed up in the
following propositions: (1) The Court of Industrial Relations has no jurisdiction to render a money judgment
involving obligation in arrears. (2) The agreement under which its police force were paid certain specific wages for
twelve-hour shifts, included overtime compensation. (3) The Association is barred from recovery by estoppel and
laches. (4) the nullity or invalidity of the employment contract precludes any recovery by the Association. (5)
Commonwealth Act No. 4444 does not authorize recovery of back overtime pay.
The contention that the Court of Industrial Relations has no jurisdiction to award a money judgment was already
overruled by this Court in G.R. No. L-4337, Detective & protective Bureau, Inc. vs. Court of Industrial Relations and
United Employees Welfare Association, 90 Phil., 665, in this wise: "It is also argued that the respondent court has
no jurisdiction to award overtime pay, which is money judgment. We believe that under Commonwealth Act No.
103 the Court is empowered to make the order for the purpose of settling disputes between the employer and
1
employee . As a matter of fact this Court has confirmed an order of the Court of Industrial Relations requiring the
Elks Club to pay to its employees certain sum of money as overtime back wages from June 3, 1939 to March 13,
1941. This, in spite the allegation of lack or excess of jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80
Phil. 272)"
The important point stressed by the petitioner is that the contract between it and the Association upon the
commencement of the employment of its watchman was to the certain rates of pay, including overtime
compensation namely, P3 per day for the day shift and P6 per day for night shift beginning September 1, 1945,
and P4 per day shift and P6.25 per day for the night shift since February, 1946. The record does not bear out
these allegations. The petitioner has relied merely on the facts that its watchmen had worked on twelve-hour shifts
at specific wages per day and that no complaint was made about the matter until, first on March 28, 1947 and,
secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of self-preservation, go from place to place and
from office to office in search for any employment, regardless of its terms and conditions, their main concern in the
first place being admission to some work. Specially for positions requiring no special qualifications, applicants
would be good as rejected if they ever try to be inquisitive about the hours of work or the amount of salary, ever
attempt to dictate their terms. The petitioner's watchmen must have railroaded themselves into their employment,
so to speak, happy in the thought that they would then have an income on which to subsist. But, at the same time,
they found themselves required to work for twelve hours a day. True, there was agreement to work, but can it fairly
be supposed that they had the freedom to bargain in any way, much less to insist in the observance of the Eight
Hour Labor Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct. 159; 6 CCH Labor Cases, Par.
51, 147, "A contract of employment, which provides for a weekly wage for a specified number of hours, sufficient to
cover both the statutory minimum wage and overtime compensation, if computed on the basis of the statutory
minimum wage, and which makes no provision for a fixed hourly rate or that the weekly wage includes overtime
compensation, does not meet the requirements of the Act."
Moreover, we note that after the petition had instituted the strict eight-hour shifts, no reduction was made in the
salaries which its watchmen received under the twelve hour arrangement. Indeed, as admitted by the petitioner,
"when the members or the respondent union were placed on strict eight-hour shifts, the lowest salary of all the
members of the respondent union was P165 a month, or P5.50 daily, for both day and night shifts." Although it may
be argued that the salary for the night shift was somewhat lessened, the fact that the rate for the day shift was
increased in a sense tends to militate against the contention that the salaries given during the twelve-hour shifts
included overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for more than 18 months, is not
accurate, because the watchmen involved in this case did not enter the service of the petitioner, at one time, on
September 1, 1945. As Judge Lanting found, "only one of them entered the service of the company on said date,
very few during the rest of said month, some during the rest of that year (1945) and in 1946, and very many in
1947, 1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective Bureau, Inc. vs. Court of Industrial
Relations and United Employees Welfare Association, supra, in which the facts were as follows: "The record
13 | P a g e

discloses that upon petition properly submitted, said court made an investigation and found that the members of
the United Employees Welfare Association (hereafter called the Association) were in the employ of the petitioner
Detective and Protective Bureau, Inc. (herein called the Bureau) which is engaged in the business of furnishing
security guards to commercial and industrial establishments, paying to said members monthly salaries out of what
it received from the establishments benefited by guard service. The employment called for daily tours of duty for
more than eight hours, in addition to work on Sundays and holidays. Nonetheless the members performed their
labors without receiving extra compensation." The only difference is that, while in said case the employees
concerned were paid monthly salaries, in the case now before us the wages were computed daily. In the case
cited, we held the following:
It appears that the Bureau had been granting the members of the Association, every month, "two days off"
days in which they rendered no service, although they received salary for the whole month. Said Bureau
contended below that the pay corresponding to said 2 day vacation corresponded to the wages for extra
work. The court rejected the contention, quite properly we believe, because in the contract there was no
agreement to that effect; and such agreement, if any, would probably be contrary to the provisions of the
Eight-Hour Law (Act No. 444, sec. 6) and would be null and void ab initio.
It is argued here, in opposition to the payment, that until the commencement of this litigation the members
of the Association never claimed for overtime pay. That may be true. Nevertheless the law gives them the
right to extra compensation. And they could not be held to have impliedly waived such extra compensation,
for the obvious reason that could not have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to have impliedly waived the right to
overtime compensation, for the obvious reason that they could not have expressly waived it."
The principle of estoppel and the laches cannot well be invoked against the Association. In the first place, it would
be contrary to the spirit of the Eight Hour Labor Law, under which as already seen, the laborers cannot waive their
right to extra compensation. In the second place, the law principally obligates the employer to observe it, so much
so that it punishes the employer for its violation and leaves the employee or laborer free and blameless. In the third
place, the employee or laborer is in such a disadvantageous position as to be naturally reluctant or even
apprehensive in asserting any claim which may cause the employer to devise a way for exercising his right to
terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or
laborer, who cannot expressly renounce their right to extra compensation under the Eight-Hour Labor Law, may be
compelled to accomplish the same thing by mere silence or lapse of time, thereby frustrating the purpose of law by
indirection.
While counsel for the petitioner has cited authorities in support of the doctrine invoked, there are also authorities
pointed out in the opinion of Judge Lanting to the contrary. Suffice it to say, in this connection, that we are inclined
to rule adversely against petitioner for the reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes recovery by the Association of any
overtime pay is also untenable. The argument, based on the supposition that the parties are in pari delicto, was in
*
effect turned down in Gotamo Lumber Co. vs. Court of Industrial Relations, 47 Off. Gaz., 3421, wherein we ruled:
"The petitioner maintains that as the overtime work had been performed without a permit from the Department of
Labor, no extra compensation should be authorized. Several decisions of this court are involved. But those
decisions were based on the reasoning that as both the laborer and employer were duty bound to secure the
permit from the Department of Labor, both were in pari delicto. However the present law in effect imposed that duty
upon the employer (C.A. No. 444). Such employer may not therefore be heard to plead his own neglect as
exemption or defense.
The employee in rendering extra service at the request of his employer has a right to assume that the latter
has complied with the requirement of the law, and therefore has obtained the required permission from the
Department of Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract between the employer and the laborer
or employee contrary to the provisions of this Act shall be null avoid ab initio," (Commonwealth Act No. 444, sec.
6), obviously intended said provision for the benefit of the laborers or employees. The employer cannot, therefore,
invoke any violation of the act to exempt him from liability for extra compensation. This conclusion is further
supported by the fact that the law makes only the employer criminally liable for any violation. It cannot be
pretended that, for the employer to commit any violation of the Eight-Hour Labor Law, the participation or
acquiescence of the employee or laborer is indispensable, because the latter in view of his need and desire to live,
cannot be considered as being on the same level with the employer when it comes to the question of applying for
and accepting an employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for recovery of back overtime pay, and
to support this contention it makes referrence to the Fair Labor Standards Act of the United States which provides
that "any employer who violates the provisions of section 206 and section 207 of this title shall be liable to the
employee or employees affected in the amount of their unpaid minimum wages or their unpaid overtime
compensation as the case may be," a provision not incorporated in Commonwealth Act No. 444, our Eight-Hour
Labor Law. We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444 expressly
14 | P a g e

provides for the payment of extra compensation in cases where overtime services are required, with the result that
the employees or laborers are entitled to collect such extra compensation for past overtime work. To hold
otherwise would be to allow an employer to violate the law by simply, as in this case, failing to provide for and pay
overtime compensation.
The point is stressed that the payment of the claim of the Association for overtime pay covering a period of almost
two years may lead to the financial ruin of the petitioner, to the detriment of its employees themselves. It is
significant, however, that not all the petitioner's watchmen would receive back overtime pay for the whole period
specified in the appealed decision, since the record shows that the great majority of the watchmen were admitted
in 1946 and 1947, and even 1948 and 1949. At any rate, we are constrained to sustain the claim of the Association
as a matter of simple justice, consistent with the spirit and purpose of the Eight-Hour Labor Law. The petitioner, in
the first place, was required to comply with the law and should therefore be made liable for the consequences of its
violation.
It is high time that all employers were warned that the public is interested in the strict enforcement of the EightHour Labor Law. This was designed not only to safeguard the health and welfare of the laborer or employee, but in
a way to minimize unemployment by forcing employers, in cases where more than 8-hour operation is necessary,
to utilize different shifts of laborers or employees working only for eight hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it being understood that the
petitioner's watchmen will be entitled to extra compensation only from the dates they respectively entered the
service of the petitioner, hereafter to be duly determined by the Court of Industrial Relations. So ordered, without
costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angelo, and Labrador, JJ., concur.
Footnotes
1
Cf. The Shell Co. vs. National Labor Union, 46 Off. Gaz. Supp. 1, p. 97; 81 Phil., 135.
85 Phil. 291.
15 | P a g e
FIRST DIVISION
CHARLITO PEARANDA,
Petitioner,
G.R. No. 159577

Present:
Panganiban, CJ,
Chairman,
Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ
- versus -
BAGANGA PLYWOOD
CORPORATION and
HUDSON CHUA,
Respondents.
Promulgated:
May 3, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code
on labor standards. Since petitioner belongs to this class of employees, he is not entitled to overtime pay and
premium pay for working on rest days.
The Case
[1]
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the January 27,
[3]
2003 and July 4, 2003 Resolutions of the Court of Appeals (CA) in CA-GR SP No. 74358. The earlier
Resolution disposed as follows:
[2]
WHEREFORE, premises considered, the instant petition is hereby DISMISSED.
[4]
The latter Resolution denied reconsideration.

On the other hand, the Decision of the National Labor Relations Commission (NLRC) challenged in the CA
disposed as follows:
WHEREFORE, premises considered, the decision of the Labor Arbiter below awarding
overtime pay and premium pay for rest day to complainant is hereby REVERSED and SET
[5]
ASIDE, and the complaint in the above-entitled case dismissed for lack of merit.
The Facts
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood
[6]
Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001,
Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson
[7]
Chua, before the NLRC.
[8]
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers
[9]
and submit supporting documents. Their respective allegations are summarized by the labor arbiter as follows:
[Pearanda] through counsel in his position paper alleges that he was employed by
respondent [Baganga] on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler
Head/Shift Engineer until he was illegally terminated on December 19, 2000. Further, [he] alleges
that his services [were] terminated without the benefit of due process and valid grounds in
accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working
during holidays/rest days, night shift differentials and finally claims for payment of damages and
attorneys fees having been forced to litigate the present complaint.
Upon the other hand, respondent [BPC] is a domestic corporation duly organized and
existing under Philippine laws and is represented herein by its General Manager HUDSON CHUA,
[the] individual respondent. Respondents thru counsel allege that complainants separation from
service was done pursuant to Art. 283 of the Labor Code. The respondent [BPC] was on
temporary closure due to repair and general maintenance and it applied for clearance with the
Department of Labor and Employment, Regional Office No. XI to shut down and to dismiss
employees (par. 2 position paper). And due to the insistence of herein complainant he was paid
his separation benefits (Annexes C and D, ibid). Consequently, when respondent [BPC] partially
reopened in January 2001, [Pearanda] failed to reapply. Hence, he was not terminated from
employment much less illegally. He opted to severe employment when he insisted payment of his
separation benefits. Furthermore, being a managerial employee he is not entitled to overtime pay
16 | P a g e

and if ever he rendered services beyond the normal hours of work, [there] was no office order/or
authorization for him to do so. Finally, respondents allege that the claim for damages has no legal
[10]
and factual basis and that the instant complaint must necessarily fail for lack of merit.
The labor arbiter ruled that there was no illegal dismissal and that petitioners Complaint was premature
[11]
because he was still employed by BPC.
The temporary closure of BPCs plant did not terminate his
employment, hence, he need not reapply when the plant reopened.
According to the labor arbiter, petitioners money claims for illegal dismissal was also weakened by his
quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and vacation
[12]
leave conversions and thirteenth month pay.
Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest
[13]
days, and attorneys fees in the total amount of P21,257.98.
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for
working on rest days. According to the Commission, petitioner was not entitled to these awards because he was a
[14]
managerial employee.
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Pearandas Petition for Certiorari. The
appellate court held that he failed to: 1) attach copies of the pleadings submitted before the labor arbiter and
[15]
NLRC; and 2) explain why the filing and service of the Petition was not done by personal service.
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner still
[16]
failed to submit the pleadings filed before the NLRC.
Hence this Petition.
[17]
The Issues
Petitioner states the issues in this wise:
The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction when
it entertained the APPEAL of the respondent[s] despite the lapse of the mandatory period of TEN
DAYS.
The [NLRC] committed grave abuse of discretion amounting to an excess or lack of jurisdiction
when it rendered the assailed RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002
REVERSING AND SETTING ASIDE the FACTUAL AND LEGAL FINDINGS of the [labor arbiter]
with respect to the following:
I.
The finding of the [labor arbiter] that [Pearanda] is a regular, common employee
entitled to monetary benefits under Art. 82 [of the Labor Code].
II. The finding that [Pearanda] is entitled to the payment of OVERTIME PAY and
[18]
OTHER MONETARY BENEFITS.
The Courts Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Pearandas Petition on purely technical grounds, particularly with regard to the failure to
submit supporting documents.
[19]
In Atillo v. Bombay, the Court held that the crucial issue is whether the documents accompanying the
petition before the CA sufficiently supported the allegations therein. Citing this case, Piglas-Kamao v.
[20]
NLRC stayed the dismissal of an appeal in the exercise of its equity jurisdiction to order the adjudication on the
merits.
The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the
[21]
finding that he was a managerial employee.
In his Motion for Reconsideration, petitioner also submitted the
[22]
pleadings before the labor arbiter in an attempt to comply with the CA rules.
Evidently, the CA could have ruled
on the Petition on the basis of these attachments. Petitioner should be deemed in substantial compliance with the
procedural requirements.
Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor of petitioner
and to tackle his substantive arguments in the present case. Rules of procedure must be adopted to help promote,
17 | P a g e

[23]
not frustrate, substantial justice.

The Court frowns upon the practice of dismissing cases purely on procedural
[24]
[25]
grounds.
Considering that there was substantial compliance, a liberal interpretation of procedural rules in this
[26]
labor case is more in keeping with the constitutional mandate to secure social justice.
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter should be filed
[27]
within 10 days from receipt thereof.
Petitioners claim that respondents filed their appeal beyond the required period is not substantiated. In
the pleadings before us, petitioner fails to indicate when respondents received the Decision of the labor
arbiter. Neither did the petitioner attach a copy of the challenged appeal. Thus, this Court has no means to
determine from the records when the 10-day period commenced and terminated. Since petitioner utterly failed to
support his claim that respondents appeal was filed out of time, we need not belabor that point. The parties
[28]
alleging have the burden of substantiating their allegations.
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and therefore, entitled to the award granted by the
labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor
standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for
[29]
working on rest days.
Under this provision, managerial employees are those whose primary duty consists of
[30]
the management of the establishment in which they are employed or of a department or subdivision.
The Implementing Rules of the Labor Code state that managerial employees are those who meet the
following conditions:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof;
(2)
They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the promotion or any other
[31]
change of status of other employees are given particular weight.
The Court disagrees with the NLRCs finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like
managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on
[32]
labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with
the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies
of the employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof;
or (ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under general supervision special assignments
and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs
[33]
(1), (2), and (3) above.
As shift engineer, petitioners duties and responsibilities were as follows:

1.
To supply the required and continuous steam to all consuming units at minimum cost.
2.
To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
3.
To evaluate performance of machinery and manpower.
4.
To follow-up supply of waste and other materials for fuel.
18 | P a g e

5.
6.
7.
8.
To train new employees for effective and safety while working.

Recommend parts and supplies purchases.
To recommend personnel actions such as: promotion, or disciplinary action.
To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
9.
Implement Chemical Dosing.
[34]
10. Perform other task as required by the superior from time to time.
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of
the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the
operation of the machines and the performance of the workers in the engineering section. This work necessarily
required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler.
[35]
As supervisor, petitioner is deemed a member of the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he
[36]
was the foreman responsible for the operation of the boiler.
The term foreman implies that he was the
[37]
representative of management over the workers and the operation of the department.
Petitioners evidence also
[38]
showed that he was the supervisor of the steam plant.
His classification as supervisor is further evident from the
manner his salary was paid. He belonged to the 10% of respondents 354 employees who were paid on a monthly
[39]
basis; the others were paid only on a daily basis.
On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for
rest days to petitioner.
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division
WE
C O N C U R:
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
Associate Justice
ROMEO J. CALLEJO, SR.

Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
Chief Justice
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
Rollo, pp. 4-11.

Id. at 64-65 & 298-299. Former Sixteenth Division. Penned by Justice Rodrigo V. Cosico (Division
chairperson), with the concurrence of Justices Rebecca de Guia-Salvador and Regalado E. Maambong
(members).
Id. at 51-52.
Id. at 65 & 299.
Id. at 34.
Petitioners Memorandum, p. 3; rollo, p. 266.
Id. at 2; id. at 265.
The labor arbiter assigned to the case was Arturo L. Gamolo.
Decision of the Labor Arbiter, p. 1; rollo, p. 21.
Id. at 2; id. at 22.
19 | P a g e

[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31]
[32]
[33]
[34]
[35]
[36]
[37]
[38]
[39]

NLRC Resolution dated May 8, 2002, p. 2; rollo, p. 33.
Assailed CA Resolution dated January 27, 2003, pp. 1-2; rollo, pp. 298-299.
Assailed CA Resolution dated July 4, 2003, p. 1; id. at 51.
This Petition was deemed submitted for decision on June 29, 2005 upon this Courts receipt of petitioners
Memorandum, which he signed with the assistance of Atty. Angela A. Librado. Respondents
Memorandum, signed by Atty. Leo N. Caubang, was received by this Court onMay 26, 2005.
Petitioners Memorandum, pp. 5-6; rollo, pp. 268-269.
351 SCRA 361, February 7, 2001.
357 SCRA 640, May 9, 2001.
Petitioner attached his pay slips and job designation, and the companys manpower schedule as Annexes
C, D, and E (CA rollo, pp. 20-31).
Petitioner submitted the parties position papers before the labor arbiter and their respective supporting
documents (CA rollo, pp. 43-64).
Chua v. Absolute Management Corporation, 412 SCRA 547, October 16, 2003; Pacific Life Assurance
Corporation v. Sison, 359 Phil. 332, November 20, 1998; Gregorio v. Court of Appeals, 72 SCRA 120, July
28, 1976.
Pacific Life Assurance Corporation v. Sison, id.; Empire Insurance Company v. National Labor Relations
Commission, 355 Phil. 694, August 14, 1998;People Security Inc. v. National Labor Relations
Commission, 226 SCRA 146, September 8, 1993; Tamargo v. Court of Appeals, 209 SCRA 518, June 3,
1992.
Chua v. Absolute Management Corporation, supra note 23; Cusi-Hernandez v. Diaz, 336 SCRA 113, July
18, 2000.
CONSTITUTION Art. II, Sec. 18 and Art. XIII, Sec. 3. See Ablaza v. Court of Industrial Relations, 126
SCRA 247, December 21, 1983.
New Rules of Procedure of the National Labor Relations Commission, Rule VI, Sec. 1.
RULES OF COURT, Rule 131, Sec. 1.
Labor standards is found in Book 3 of the Labor Code, entitled Conditions of Employment. Arts. 87 and
93 provide:
Arts. 87. Overtime work. Work may be performed beyond eight (8) hours a day
provided that the employee is paid for the overtime work, an additional compensation
equivalent to his regular wage plus at least twenty-five (25%) per cent thereof. Work
performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at
least thirty percent thereof.
Art. 93. Compensation for rest day, Sunday or holiday work. (a) Where an
employee is made or permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage. An employee
shall be entitled to such additional compensation for work performed on Sunday only when
it is his established rest day.
(b) When the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage for work performed on
Sundays and holidays.
(c) Work performed on any special holiday shall be paid an additional
compensation of at least thirty percent (30%) of the regular wage of the employee. Where
such holiday work falls on the employees scheduled rest day, he shall be entitled to an
additional compensation of at least fifty percent (50%) of his regular wage.
(d) Where the collective bargaining agreement or other applicable employment
contract stipulates the payment of a higher premium pay than that prescribed under this
Article, the employer shall pay such higher rate.
The other definition of a managerial employee found in the Labor Code Art. 212(m) is in connection with
labor relations or the right to engage in unionization. Under this provision, a managerial employee is one
vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, lay off, recall, discharge, assign or discipline employees. C. AZUCENA,EVERYONES LABOR
CODE, 58 (2001 ed.).
Implementing Rules of the Labor Code, Book III, Rule I, Sec. 2(b).
LABOR CODE, Art. 82.
Implementing Rules of the Labor Code, Book III, Rule I, Sec. 2(c).
Job Description, submitted as petitioners Annex to his Memorandum; rollo, p. 312.
See Quebec v. National Labor Relations Commission, 361 Phil. 555, January 22, 1999; Salazar v.
National Labor Relations Commission, 326 Phil. 288, April 17, 1996; National Sugar Refineries
Corporation v. National Labor Relations Commission, 220 SCRA 452, March 24, 1993.
Petitioners Position Paper, p. 1; rollo, p. 14.
WEBSTERS THIRD NEW INTERNATIONAL DICTIONARY, 889 (1976).
Servicing Schedule, submitted as petitioners Annex to his Memorandum; rollo p. 315.
Respondents Termination Report submitted to the Department of Labor and Employment; rollo, pp. 4961.
20 | P a g e

SECOND DIVISION
[G.R. No. 112574. October 8, 1998]
MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR., respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor
Relations Commission dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision of the
Labor Arbiter in NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993, of the NLRC
denying reconsideration.
This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr.
against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive
leave for 1990. Private respondent had been employed as a bodegero or ships quartermaster on February 12,
1988. He complained that he had been constructively dismissed by petitioner when the latter refused him
[1]
assignments aboard its boats after he had reported to work on May 28, 1990.
Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month
from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was
told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give
him work. For this reason, private respondent asked for a certificate of employment from petitioner on September
6, 1990. However, when he came back for the certificate on September 10, petitioner refused to issue the
certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he
[2]
was given separation pay, petitioner prevented him from entering the premises.
Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It
claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without leave for
three months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned private respondent to
another vessel, but the latter was left behind on September 1, 1990. Thereafter, private respondent asked for a
certificate of employment on September 6 on the pretext that he was applying to another fishing company. On
[3]
September 10, 1990, he refused to get the certificate and resign unless he was given separation pay.
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision disposing of the case as follows:
ACCORDINGLY, respondents are ordered to reinstate complainant with backwages, pay him his 13th
month pay and incentive leave pay for 1990.
All other claims are dismissed.
SO ORDERED.
Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit. The
NLRC dismissed petitioners claim that it cannot be held liable for service incentive leave pay by fishermen in its
[4]
employ as the latter supposedly are field personnel and thus not entitled to such pay under the Labor Code.
The NLRC likewise denied petitioners motion for reconsideration of its decision in its order dated October 25,
1993.
Hence, this petition. Petitioner contends:
I
THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND SUSTAINING THE VIEW THAT
FISHING CREW MEMBERS, LIKE FERMIN AGAO, JR., CANNOT BE CLASSIFIED AS FIELD PERSONNEL
UNDER ARTICLE 82 OF THE LABOR CODE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT UPHELD THE FINDINGS OF THE LABOR ARBITER THAT HEREIN PETITIONER
HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
21 | P a g e

ART. 82. Coverage. - The provisions of this Title [Working Conditions and Rest Periods] shall apply to
employees in all establishments and undertakings whether for profit or not, but not to government
employees, field personnel, members of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate regulations.
....
...
...
Field personnel shall refer to non-agricultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
Petitioner argues essentially that since the work of private respondent is performed away from its principal
place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private
respondent and other fishermen in its employ should be classified as field personnel who have no statutory right
to service incentive leave pay.
[5]
In the case of Union of Filipro Employees (UFE) v. Vicar, this Court explained the meaning of the phrase
whose actual hours of work in the field cannot be determined with reasonable certainty in Art. 82 of the Labor
Code, as follows:
Moreover, the requirement that actual hours of work in the field cannot be determined with reasonable
certainty must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all employees except:
....
...
...
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer xxx (Italics supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner
nevertheless attempted to show that its affected members are not covered by the abovementioned
rule. The petitioner asserts that the companys sales personnel are strictly supervised as shown by the
SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and
3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add
another element to the Labor Code definition of field personnel. The clause whose time and
performance is unsupervised by the employer did not amplify but merely interpreted and expounded the
clause whose actual hours of work in the field cannot be determined with reasonable certainty. The
former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in
deciding whether or not an employees actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such employees time and performance
[6]
is constantly supervised by the employer.
Accordingly, it was held in the aforementioned case that salesmen of Nestle Philippines, Inc. were field
personnel:
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the
office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales
personnels working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining whether or not these sales personnel, even if
they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the
[7]
hours in between in actual field work.
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away
from petitioners business offices, the fact remains that throughout the duration of their work they are under the
[8]
effective control and supervision of petitioner through the vessels patron or master as the NLRC correctly held.
Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been
dismissed by petitioner. Such factual finding of both the NLRC and the Labor Arbiter is based not only on the
pleadings of the parties but also on a medical certificate of fitness which, contrary to petitioners claim, private
[9]
respondent presented when he reported to work on May 28, 1990. As the NLRC held:
Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell, would like us to believe that the
Arbiter abused his discretion (or seriously erred in his findings of facts) in giving credence to the factual
version of the complainant. But it is settled that (W)hen confronted with conflicting versions of factual
matters, the Labor Arbiter has the discretion to determine which party deserves credence on the basis
of evidence received. [Gelmart Industries (Phils.), Inc. vs. Leogardo, 155 SCRA 403, 409, L-70544,
November 5, 1987]. And besides, it is settled in this jurisdiction that to constitute abandonment of
position, there must be concurrence of the intention to abandon and some overt acts from which it may
be inferred that the employee concerned has no more interest in working (Dagupan Bus Co., Inc. vs.
NLRC, 191 SCRA 328), and that the filing of the complaint which asked for reinstatement plus
22 | P a g e

backwages (Record, p. 20) is inconsistent with respondents defense of abandonment (Hua Bee Shirt
[10]
Factory vs. NLRC, 188 SCRA 586).
It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are
[11]
supported substantially by evidence in the record of the case. This is especially so where, as here, the agency
[12]
and its subordinate who heard the case in the first instance are in full agreement as to the facts.
As regards the labor arbiters award which was affirmed by respondent NLRC, there is no reason to apply the
rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is
[13]
strained. Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate private
[14]
respondent.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Regalado, Acting C.J., (Chairman), Melo, Puno, and Martinez, JJ., concur.
[1]
Rollo, p. 38.
Id., pp. 22-24.
[3]
Id., pp. 16-17.
[4]
Rollo, pp. 52-53.
[5]
205 SCRA 200 (1992).
[6]
Id., p. 206.
[7]
Id., p. 205.
[8]
Rollo, pp. 52-53.
[9]
Id., p. 32.
[10]
Id., p. 52.
[11]
International Container Terminal Services, Inc. v. NLRC, 256 SCRA 124 (1996).
[12]
Belaunzaran v. NLRC, 265 SCRA 800 (1996).
[13]
Hernandez v. NLRC, 176 SCRA 269 (1989).
[14]
Rollo, p. 10.
[2]
23 | P a g e
SECOND DIVISION
[G.R. No. 156367. May 16, 2005]

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA, respondent.
DECISION
CHICO-NAZARIO, J.:
[1]
[2]
Before Us is a Petition for Review on Certiorari assailing the Decision and Resolution of the Court of
[3]
Appeals affirming the Decision of the National Labor Relations Commission (NLRC). The NLRC ruling modified
th
the Decision of the Labor Arbiter (finding respondent entitled to the award of 13 month pay and service incentive
th
leave pay) by deleting the award of 13 month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, BaguioTuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent
(7%) of the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus
he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at
a sharp curve without giving any warning.
Respondent averred that the accident happened because he was compelled by the management to go back
to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila
from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite
respondents pleas for reconsideration, the same was ignored by management. After a month, management sent
him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for
th
nonpayment of 13 month pay and service incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondents employment was replete with offenses involving
reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of
letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was
involved.
Furthermore, petitioner avers that in the exercise of its management prerogative, respondents employment
was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on
03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor
[4]
Arbiter Monroe C. Tabingan promulgated a Decision, the dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to
stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.
However, still based on the above-discussed premises, the respondent must pay to the complainant the following:
th
a. his 13 month pay from the date of his hiring to the date of his dismissal, presently computed at
P78,117.87;
b. his service incentive leave pay for all the years he had been in service with the respondent,
presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for lack of merit.
[5]
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which
rendered its decision on 28 September 2001, the decretal portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:
Section 3. Employers covered. The Decree shall apply to all employers except to:
xxx
xxx
xxx
e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work,
irrespective of the time consumed in the performance thereof. xxx.
24 | P a g e

Records show that complainant, in his position paper, admitted that he was paid on a commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of
th
13 month pay to the complainant.
th
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13 month pay.
[6]
The other findings are AFFIRMED.
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a
reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October
2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision
with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002,
the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of
[7]
respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as
amended, is applicable to respondents claim of service incentive leave pay.
RULING OF THE COURT

The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a)
Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid in
a fixed amount for performing work irrespective of the time consumed in the performance thereof; . .
.
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave
has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those
employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive
Leave shall not apply to employees classified as field personnel. The phrase other employees whose
performance is unsupervised by the employer must not be understood as a separate classification of employees
to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of
the definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be
[8]
determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or contract basis, purely
commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem generis that
[9]
general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees
engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the
grant of service incentive leave, unless, they fall under the classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave just
because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the
issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty. This definition is further
25 | P a g e

elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical
[10]
Commercial Employees Association which states that:
As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days of
work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal
office of the employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no
employee would ever be considered a field personnel because every employer, in one way or another, exercises
control over his employees. Petitioner further argues that the only criterion that should be considered is the nature
of work of the employee in that, if the employees job requires that he works away from the principal office like that
of a messenger or a bus driver, then he is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of a field personnel is not
merely concerned with the location where the employee regularly performs his duties but also with the fact that the
employees performance is unsupervised by the employer. As discussed above, field personnel are those who
regularly perform their duties away from the principal place of business of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee
is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees
time and performance are constantly supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned
at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductors
reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to
its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the
driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe
prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is
always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at
specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the
complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be
[11]
considered a field personnel.
We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is
not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual
trade of petitioners business. Accordingly, respondent is entitled to the grant of service incentive leave.
The question now that must be addressed is up to what amount of service incentive leave pay respondent is
entitled to.
The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year
prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service incentive
leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall
be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be answered is when does the
cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive
period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative
[12]
of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element
of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a
determination must be made as to the period when the act constituting a violation of the workers right to the
benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the
[13]
filing of the money claim, said cause of action has already prescribed in accordance with Article 291.
Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the
benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount
pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount
that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld
[14]
within three (3) years before the filing of the complaint.
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation
to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may
choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the
[15]
year. Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is
entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As
[16]
enunciated by the Court in Fernandez v. NLRC:
26 | P a g e

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject
to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that [e]very
employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five
days with pay. Service incentive leave is a right which accrues to every employee who has served within 12
months, whether continuous or broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy,
or that provided in the employment contracts, is less than 12 months, in which case said period shall be
considered as one year. It is also commutable to its money equivalent if not used or exhausted at the end of the
year. In other words, an employee who has served for one year is entitled to it. He may use it as leave days or
he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to
[17]
unduly restrict such right. [Italics supplied]
Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim
his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary
equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation.
Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his
resignation or separation from employment, his cause of action to claim the whole amount of his accumulated
service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or
separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can
conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee
becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to
pay its monetary equivalent after demand of commutation or upon termination of the employees services, as the
case may be.
The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the
rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its
[18]
implementing regulations, the workingmans welfare should be the primordial and paramount consideration. The
policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits
under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to
[19]
labor.
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its
commutation until his employment was terminated by petitioner. Neither did petitioner compensate his
accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for
illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer
commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service
incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated
leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced
from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his
dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal,
necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the
Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
[1]
CA-G.R. SP No. 68395, dated 06 May 2002, penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado M.
Vasquez, Jr. and Mario L. Guaria, III, concurring.
[2]
Dated 12 December 2002.
[3]
NLRC NCR CA No. 026584-2000 (NLRC Case No. RAB CAR 02-0088-00), dated 28 September 2001.
[4]
NLRC Case No. RAB-CAR-02-0088-00.
[5]
Rollo, pp. 46-47.
[6]
Rollo, pp. 52-53.
[7]
CA Decision, p. 10; Rollo, p. 24.
[8]
See Mercidar Fishing Corporation v. NLRC, G.R. No. 112574, 08 October 1998, 297 SCRA440.
[9]
Cebu Institute of Technology v. Ople, G.R. No. L- 58870, 18 December 1987, 156 SCRA 629, 672, citing Vera v. Cuevas, G.R. No. L-33693,
31 May 1979, 90 SCRA 379.
[10]
06 April 1989; Rollo. p. 20.
[11]
Rollo, pp. 45-46.
[12]
Baliwag Transit, Inc. v. Ople, G.R. No. 57642, 16 March 1989, 171 SCRA 250, citing Agric. Credit & Cooperative Financing Administration v.
Alpha Ins. & Surety Co., Inc., G.R. No. L-24566, 29 July 1968, 24 SCRA 151; Summit Guaranty and Insurance Co., Inc. v. De
Guzman, G.R. No. L-50997, 30 June 1987, 151 SCRA 389; Tormon v. Cutanda, G.R. No. L-18785, 23 December 1963, 9 SCRA 698.
[13]
See De Guzman, et al. v. CA and Nasipit Lumber Co., G.R. No.132257, 12 October 1998, 297 SCRA 743.
[14]
See E. Ganzon, Inc. v. NLRC, G.R. No. 123769, 22 December 1999, 321 SCRA 434.
[15]
Fernandez v. NLRC, G.R. No. 105892, 28 January 1998, 349 Phil 65.
[16]
Ibid.
[17]
Ibid., pp. 94-95.
[18]
Abella v. NLRC, G.R. No. L-71813, 20 July 1987, 152 SCRA 140, citing Volkschel Labor Union v. Bureau of Labor Relations, G.R. No. L45824, 19 June 1985, 137 SCRA 43.
[19]
Sarmiento v. Employees Compensation Commission, G.R. No. L-68648, 24 September 1986, 144 SCRA 421, citing Cristobal v. Employees
Compensation Commission, G.R. No. L-49280, 26 February 1981, 103 SCRA 329; Acosta v. Employees Compensation
Commission, G.R. No. L-55464, 12 November 1981, 109 SCRA 209.
27 | P a g e

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162813
February 12, 2007
FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners,

vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, Respondents.
DECISION
QUISUMBING, J.:
1
Before us is a petition for review on certiorari assailing the Decision dated September 30, 2003 of the Court of
2
Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 denying the motion for
3
reconsideration. The appellate court had reversed the Decision dated October 15, 2002 of the National Labor
4
Relations Commission (NLRC) setting aside the Decision dated June 27, 2001 of the Labor Arbiter.
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique
as truck driver with a daily wage of P223.50. He delivered animal feeds to the companys clients.
On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000,
when he was required to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother
of Far Easts General Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use of
company vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the
company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE)
Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. According to Lebatique,
two days later, he received a telegram from petitioners requiring him to report for work. When he did the next day,
January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had never
been paid for overtime work since he started working for the company. He also told Alexander that Manuel had
fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor
Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full
back wages, 13th month pay, service incentive leave pay, and overtime pay. The dispositive portion of the decision
is quoted herein in full, as follows:
WHEREFORE, we find the termination of complainant illegal. He should thus be ordered reinstated with full
backwages. He is likewise ordered paid his 13th month pay, service incentive leave pay and overtime pay as
computed by the Computation and Examination Unit as follows:
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53
13th Month Pay: 1/12 of P 104,725.53 = 8,727.13
Service Incentive Leave Pay
01/25/00 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 4/30/97 = 1.36 mos.
P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
TOTAL AWARD P 196,659.72
5
SO ORDERED.
28 | P a g e

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held
that there was no dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique
was a field personnel, hence, not entitled to overtime pay and service incentive leave pay. Lebatique sought
reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals.1awphi1.net
The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24,
2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job. It also found
that Lebatique was not a field personnel and therefore entitled to payment of overtime pay, service incentive leave
pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is
hereby REVERSEDand the Labor Arbiters decision dated 27 June 2001 REINSTATED.
SO ORDERED.
Petitioners moved for reconsideration but it was denied.

Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT
WAS ILLEGALLY DISMISSED.
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS
NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE
LEAVE PAY.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE
OF PRIVATE RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND
7
RESOLUTION OF THE PUBLIC RESPONDENT.
Simply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether
Lebatique was a field personnel, not entitled to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to
violation of company rules; (2) Lebatique was not barred from entering the company premises since he never
reported back to work; and (3) Lebatique is estopped from claiming that he was illegally dismissed since his
complaint before the DOLE was only on the nonpayment of his overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel
whose time outside the company premises cannot be determined with reasonable certainty. According to
petitioners, the drivers do not observe regular working hours unlike the other office employees. The drivers may
report early in the morning to make their deliveries or in the afternoon, depending on the production of animal
8
feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a day.
Lebatique for his part insists that he was illegally dismissed and was not merely suspended. He argues that he
neither refused to work nor abandoned his job. He further contends that abandonment of work is inconsistent with
the filing of a complaint for illegal dismissal. He also claims that he is not a field personnel, thus, he is entitled to
overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition lacks merit. We are in agreement with
the decision of the Court of Appeals sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was
9
for a valid cause. In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was
merely suspended for one day but he abandoned his work thereafter. To constitute abandonment as a just cause
for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by
10
some overt act, to sever the employer-employee relationship.
The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a
clear intention on the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally
told by Alexander Uy, the companys General Manager, to look for another job, Lebatique was in effect dismissed.
Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that
he was afforded the opportunity to explain his side. It is clear also from the sequence of the events leading to
Lebatiques dismissal that it was Lebatiques complaint for nonpayment of his overtime pay that provoked the
29 | P a g e

management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to
overtime pay.
An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned
his work and the filing of the complaint is proof enough of his desire to return to work, thus negating any
11
suggestion of abandonment. A contrary notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by
managements unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000,
after he was told not to report for work, and his filing was well within the prescriptive period allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term
"field personnel." It provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest Periods] shall apply to employees
in all establishments and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
12
In Auto Bus Transport Systems, Inc. v. Bautista, this Court emphasized that the definition of a "field personnel" is
not merely concerned with the location where the employee regularly performs his duties but also with the fact that
the employees performance is unsupervised by the employer. We held that field personnel are those who
regularly perform their duties away from the principal place of business of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. Thus, in order to determine whether an employee
is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees
13
time and performance are constantly supervised by the employer.
As correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following
reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place;
(2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a
directive that company drivers should stay at the clients premises during truck-ban hours which is from 5:00 to
14
9:00 a.m. and 5:00 to 9:00 p.m. Even petitioners admit that the drivers can report early in the morning, to make
15
their deliveries, or in the afternoon, depending on the production of animal feeds. Drivers, like Lebatique, are
under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose
tasks are usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to
the benefits accorded to regular employees of Far East, including overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee relationship shall be filed within three years from
16
the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established that the
benefits being claimed have been withheld from the employee for a period longer than three years, the amount
pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount
that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld
17
within three years before the filing of the complaint.
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive
18
period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of
overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only
demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on
March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute
properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records,
payroll, or other documents in managements control to determine the correct overtime pay due Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 30, 2003 of the Court of
Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED with
MODIFICATIONto the effect that the case is hereby REMANDED to the Labor Arbiter for further proceedings to
determine the exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein
petitioners should pay without further delay.
Costs against petitioners.
SO ORDERED.
LEONARDO A. QUISUMBING
Associate Justice
30 | P a g e

WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
CONCHITA CARPIO MORALES
Associate Justice
DANTE O. TINGA
Asscociate Justice
PRESBITERO J. VELASCO, JR.

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 34-44. Penned by Associate Justice Buenaventura J. Guerrero with Associate Justices Andres
B. Reyes, Jr. and Regalado E. Maambong concurring.
2
Id. at 62.
3
Id. at 194-203.
4
Id. at 167-174.
5
Id. at 173-174.
6
Id. at 44.
7
Id. at 17.
8
Id. at 375.
9
Micro Sales Operation Network v. National Labor Relations Commission, G.R. No. 155279, October 11,
2005, 472 SCRA 328, 337.
10
Id. at 336.
11
Veterans Security Agency, Inc. v. Gonzalvo, Jr., G.R. No. 159293, December 16, 2005, 478 SCRA 298,
305.
12
G.R. No. 156367, May 16, 2005, 458 SCRA 578.
13
Id. at 589.
14
Rollo, p. 42.
15
Id. at 375.
16
Article 291 of the Labor Code.
17
Supra note 12, at 591.
18
See Auto Bus Transport Systems, Inc. v. Bautista, supra at 594.
31 | P a g e
FIRST DIVISION
[G. R. No. 123938. May 21, 1998]
LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA MARIE OCAMPO,
MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA,
IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO, CATHERINE
ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET
DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA
SALAZAR, GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY
CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA,
LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T.
OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD, EVELYN MANALO, NORA PATIO,
JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO,
SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN,
ELIZABETH MERCADO, JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES
SALAS, VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA
PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY
GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO,
ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE
MANABAT, ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY
MANARANG, EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL
MANALO, SONIA DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN, JULIE DAVID,
GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA RONOZ,
IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President &
Manager, MR. GONZALO KEHYENG and MRS. EVELYN KEHYENG, respondents.
DECISION
DAVIDE, JR., J.:
In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995
[1]
resolution of the National Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which
[2]
affirmed the Decision of Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack of merit.
The antecedents of this case as summarized by the Office of the Solicitor General in its Manifestation and
[3]
Motion in Lieu of Comment, are as follows:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food
Products, which hired them on various dates (Paragraph 1, Annex A of Petition, Annex B; Page 2, Annex F of
Petition).
Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor
standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They also filed a petition for direct certification of
petitioner Labor Congress of the Philippines as their bargaining representative (Case No. R0300-9010-RU-005).
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents
Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of
Agreement which provided, among others, the following:
1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE,
Management of the Empire Food Products has no objection [to] the direct certification of the LCP Labor Congress
and is now recognizing the Labor Congress of the Philippines (LCP) and its Local Chapter as the SOLE and
EXCLUSIVE Bargaining Agent and Representative for all rank and file employees of the Empire Food Products
regarding WAGES, HOURS OF WORK, AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT;
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC parties jointly and
mutually agreed that the issues thereof, shall be discussed by the parties and resolve[d] during the negotiation of
the Collective Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment of the Employees Wages
within fifteen (15) days from the signing of this Agreement and further agreed to register all the employees with the
SSS;
32 | P a g e

4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll deduction UNION
DUES and other Assessment[s] upon submission by the LCP Labor Congress individual Check-Off
Authorization[s] signed by the Union Members indicating the amount to be deducted and further agreed all
deduction[s] made representing Union Dues and Assessment[s] shall be remitted immediately to the LCP Labor
Congress Treasurer or authorized representative within three (3) or five (5) days upon deductions [sic], Union dues
not deducted during the period due, shall be refunded or reimbursed by the
Employer/Management. Employer/Management further agreed to deduct Union dues from non-union members
the same amount deducted from union members without need of individual Check-Off Authorizations [for] Agency
Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that NLRC CASE NO.
RAB-III-10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations
Commission(NLRC), while the Petition for direct certification of the LCP Labor Congress parties jointly move for
the direct certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic], Threats,
Interferences [sic] of their respective rights under the law, no Vengeance or Revenge by each partner nor any act
of ULP which might disrupt the operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA, this
Memorandum of Agreement shall govern the parties in the exercise of their respective rights involving the
Management of the business and the terms and condition[s] of employment, and whatever problems and
grievances may arise by and between the parties shall be resolved by them, thru the most cordial and good
harmonious relationship by communicating the other party in writing indicating said grievances before taking any
action to another forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and comply with
all the terms and conditions hereof. Further agreed that violation by the parties of any provision herein shall
constitute an act of ULP. (Annex A of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement
and certified LCP as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food
Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions
of employment (Annex B of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for
collective bargaining (Annex C of Petition).
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against
private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to selforganization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated
by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages. (Annex D of Petition)
After the submission by the parties of their respective position papers and presentation of testimonial evidence,
Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting,
violation of the memorandum of agreement, underpayment of wages and denied petitioners prayer for actual,
moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual
complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in every
establishment that a payroll and other papers evidencing hours of work, payments, etc. shall always be maintained
and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such
penalty, respondents should not escape liability for this technicality, hence, it is proper that all individual
complainants except those who resigned and executed quitclaim[s] and releases prior to the filing of this
complaint should be reinstated to their former position[s] with the admonition to respondents that any harassment,
intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt
with accordingly.
SO ORDERED. (Annex G of Petition)
On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and
remanded the case to the Labor Arbiter for further proceedings for the following reasons:
The Labor Arbiter, through his decision, noted that xxx complainant did not present any single witness while
respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and
Elvira Bulagan xxx (p. 183, Records), that xxx complainant before the National Labor Relations Commission must
prove with definiteness and clarity the offense charged. xxx (Record, p. 183); that xxx complainant failed to
33 | P a g e

specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute
unfair labor practice xxx (Record, p. 183); that complainants failed to present any witness who may describe in
what manner respondents have committed unfair labor practice xxx (Record, p. 185); that xxx complainant LCP
failed to present anyone of the so-called 99 complainants in order to testify who committed the threats and
intimidation xxx (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant presented
witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p.
92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes
thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that complainant
further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES
PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May
1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary
and Testimonial Evidence was made by complainant on June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on
record. Other individual complainants should have been summoned with the end in view of receiving their
testimonies. The complainants should be afforded the time and opportunity to fully substantiate their claims
against the respondents. Judgment should be rendered only based on the conflicting positions of the parties. The
Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view [that] the case should be remanded to the Labor Arbiter of
origin for further proceedings.(Annex H of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor
practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facie evidence of
probability that a criminal offense may have been committed so as to warrant the filing of a criminal information
before the regular court. Hence, evidence which is more than a scintilla is required in order to declare
respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to the cause of
complainants. Besides, even the charge of illegal lockout has no leg to stand on because of the testimony of
respondents through their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991,
complainants refused and failed to report for work, hence guilty of abandoning their post without permission from
respondents. As a result of complainants[] failure to report for work, the cheese curls ready for repacking were all
spoiled to the prejudice of respondents. Under cross-examination, complainants failed to rebut the authenticity of
respondents witness testimony.
As regards the issue of harassments [sic], threats and interference with the rights of employees to self-organization
which is actually an ingredient of unfair labor practice, complainants failed to specify what type of threats or
intimidation was committed and who committed the same. What are the acts or utterances constitutive of
harassments [sic] being complained of? These are the specifics which should have been proven with
definiteness and clarity by complainants who chose to rely heavily on its position paper through generalizations to
prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned, both parties agreed
that:
2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the NLRC,
parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and
resolve[d] during the negotiation of the CBA.
The aforequoted provision does not speak of [an] obligation on the part of respondents but on a resolutory
condition that may occur or may not happen. This cannot be made the basis of an imposition of an obligation over
which the National Labor Relations Commission has exclusive jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the contrary. The enumeration of
complainants wages in their consolidated Affidavits of merit and position paper which implies underpayment has
no leg to stand on in the light of the fact that complainants admission that they are piece workers or paid on
a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese curls or other products repacked. The
only limitation for piece workers or pakiao workers is that they should receive compensation no less than the
minimum wage for an eight (8) hour work [sic]. And compliance therewith was satisfactorily explained by
respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On crossexamination, complainants failed to rebut or deny Gonzalo Kehyengs testimony that complainants have been even
receiving more than the minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than the
minimum wage but the same cannot be attributable to respondents but to the lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was
ever proven to have been perpetuated by respondents.
34 | P a g e

WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit. (Annex I of
[4]
Petition).
[5]
On appeal, the NLRC, in its Resolution dated 29 March 1995, affirmed in toto the decision of Labor Arbiter
Santos. In so doing, the NLRC sustained the Labor Arbiters findings that: (a) there was a dearth of evidence to
prove the existence of unfair labor practice and union busting on the part of private respondents; (b) the agreement
of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRCs jurisdiction, as the
provisions thereof, particularly Section 2, spoke of a resolutory condition which could or could not happen; (c) the
claims for underpayment of wages were without basis as complainants were admittedly pakiao workers and paid
on the basis of their output subject to the lone limitation that the payment conformed to the minimum wage rate for
an eight-hour workday; and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October
[6]
1995, petitioners filed the instant special civil action for certiorari raising the following issues:
I
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION
GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE
EVIDENCE FAVORABLE TO HEREIN PETITIONERS, APPLICABLE JURISPRUDENCE BUT ALSO ITS
OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS] TANTAMOUNT
NOT ONLY TO THE DEPRIVATION OF PETITIONERS RIGHT TO DUE PROCESS BUT WOULD RESULT
[IN] MANIFEST INJUSTICE.
II
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT
DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION,
SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS OF WORK AND
DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY
DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD.
IV
WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL
UP TO THE TIME OF THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS,
[7]
DAMAGES AND ATTORNEYS FEES.
We required respondents to file their respective Comments.
In their Manifestation and Comment, private respondents asserted that the petition was filed out of time. As
petitioners admitted in their Notice to File petition for Review on Certiorari that they received a copy of the
resolution (denying their motion for reconsideration) on 13 December 1995, they had only until 29 December 1995
to file the petition. Having failed to do so, the NLRC thus already entered judgment in private respondents favor.
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a petition for
review on their behalf, mistook which reglementary period to apply. Instead of using the reasonable time criterion
for certiorari under Rule 65, he used the 15-day period for petitions for review on certiorari under Rule 45. They
hastened to add that such was a mere technicality which should not bar their petition from being decided on the
merits in furtherance of substantial justice, especially considering that respondents neither denied nor contradicted
the facts and issues raised in the petition.
In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG) sided with
petitioners. It pointed out that the Labor Arbiter, in finding that petitioners abandoned their jobs, relied solely on the
testimony of Security Guard Rolando Cairo that petitioners refused to work on 21 January 1991, resulting in the
spoilage of cheese curls ready for repacking. However, the OSG argued, this refusal to report for work for a single
day did not constitute abandonment, which pertains to a clear, deliberate and unjustified refusal to resume
employment, and not mere absence. In fact, the OSG stressed, two days after allegedly abandoning their work,
petitioners filed a complaint for,inter alia, illegal lockout or illegal dismissal. Finally, the OSG questioned the lack of
explanation on the part of Labor Arbiter Santos as to why he abandoned his original decision to reinstate
petitioners.
In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment.
In its Comment, the NLRC invokes the general rule that factual findings of an administrative agency bind a
reviewing court and asserts that this case does not fall under the exceptions. The NLRC further argues that grave
abuse of discretion may not be imputed to it, as it affirmed the factual findings and legal conclusions of the Labor
Arbiter only after carefully reviewing, weighing and evaluating the evidence in support thereof, as well as the
pertinent provisions of law and jurisprudence.
In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by
substantial evidence; that abandonment was not proved; and that much credit was given to self-serving statements
of Gonzalo Kehyeng, owner of Empire Foods, as to payment of just wages.
On 7 July 1997, we gave due course to the petition and required the parties to file their respective
memoranda. However, only petitioners and private respondents filed their memoranda, with the NLRC merely
adopting its Comment as its Memorandum.
We find for petitioners.
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the
circumstances. Initially, we are unable to discern any compelling reason justifying the Labor Arbiters volte
35 | P a g e

face from his 14 April 1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision,
when in both instances, he had before him substantially the same evidence. Neither do we find the 29 March 1995
NLRC resolution to have sufficiently discussed the facts so as to comply with the standard of substantial
evidence. For one thing, the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiters
factual findings, staunchly declaring that it was not about to substitute [its] judgment on matters that are within the
[8]
province of the trier of facts. Yet, in the 21 July 1992 NLRC resolution, it chastised the Labor Arbiter for his
errors both in judgment and procedure, for which reason it remanded the records of the case to the Labor Arbiter
for compliance with the pronouncements therein.
What cannot escape from our attention is that the Labor Arbiter did not heed the observations and
pronouncements of the NLRC in its resolution of 21 July 1992, neither did he understand the purpose of the
remand of the records to him. In said resolution, the NLRC summarized the grounds for the appeal to be:
1.
that there is a prima facie evidence of abuse of discretion and acts of gross incompetence committed by the
Labor Arbiter in rendering the decision.
2.
that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts.
After which, the NLRC observed and found:

Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants who submitted their
Consolidated Affidavit of Merit and Position Paper which was adopted as direct testimonies during the hearing and
cross-examined by respondents counsel.
The Labor Arbiter, through his decision, noted that x x x complainant did not present any single witness while
respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and
Elvira Bulagan x x x (Records, p. 183), that x x x complainant before the National Labor Relations Commission
must prove with definiteness and clarity the offense charged. x x x (Record, p. 183; that x x x complainant failed
to specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute
unfair labor practice x x x (Record, p. 183); that complainants failed to present any witness who may describe in
what manner respondents have committed unfair labor practice x x x (Record, p. 185); that x x x complainant a
[sic] LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats
and intimidation x x x (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant presented
witnesses, namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p.
92), who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto
as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that complainant further presented
other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE
PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16
May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial
Evidence was made by the complainant on June 24, 1991 (Record, p. 106-109).
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on
record. Other individual complainants should have been summoned with the end in view of receiving their
testimonies. The complainants should [have been] afforded the time and opportunity to fully substantiate their
claims against the respondents. Judgment should [have been] rendered only based on the conflicting positions of
the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the
parties.
Toward this end, therefore, it is Our considered view the case should be remanded to the Labor Arbiter of origin for
further proceedings.
Further, We take note that the decision does not contain a dispositive portion or fallo. Such being the case, it may
be well said that the decision does not resolve the issues at hand. On another plane, there is no portion of the
decision which could be carried out by way of execution.
It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof:
x x x x x
The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every
establishment that a payroll and other papers evidencing hour[s] of work, payment, etc. shall always be maintained
and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such
penalty, respondents should not escape liability for this technicality, hence, it is proper that all the individual
complainants except those who resigned and executed quitclaim[s] and release[s] prior to the filing of this
complaint should be reinstated to their former position with the admonition to respondents that any harassment,
intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt
with accordingly.
SO ORDERED.
36 | P a g e

It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and
other papers evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the
directive to reinstate complainants to their former positions. It is [a] well settled rule that there must be a finding of
illegal dismissal before reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision, after receiving
[9]
evidence, considering and resolving the same, the requisite dispositive portion.
Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this
stinging rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27
July 1994 Decision that petitioners abandoned their work, was moved by, at worst, spite, or at best, lackadaisically
glossed over petitioners evidence. On this score, we find the following observations of the OSG most persuasive:
In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony
of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure
to work, the cheese curls ready for repacking on said date were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of
work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a
complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several cases, this
Honorable Court held that one could not possibly abandon his work and shortly thereafter vigorously pursue his
complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan
Bus Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190 SCRA
505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo
Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated, supra, this Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his
reinstatement. We can not believe that Caballo, who had worked for Atlas for two years and ten months, would
simply walk away from his job unmindful of the consequence of his act, i.e. the forfeiture of his accrued
employment benefits. In opting to finally to [sic] contest the legality of his dismissal instead of just claiming his
separation pay and other benefits, which he actually did but which proved to be futile after all, ably supports his
sincere intention to return to work,thus negating Atlas stand that he had abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and unjustified refusal
to resume employment and not mere absence that constitutes abandonment. The absence of petitioner
employees for one day on January 21, 1991 as testified [to] by Security Guard Orlando Cairo did not constitute
abandonment.
In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and
admonished the private respondents that any harassment, intimidation, coercion or any form of threat as a result
of this immediately executory reinstatement shall be dealt with accordingly.
In his second decision, Labor Arbiter Santos did not state why he was abandoning his previous decision directing
the reinstatement of petitioner employees.
By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter impliedly held that they
did not abandon their work but were not allowed to work without just cause.
That petitioner employees are pakyao or piece workers does not imply that they are not regular employees
entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit processing
company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held that the work
of merchandisers of processed food, who coordinate with grocery stores and other outlets for the sale of the
processed food is necessary in the day-to-day operation[s] of the company. With more reason, the work of
[10]
processed food repackers is necessary in the day-to-day operation[s] of respondent Empire Food Products.
It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee,
[11]
such as abandonment, rests on the employer,
a burden private respondents failed to discharge.
Private respondents, moreover, in considering petitioners employment to have been terminated by
abandonment, violated their rights to security of tenure and constitutional right to due process in not even serving
[12]
them with a written notice of such termination. Section 2, Rule XIV, Book V of the Omnibus Rules Implementing
the Labor Code provides:
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a written notice
stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work,
the notice shall be served at the workers last known address.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor
Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of
employees involved, the length of time that has lapsed since their dismissal, and the perceptible resentment and
enmity between petitioners and private respondents which necessarily strained their relationship, reinstatement
would be impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement then,
37 | P a g e

separation pay at the rate of one month for every year of service, with a fraction of at least six (6) months of
[13]
service considered as one (1) year, is in order.
That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully
[14]
settled at this time. Petitioners, as piece-rate workers having been paid by the piece, there is need to determine
the varying degrees of production and days worked by each worker. Clearly, this issue is best left to the National
Labor Relations Commission.
th
As to the other benefits, namely, holiday pay, premium pay, 13 month pay and service incentive leave which
[15]
the labor arbiter failed to rule on but which petitioners prayed for in their complaint, we hold that petitioners are
so entitled to these benefits. Three (3) factors lead us to conclude that petitioners, although piece-rate workers,
were regular employees of private respondents. First, as to the nature of petitioners tasks, their job of repacking
snack food was necessary or desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners worked for private respondents throughout the
year, their employment not having been dependent on a specific project or season; and third, the length of
[16]
time that petitioners worked for private respondents. Thus, while petitioners mode of compensation was on a
per piece basis, the status and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime
[17]
[18]
pay, holiday pay, service incentive leave and 13th month pay, inter alia, field personnel and other employees
whose time and performance is unsupervised by the employer, including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of
the time consumed in the performance thereof. Plainly, petitioners as piece-rate workers do not fall within this
group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their
employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for
compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are
specifically mentioned as being entitled to holiday pay.
SEC. 8. Holiday pay of certain employees.(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay
shall not be less than his average daily earnings for the last seven (7) actual working days preceding the
regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable
statutory minimum wage rate.
th
In addition, the Revised Guidelines on the Implementation of the 13 Month Pay Law, in view of the
[19]
modifications to P.D. No. 851 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers
th
from those exempted from paying 13 month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d.
Employers of those who are paid on purely commission, boundary or task basis, and those who
are paid a fixed amount for performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such workers. (italics supplied)
The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate
category as those who are paid a standard amount for every piece or unit of work produced that is more or less
[20]
regularly replicated, without regard to the time spent in producing the same.
As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the
Implementing Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or
task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of
these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid
section, are not entitled to receive overtime pay. Here, private respondents did not allege adherence to the
standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are
beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the National Labor
Relations Commission would be in a better position to determine the exact amounts owed petitioners, if any.
As to the claim that private respondents violated petitioners right to self-organization, the evidence on record
does not support this claim. Petitioners relied almost entirely on documentary evidence which, per se, did not
[21]
prove any wrongdoing on private respondents part. For example, petitioners presented their complaint to prove
the violation of labor laws committed by private respondents. The complaint, however, is merely the pleading
[22]
alleging the plaintiffs cause or causes of action. Its contents are merely allegations, the verity of which shall
have to be proved during the trial. They likewise offered their Consolidated Affidavit of Merit and Position
[23]
Paper which, like the offer of their Complaint, was a tautological exercise, and did not help nor prove their
[24]
[25]
cause. In like manner, the petition for certification election and the subsequent order of certification merely
proved that petitioners sought and acquired the status of bargaining agent for all rank-and-file employees. Finally,
[26]
the existence of the memorandum of agreement offered to substantiate private respondents non-compliance
therewith, did not prove either compliance or non-compliance, absent evidence of concrete, overt acts in
contravention of the provisions of the memorandum.
38 | P a g e

IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution of the National Labor
Relations Commission of 29 March 1995 and the Decision of the Labor Arbiter of 27 July 1994 in NLRC Case No.
RAB-III-01-1964-91 are hereby SET ASIDE, and another is hereby rendered:
1. DECLARING petitioners to have been illegally dismissed by private respondents, thus entitled to full
back wages and other privileges, and separation pay in lieu of reinstatement at the rate of one
months salary for every year of service with a fraction of six months of service considered as one
year;
2. REMANDING the records of this case to the National Labor Relations Commission for its
determination of the back wages and other benefits and separation pay, taking into account the
foregoing observations; and
3. DIRECTING the National Labor Relations Commission to resolve the referred issues within sixty (60)
days from its receipt of a copy of this decision and of the records of the case and to submit to this
Court a report of its compliance hereof within ten (10) days from the rendition of its resolution.
Costs against private respondents.
SO ORDERED.
Bellosillo, Vitug, Panganiban, and Quisumbing, JJ., concur.
[1]
Annex J of Petition. Per Commissioner Tanodra, J., with Presiding Commissioner Javier, L., and
Commissioner Bernardo, I., concurring; Rollo, 98-108.
[2]
Annex I of Petition, Rollo, 91-97.

Rollo, 137 et seq.
[4]
Rollo, 138-148.
[5]
Supra note 1.
[6]
Rollo, 109-110.
[7]
Id., 21-22.
[3]
[8]
Annex H of Petition, Id., 85-90. Per Commissioner Rayala, R.I., with Commissioners Javier, L., and Bernardo,
I., concurring.
[9]
Rollo, 86-90.
Rollo, 150-153.
[10]
[11]
Lim v. NLRC, 259 SCRA 485, 497 [1996]; Metro Transit Organization, Inc., 263 SCRA 313, 321 [1996]; De la
Cruz v. NLRC, 268 SCRA 458, 468 [1997].
[12]
See Tiu v. NLRC, 215 SCRA 540, 550-552 [1992]; Radio Communications of the Phils. v. NLRC, 223 SCRA
656, 667-668 [1993].
[13]
Globe-Mackay Cable and Radio Corp. v. NLRC, 206 SCRA 701, 709-710 [1992]; Kathy-O Enterprises v. NLRC,
G.R. No. 117610, 2 March 1998.
[14]
See Dy Keh Beng v. International Labor, 90 SCRA 161 [1979]; Brotherhood Unity Movement of the Phils. v.
Zamora, 147 SCRA 49 [1987].
[15]
Rollo, 51.
RJL Mariner Fishing Corp. v. NLRC, 127 SCRA 454, 462 [1984].
[17]
Section 1 (e), Rule II, Sec. 1(e) Rule IV and Sec. 1(d), Rule V of Book II.
[18]
P.D. No. 851, as modified by Memorandum No. 28.
[19]
Requiring All Employers To Pay Their Employees a [sic]13th-Month Pay.
[20]
This distinction was also used in Sec. 3(e) Rules and Regulations Implementing P.D. 851.
[21]
Exhibit C, OR, 42-43.
[22]
Section 3, Rule 6, Revised Rules of Court.
[23]
Exhibit J, OR, 56-78.
[24]
Exhibit D, Id., 44-45.
[25]
Exhibit F, Id., 50.
[26]
Exhibit E, Id., 46-49.
[16]
39 | P a g e
SECOND DIVISION
[G.R. No. 132805. February 2, 1999]
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR
ARBITER ROMULUS PROTACIO and DR. HERMINIO A. FABROS, respondents.
DECISION
PUNO, J.:
Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations Commission dismissing
its appeal from the decision of Labor Arbiter Romulus S. Protacio which declared the suspension of private
respondent Dr. Herminio A. Fabros illegal and ordered petitioner to pay private respondent the amount equivalent
to all the benefits he should have received during his period of suspension plus P500,000.00 moral damages.
The facts are as follow:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL
Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at
his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call
from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse
on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient
arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private
respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr.
Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight
Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why
no disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he
immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the
clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged private respondent with
abandonment of post while on duty. He was given ten days to submit a written answer to the administrative
charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that
he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In
fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner company decided to
suspend private respondent for three months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
[1]
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision declaring the suspension of
private respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to all the
benefits he should have received during his period of suspension plus P500,000.00 moral damages. The
dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the suspension of complainant
as illegal, and ordering the respondents the restitution to the complainant of all employment benefits equivalent to
[2]
his period of suspension, and the payment to the complainant of P500,000.00 by way of moral damages.
Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that the decision of
[3]
the Labor Arbiter is supported by the facts on record and the law on the matter. The NLRC likewise denied
[4]
petitioners motion for reconsideration.
Hence, this petition raising the following arguments:
1. The public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion in
nullifying the 3-month suspension of private respondent despite the fact that the private respondent has
committed an offense that warranted the imposition of disciplinary action.
40 | P a g e

2. The public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion in
holding the petitioner liable for moral damages:
(a) Despite the fact that no formal hearing whatsoever was conducted for complainant to substantiate
his claim;
(b) Despite the absence of proof that the petitioner acted in bad faith in imposing the 3-month
suspension; and
(c) Despite the fact that the Labor Arbiter's award of moral damages is highly irregular, considering
[5]
that it was more than what the private respondent prayed for.
We find that public respondents did not err in nullifying the three-month suspension of private
respondent. They, however, erred in awarding moral damages to private respondent.
First, as regards the legality of private respondents suspension. The facts do not support petitioners
allegation that private respondent abandoned his post on the evening of February 17, 1994. Private respondent
left the clinic that night only to have his dinner at his house, which was only a few minutes drive away from the
clinic. His whereabouts were known to the nurse on duty so that he could be easily reached in case of emergency.
Upon being informed of Mr. Acostas condition, private respondent immediately left his home and returned to the
clinic. These facts belie petitioners claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company
premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even
to take his meals.
We are not impressed.
Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work.The normal hours of work of any employee shall not exceed eight (8) hours a
day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and
clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this
Article, health personnel shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty
of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not less than one
(1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20)
minutes may be given by the employer provided that such shorter meal period is credited as compensable hours
worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods
.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable
working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company premises. Employees are not prohibited from going out of
the premises as long as they return to their posts on time. Private respondents act, therefore, of going home to
take his dinner does not constitute abandonment.
We now go to the award of moral damages to private respondent.
Not every employee who is illegally dismissed or suspended is entitled to damages. As a rule, moral
damages are recoverable only where the dismissal or suspension of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or
[6]
public policy. Bad faith does not simply mean negligence or bad judgment. It involves a state of mind dominated
by ill will or motive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or
[7]
some moral obliquity. The person claiming moral damages must prove the existence of bad faith by clear and
[8]
convincing evidence for the law always presumes good faith.
In the case at bar, there is no showing that the management of petitioner company was moved by some evil
motive in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief
that private respondents act of leaving the company premises to take his meal at home constituted abandonment
of post which warrants the penalty of suspension. Also, it is evident from the facts that petitioner gave private
respondent all the opportunity to refute the charge against him and to defend himself. These negate the existence
41 | P a g e

of bad faith on the part of petitioner. Under the circumstances, we hold that private respondent is not entitled to
moral damages.
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the assailed decision awarding
moral damages to private respondent is DELETED. All other aspects of the decision are AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.
[1]
Rollo, pp. 19-32.
[2]
Rollo, p. 32.
[3]
Rollo, p. 43.
[4]
Rollo, p. 46.
[5]
Rollo, p. 8.
[6]
Ford Philippines, Inc. vs. Court of Appeals, 267 SCRA 320 (1997); Equitable Banking Corporation vs. NLRC,
273 SCRA 352 (1997); Tumbiga vs. NLRC, 274 SCRA 338 (1997).
[7]
Ibid.; citing Far East Bank and Trust Co. vs. Court of Appeals, 241 SCRA 671 (1996).
[8]
Ibid.
42 | P a g e

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[LABOR] July 24, 2014

Republic of the Philippines

G.R. No. 114337 September 29, 1995

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[G.R. No. 122917. July 12, 1999]

of the NLRC, which denied the Motion for Reconsideration.

The facts were summarized by the NLRC in this wise:

[LABOR] July 24, 2014

The EMPLOYEE shall likewise be entitled to the following benefits:

[LABOR] July 24, 2014

The Ruling of the NLRC

[LABOR] July 24, 2014

This Courts Ruling

Preliminary Matter: Propriety of Certiorari

Main Issue: Are Petitioners Regular Employees?

[LABOR] July 24, 2014

in which this Court held:

[LABOR] July 24, 2014

Applicability of the Brent Ruling

Other Grounds Cited by Respondent

In this light, we iterate our ruling in Romares v. NLRC:

[LABOR] July 24, 2014

Rollo, pp. 3-39.

[LABOR] July 24, 2014

July 16, 1952

MANILA TERMINAL COMPANY, INC., petitioner,

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[LABOR] July 24, 2014

G.R. No. 159577

WHEREFORE, premises considered, the instant petition is hereby DISMISSED.

The latter Resolution denied reconsideration.

[LABOR] July 24, 2014

[LABOR] July 24, 2014

not frustrate, substantial justice.

As shift engineer, petitioners duties and responsibilities were as follows:

[LABOR] July 24, 2014

To train new employees for effective and safety while working.

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ

ROMEO J. CALLEJO, SR.

Rollo, pp. 4-11.

[LABOR] July 24, 2014

Id. at 5; id. at 25.

[LABOR] July 24, 2014

[G.R. No. 112574. October 8, 1998]

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[G.R. No. 156367. May 16, 2005]

[LABOR] July 24, 2014

RULING OF THE COURT

Book III, Rule V: SERVICE INCENTIVE LEAVE

[LABOR] July 24, 2014

[LABOR] July 24, 2014

[LABOR] July 24, 2014

February 12, 2007

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners,

[LABOR] July 24, 2014

Petitioners moved for reconsideration but it was denied.

[LABOR] July 24, 2014