G.R. No.

159577

May 3, 2006

CHARLITO PEARANDA, Petitioner,

vs.
BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA, Respondents.
DECIS ION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are exempted from
the provisions of the Labor Code on labor standards. Since petitioner belongs to
this class of employees, he is not entitled to overtime pay and premium pay for
working on rest days.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing
the January 27, 20032 and July 4, 20033 Resolutions of the Court of Appeals (CA)
in CA-GR SP No. 74358. The earlier Resolution disposed as follows:
"WHEREFORE, premises considered, the instant petition is
hereby DISMISSED."4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations Commission
(NLRC) challenged in the CA disposed as follows:
"WHEREFORE, premises considered, the decision of the Labor Arbiter below
awarding overtime pay and premium pay for rest day to complainant is hereby
REVERSED and SET ASIDE, and the complaint in the above-entitled case
dismissed for lack of merit.5
The Facts

Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee

of Baganga Plywood Corporation (BPC) to take charge of the operations and
maintenance of its steam plant boiler.6 In May 2001, Pearanda filed a Complaint
for illegal dismissal with money claims against BPC and its general manager,
Hudson Chua, before the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed the parties to
file their position papers and submit supporting documents.9 Their respective
allegations are summarized by the labor arbiter as follows:
"[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 and if ever he rendered services beyond the normal hours
of work, [there] was no office order/or authorization for him to do so. Finally,
respondents allege that the claim for damages has no legal and factual basis and
that the instant complaint must necessarily fail for lack of merit."10
The labor arbiter ruled that there was no illegal dismissal and that petitioners
Complaint was premature because he was still employed by BPC. 11 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 leave conversions and
thirteenth month pay.12
Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium
pay for working on rest days, and attorneys fees in the total amount
of P21,257.98.13

"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 OTHER MONETARY BENEFITS."18

Ruling of the NLRC

The Courts Ruling
Respondents filed an appeal to the NLRC, which deleted the award of overtime
pay and premium pay for working on rest days. According to the Commission,
petitioner was not entitled to these awards because he was a managerial
employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Pearandas Petition
for Certiorari. The appellate court held that he failed to: 1) attach copies of the
pleadings submitted before the labor arbiter and NLRC; and 2) explain why the
filing and service of the Petition was not done by personal service.15
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the
ground that petitioner still failed to submit the pleadings filed before the NLRC. 16

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.
In Atillo v. Bombay,19 the Court held that the crucial issue is whether the
documents accompanying the petition before the CA sufficiently supported the
allegations therein. Citing this case, Piglas-Kamao v. NLRC20 stayed the
dismissal of an appeal in the exercise of its equity jurisdiction to order the
adjudication on the merits.

Hence this Petition.17

The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of discretion amounting to excess or lack of
jurisdiction when it entertained the APPEAL of the respondent[s] despite the
lapse of the mandatory period of TEN DAYS.1avvphil.net

The Petition filed with the CA shows a prima facie case. Petitioner attached his
evidence to challenge the finding that he was a managerial employee.21 In his
Motion for Reconsideration, petitioner also submitted the pleadings before the
labor arbiter in an attempt to comply with the CA rules.22 Evidently, the CA
could have ruled on the Petition on the basis of these attachments. Petitioner
should be deemed in substantial compliance with the procedural requirements.

Under these extenuating circumstances, the Court does not hesitate to grant
liberality in favor of petitioner and to tackle his substantive arguments in the
present case. Rules of procedure must be adopted to help promote, not frustrate,
substantial justice.23 The Court frowns upon the practice of dismissing cases
purely on procedural grounds.24 Considering that there was substantial
compliance,25 a liberal interpretation of procedural rules in this labor case is more
in keeping with the constitutional mandate to secure social justice.26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the decision of the
labor arbiter should be filed within 10 days from receipt thereof.27
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 alleging have the
burden of substantiating their allegations.28

The Implementing Rules of the Labor Code state that managerial employees are
those who meet the following conditions:
"(1) Their primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision thereof;
"(2) They customarily and regularly direct the work of two or more
employees therein;
"(3) They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to the hiring and
firing and as to the promotion or any other change of status of other
employees are given particular weight."31
The Court disagrees with the 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 labor standards.32 The Implementing Rules of the Labor Code define
members of a managerial staff as those with the following duties and
responsibilities:
"(1) The primary duty consists of the performance of work directly
related to management policies of the employer;

Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and therefore, entitled
to the award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage
of labor standards. Labor standards provide the working conditions of employees,
including entitlement to overtime pay and premium pay for working on rest
days.29 Under this provision, managerial employees are "those whose primary
duty consists of the management of the establishment in which they are employed
or of a department or subdivision."30

"(2) Customarily and regularly exercise discretion and independent

judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and tasks; and
"(4) who do not devote more than 20 percent of their hours worked in a
workweek to activities which are not directly and closely related to the

performance of the work described in paragraphs (1), (2), and (3)

above."33

discretion and independent judgment to ensure the proper functioning of the

steam plant boiler. As supervisor, petitioner is deemed a member of the
managerial staff.35

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.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position

Paper, he stated that he was the foreman responsible for the operation of the
boiler.36 The term foreman implies that he was the representative of management
over the workers and the operation of the department.37 Petitioners evidence also
showed that he was the supervisor of the steam plant.38 His classification as
supervisor is further evident from the manner his salary was paid. He belonged to
the 10% of respondents 354 employees who were paid on a monthly basis; the
others were paid only on a daily basis.39

"4. To follow-up supply of waste and other materials for fuel.

On the basis of the foregoing, the Court finds no justification to award overtime
pay and premium pay for rest days to petitioner.

"5. To train new employees for effective and safety while working.

WHEREFORE, the Petition is DENIED. Costs against petitioner.

"6. Recommend parts and supplies purchases.

SO ORDERED.

"7. To recommend personnel actions such as: promotion, or disciplinary

action.

ARTEMIO V. PANGANIBAN

"8. To check water from the boiler, feedwater and softener, regenerate
softener if beyond hardness limit.
SECOND DIVISION
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time."34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that
petitioner was a member of the managerial staff. His duties and responsibilities
conform to the definition of a member of a managerial staff under the
Implementing Rules.

CLIENTLOGIC PHILPPINES, INC. (now known as

SITEL), JOSEPH VELASQUEZ, IRENE ROA, and
RODNEY SPIRES,
Petitioners,

- versus 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

G.R. No. 186070

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:

BENEDICT CASTRO,
Respondent.
April 11, 2011

The second assailed issuance of the CA denied petitioners motion for

reconsideration.

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

Respondent was employed by petitioner ClientLogic Philippines, Inc.

(now known and shall hereafter be referred to as SITEL) on February 14, 2005 as
a call center agent for its Bell South Account. After six (6) months, he was

This is a Petition for Review on Certiorari under Rule 45 of the Rules of

Court, assailing the September 1, 2008 Decision[1] and the January 7, 2009

promoted to the Mentor position, and thereafter to the Coach position. A

Coach is a team supervisor who is in charge of dealing with customer

Resolution[2] of the Court of Appeals (CA), affirming with modification the

complaints which cannot be resolved by call center agents. In June 2006, he was

November 29, 2007 resolution[3] of the National Labor Relations Commission

transferred to the Dot Green Account.

(NLRC), which held that respondent Benedict Castro was not illegally dismissed.
The CA, however, awarded respondents money claims, viz.:

During respondents stint at the Dot Green Account, respondent noticed

that some of the call center agents under him would often make excuses to leave

WHEREFORE, premises considered, the instant

Petition is PARTLY GRANTED. The Resolutions dated 29
November 2007 and 23 January 2008 of the National Labor
Relations Commission (Third Division) in NLRC CN. RABCAR-02-0091-07
LAC
NO.
08-00220707 are AFFIRMED with MODIFICATION in
that
the
monetary awards of Executive Labor Arbiter Vito C. Bose in
his Decision dated 29 June 2007, as computed in Annex A
thereof, ONLY for holiday premiums of Php 16,913.35; service
incentive leave pay Php8,456.65; overtime pay of Php
578,753.10; and rest day pay of Php 26,384.80 which
(petitioners) shall jointly and solidarily pay to petitioner, are
herebyREINSTATED. No pronouncement as to costs.
SO ORDERED.[4]

their work stations. Their most common excuse was that they would visit the
companys medical clinic. To verify that they were not using the clinic as an alibi
to cut their work hours, respondent sent an e-mail to the clinics personnel
requesting for the details of the agents alleged medical consultation. His request
was denied on the ground that medical records of employees are highly
confidential and can only be disclosed in cases involving health issues, and not to
be used to build any disciplinary case against them.
On October 11, 2006, respondent received a notice requiring him to
explain why he should not be penalized for: (1) violating Green Dot Companys
Policy and Procedure for Direct Deposit Bank Info Request when he accessed a

customers online account and then gave the latters routing and reference

holiday pay, and service incentive leave pay because he was a supervisor, hence,

numbers for direct deposit; and (2) gravely abusing his discretion when he

a member of the managerial staff.

requested for the medical records of his team members. Respondent did not deny
the infractions imputed against him. He, however, justified his actuations by

In a decision dated June 29, 2007,[7] the LA ruled in favor of respondent by

explaining that the customer begged him to access the account because she did

declaring him illegally dismissed and ordering petitioners to pay his full

not have a computer or an internet access and that he merely requested for a

backwages and, in lieu of reinstatement, his separation pay. The LA further

patient tracker, not medical records.

awarded respondents money claims upon finding that he was not occupying a
managerial position. The decretal portion of the decision reads:

In November 2006, a poster showing SITELs organizational chart was

posted on the companys bulletin board, but respondents name and picture were
conspicuously missing, and the name and photo of another employee appeared in
the position which respondent was supposedly occupying.
On January 22, 2007, SITEL posted a notice of vacancy for respondents
position, and on February 12, 2007, he received a Notice of Termination. These
events prompted him to file a complaint for illegal dismissal; non-payment of
overtime pay, rest day pay, holiday pay, service incentive leave pay; full
backwages; damages; and attorneys fees before the Labor Arbiter (LA) against
herein petitioners SITEL and its officers, Joseph Velasquez (Velasquez), Irene
Roa (Roa), and Rodney Spires (Spires).[5]
In their position paper,[6] petitioners averred that respondent was
dismissed on account of valid and justifiable causes. He committed serious
misconduct which breached the trust and confidence reposed in him by the

WHEREFORE, all premises duly considered, the

(petitioners) are hereby found guilty of illegally dismissing
(respondent). As such, (petitioners) shall be jointly and
solidarily liable to pay (respondent) his full backwages from the
date of his dismissal to the finality of this decision, computed
as of today at One Hundred Thirty Eight Thousand Seven
Hundred
Fifty
Nine
Pesos
and
80/100
(P138,759.80) plus, Seven Hundred Sixty Three Thousand
Two Hundred Forty Eight Pesos and 67/100
(P763,248.67) representing his separation pay at one month pay
for every year of service, holiday pay and service incentive
leave pay for the three years prior to the filing of this case,
overtime pay for six (6) hours daily, rest day and ten percent
(10%) as attorneys fees.
All other claims are hereby dismissed for lack of
evidence.
The computation of the foregoing monetary claims is
hereto attached and made an integral part hereof as Annex A.
SO ORDERED.[8]

company. He was duly furnished the twin notices required by the Labor Code.
Further, he is not entitled to overtime pay, rest day pay, night shift differential,

Aggrieved, petitioners appealed to the NLRC, which, in its November 29,

2007 resolution,[9] reversed and set aside the decision of the LA by dismissing the

complaint for lack of merit on the ground that respondents employment was
terminated for a just cause. The NLRC failed to discuss the money claims.

The alleged errors of the CA lengthily enumerated in the petition [13] are
essentially factual in nature and, therefore, outside the ambit of a petition for
review on certiorari under Rule 45 of the Rules of Civil Procedure. The Court

On September 1, 2008, the CA affirmed the NLRCs finding that there was

does not try facts since such statutory duty is devolved upon the labor tribunals. It

no illegal dismissal. Anent the money claims, however, the CA concurred with

is not for this Court to weigh and calibrate pieces of evidence otherwise

the LAs ruling.

[10]

adequately passed upon by the labor tribunals especially when affirmed by the
appellate court.[14]

Petitioners

and

respondent

respectively

moved

for

partial

reconsideration, but their motions were denied in the CA Resolution dated

January 7, 2009.

[11]

Petitioners claim exception to the foregoing rule and assert that the

From the said denial, only petitioners sought recourse with

factual findings of the LA and the NLRC were conflicting. This is not correct.

this Court through the petition at bar. Respondents failure to partially appeal the

The labor tribunals decisions were at odds only with respect to the issue of

CAs Decision finding him not illegally dismissed has now rendered the same

illegal dismissal. Anent the money claims issue, it cannot be said that their

final and executory; hence, the instant petition shall traverse only the issue on

rulings were contradictory because the NLRC, disappointingly, did not make any

money claims.

finding thereon and it erroneously construed that the resolution of the money
claims was intertwined with the determination of the legality of respondents

Petitioners argue in the main[12] that, as a team supervisor, respondent was

dismissal. Nonetheless, the CA has already rectified such lapse when it made a

a member of the managerial staff; hence, he is not entitled to overtime pay, rest

definitive review of the LAs factual findings on respondents money claims.

day pay, holiday pay, and service incentive leave pay.

Agreeing with the LA, the CA held:

We deny the petition.

The petition hinges on the question of whether the duties and
responsibilities performed by respondent qualify him as a member of petitioners
managerial staff. This is clearly a question of fact, the determination of which
entails an evaluation of the evidence on record.

Article 82 of the Labor Code states that the provisions

of the Labor Code on working conditions and rest periods shall
not apply to managerial employees. Generally, managerial
employees are not entitled to overtime pay for services
rendered in excess of eight hours a day.
Article 212 (m) of the Labor Code defines a
managerial employee as one who is 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, or to effectively recommend
such managerial actions.

In his Position Paper, (respondent) states that he

worked from 8:00 p.m. to 10:00 a.m. or 4 p.m. to 12:00 p.m. of
the following day; he was also required to work during his
restdays and during holidays but he was not paid; he was also
not paid overtime pay; night shift differentials, and service
incentive leave. He was employed as call center agent on 14
February 2005, then promoted as Mentor in August 2005,
and again promoted to Coach position in September 2005,
which was the position he had when he was terminated. A
coach is a team supervisor who is in charge of dealing with
customer complaints which could not be dealt with by call
center agents, and if a call center agent could not meet the
needs of a customer, he passes the customers call to the
coach. Clearly, (respondent) is not a managerial employee as
defined by law. Thus, he is entitled to his money claims.
As correctly found by Executive Labor Arbiter Bose:
Employees are considered occupying managerial
positions if they meet all of the following conditions, namely:
1) Their primary duty consists of management of the
establishment in which they are employed or of a department or
subdivision thereof;

1) The primary duty consists of the performance of

work directly related to management of policies of their
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
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 assignment and tasks xxx.
(Respondents) duties do not fall under any of the
categories enumerated above. His work is not directly related to
management policies. Even the circumstances shown by the
instant case reveal that (respondent) does not regularly exercise
discretion and independent judgment. (Petitioners) submitted a
list of the responsibilities of HR Manager/Supervisor and
Division Manager/Department Manager/Supervisors but
these do not pertain to (respondent) who does not have any of
the said positions. He was just a team Supervisor and not (an)
HR or Department Supervisor.[15]

2) They customarily and regularly direct the work of

two or more employees therein;
3) They have the authority to hire or fire other
employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are
given particular weight.
They are considered as officers or members of a
managerial staff if they perform the following duties and
responsibilities:

We find no reversible error in the above ruling. The test of supervisory

or managerial status depends on whether a person possesses authority to act in
the interest of his employer and whether such authority is not merely routinary or
clerical in nature, but requires the use of independent judgment. [16] The position
held by respondent and its concomitant duties failed to hurdle this test.
As a coach or team supervisor, respondents main duty was to deal with
customer complaints which could not be handled or solved by call center agents.

If the members of his team could not meet the needs of a customer, they passed

c. Ensure that the said Policy on Discipline is communicated to

and understood by all employees.

the customers call to respondent.

d. Monitor compliance by employees with the said Policy.
This job description does not indicate that respondent can exercise the
powers and prerogatives equivalent to managerial actions which require the

e. Advise HR Manager on the state of discipline in their

respective departments; problems, if any, and recommend
solution(s) and corrective
action(s).

customary use of independent judgment. There is no showing that he was actually

conferred or was actually exercising the following duties attributable to a
member of the managerial staff, viz.:

As correctly observed by the CA and the LA, these duties clearly

pertained to Division Managers/Department Managers/ Supervisors, which

1)
The primary duty consists of the performance of work
directly related to management of policies of their employer;

respondent was not, as he was merely a team supervisor. Petitioners themselves

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 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 assignment and tasks; and

specific number of agents, who form a team.[18]

4)
Who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2), and (3) above.[17]

described respondent as the superior of a call center agent; he heads and guides a

From the foregoing, respondent is thus entitled to his claims for

holiday pay, service incentive leave pay, overtime pay and

rest

pay,pursuant to Book Three of the Labor Code, specifically Article 82,

relation to Articles 87,

[20]

93,

[21]

and 95

[22]

day
[19]

in

thereof.

WHEREFORE, premises considered, the Petition is hereby DENIED.

The September 1, 2008 Decision and the January 7, 2009 Resolution of the Court
of Appeals are AFFIRMED.

According to petitioners, respondent also performed the following

duties, as shown in the companys Statement of Policy on Discipline:
a. Know and understand in full the Policy on Discipline
including their underlying reasons.
b. Implement strictly and consistently the Policy on Discipline.

SO ORDERED.

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO

BAUTISTA, respondent.

DECISION

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.

Before Us is a Petition for Review on Certiorari assailing the

Decision[1] and Resolution[2] of the Court of Appeals affirming the Decision[3] of
the National Labor Relations Commission (NLRC). The NLRC ruling modified
the Decision of the Labor Arbiter (finding respondent entitled to the award of
13th month pay and service incentive leave pay) by deleting the award of
13th month pay to respondent.

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.

THE FACTS

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.

CHICO-NAZARIO, J.:

Since 24 May 1995, respondent Antonio Bautista has been employed by

petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with
travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and
Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven
percent (7%) of the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along
Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear
portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp
curve without giving any warning.
Respondent averred that the accident happened because he was compelled
by the management to go back to Roxas, Isabela, although he had not slept for
almost twenty-four (24) hours, as he had just arrived in Manila from Roxas,
Isabela. Respondent further alleged that he was not allowed to work until he
fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost
of repair of the damaged buses and that despite respondents pleas for
reconsideration, the same was ignored by management. After a month,
management sent him a letter of termination.

On 29 September 2000, based on the pleadings and supporting evidence

presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a
Decision,[4] the dispositive portion of which reads:

However, still based on the above-discussed premises, the respondent must pay to
the complainant the following:
a.

his 13th month pay from the date of his hiring to the date of
his dismissal, presently computed at P78,117.87;

b. his service incentive leave pay for all the years he had been
in service with the respondent, presently computed at
P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for
lack of merit.[5]
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the
decision to the NLRC which rendered its decision on 28 September 2001, the
decretal portion of which reads:

Thus, on 02 February 2000, respondent instituted a Complaint for Illegal

Dismissal with Money Claims for nonpayment of 13th month pay and service
incentive leave pay against Autobus.

[T]he Rules and Regulations Implementing Presidential Decree No. 851,

particularly Sec. 3 provides:

Petitioner, on the other hand, maintained that respondents employment was

replete with offenses involving reckless imprudence, gross negligence, and

Section 3. Employers covered. The Decree shall apply to all employers except
to:

xxx

xxx

xxx

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.

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.

RULING OF THE COURT

Records show that complainant, in his position paper, admitted that he was paid
on a commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed
Decision by deleting the award of 13th month pay to the complainant.

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.

WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by

deleting the award of 13th month pay. The other findings are AFFIRMED.[6]
In other words, the award of service incentive leave pay was maintained.
Petitioner thus sought a reconsideration of this aspect, which was subsequently
denied in a Resolution by the NLRC dated 31 October 2001.

Book III, Rule V: SERVICE INCENTIVE LEAVE

Displeased with only the partial grant of its appeal to the NLRC, petitioner
sought the review of said decision with the Court of Appeals which was
subsequently denied by the appellate court in a Decision dated 06 May 2002, the
dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is DISMISSED for lack of

merit; and the assailed Decision of respondent Commission in NLRC NCR CA
No. 026584-2000 is hereby AFFIRMED in toto. No costs.[7]
Hence, the instant petition.

ISSUES
1. Whether or not respondent is entitled to service incentive leave;

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

(d) Field personnel and other employees whose performance is

unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who
are paid in a fixed amount for performing work irrespective of the
time consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that
the grant of service incentive leave has been delimited by the Implementing Rules
and Regulations of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the Implementing
Rules, Service Incentive Leave shall not apply to employees classified as field
personnel. The phrase other employees whose performance is unsupervised by
the employer must not be understood as a separate classification of employees to
which service incentive leave shall not be granted. Rather, it serves as an

amplification of the interpretation of the definition of field personnel under the

Labor Code as those whose actual hours of work in the field cannot be
determined with reasonable certainty.[8]
The same is true with respect to the phrase those who are engaged on task
or contract basis, purely commission basis. Said phrase should be related with
field personnel, applying the rule on ejusdem generis that general and unlimited
terms are restrained and limited by the particular terms that they follow. [9] Hence,
employees engaged on task or contract basis or paid on purely commission basis
are not automatically exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant
of service incentive leave just because he was paid on purely commission basis is
misplaced. What must be ascertained in order to resolve the issue of propriety of
the grant of service incentive leave to respondent is whether or not he is a field
personnel.
According to Article 82 of the Labor Code, field personnel shall refer to
non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. This
definition is further elaborated in theBureau of Working Conditions (BWC),
Advisory Opinion to Philippine Technical-Clerical Commercial Employees
Association[10] which states that:
As a general rule, [field personnel] are those whose performance of their
job/service is not supervised by the employer or his representative, the workplace
being away from the principal office and whose hours and days of work cannot
be determined with reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required to be at
specific places at specific times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing work away from the
principal office of the employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that
under said advisory opinion, no employee would ever be considered a field
personnel because every employer, in one way or another, exercises control over
his employees. Petitioner further argues that the only criterion that should be
considered is the nature of work of the employee in that, if the employees job

requires that he works away from the principal office like that of a messenger or a
bus driver, then he is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the
definition of a field personnel is not merely concerned with the location where
the employee regularly performs his duties but also with the fact that the
employees performance is unsupervised by the employer. As discussed above,
field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty. Thus, in order to conclude
whether an employee is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by the
employer. In so doing, an inquiry must be made as to whether or not the
employees time and performance are constantly supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies,
there are its inspectors assigned at strategic places who board the bus and inspect
the passengers, the punched tickets, and the conductors reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is regularly checked
as to its mechanical, electrical, and hydraulic aspects, whether or not there are
problems thereon as reported by the driver and/or conductor. They too, must be
at specific place as [sic] specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In
each and every depot, there is always the Dispatcher whose function is precisely
to see to it that the bus and its crew leave the premises at specific times and arrive
at the estimated proper time. These, are present in the case at bar. The driver, the
complainant herein, was therefore under constant supervision while in the
performance of this work. He cannot be considered a field personnel.[11]
We agree in the above disquisition. Therefore, as correctly concluded by
the appellate court, respondent is not a field personnel but a regular employee
who performs tasks usually necessary and desirable to the usual trade of
petitioners business. Accordingly, respondent is entitled to the grant of service
incentive leave.
The question now that must be addressed is up to what amount of service
incentive leave pay respondent is entitled to.

The response to this query inevitably leads us to the correlative issue of

whether or not the three (3)-year prescriptive period under Article 291 of the
Labor Code is applicable to respondents claim of service incentive leave pay.

resignation or separation from work to the commutation of his accrued service

incentive leave. As enunciated by the Court in Fernandez v. NLRC:[16]

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.

The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V,
Book III of the Implementing Rules and Regulations provides that [e]very
employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay. Service incentive leave is a
right which accrues to every employee who has served within 12 months,
whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said
period shall be considered as one year. It is also commutable to its money
equivalent if not used or exhausted at the end of the year. In other words, an
employee who has served for one year is entitled to it. He may use it as leave
days or he may collect its monetary value. To limit the award to three years, as
the solicitor general recommends, is to unduly restrict such right. [17] [Italics
supplied]

In the application of this section of the Labor Code, the pivotal question to
be answered is when does the cause of action for money claims accrue in order to
determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit,
(1) a right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff.[12]
To properly construe Article 291 of the Labor Code, it is essential to
ascertain the time when the third element of a cause of action transpired. Stated
differently, in the computation of the three-year prescriptive period, a
determination must be made as to the period when the act constituting a violation
of the workers right to the benefits being claimed was committed. For if the
cause of action accrued more than three (3) years before the filing of the money
claim, said cause of action has already prescribed in accordance with Article
291.[13]
Consequently, in cases of nonpayment of allowances and other monetary
benefits, if it is established that the benefits being claimed have been withheld
from the employee for a period longer than three (3) years, the amount pertaining
to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee
shall be limited to the amount of the benefits withheld within three (3) years
before the filing of the complaint.[14]
It is essential at this point, however, to recognize that the service incentive
leave is a curious animal in relation to other benefits granted by the law to every
employee. In the case of service incentive leave, the employee may choose to
either use his leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year.[15]Furthermore, if the employee entitled to
service incentive leave does not use or commute the same, he is entitled upon his

Correspondingly, it can be conscientiously deduced that the cause of action

of an entitled employee to claim his service incentive leave pay accrues from the
moment the employer refuses to remunerate its monetary equivalent if the
employee did not make use of said leave credits but instead chose to avail of its
commutation. Accordingly, if the employee wishes to accumulate his leave
credits and opts for its commutation upon his resignation or separation from
employment, his cause of action to claim the whole amount of his accumulated
service incentive leave shall arise when the employer fails to pay such amount at
the time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the three (3)-year prescriptive
period commences, not at the end of the year when the employee becomes
entitled to the commutation of his service incentive leave, but from the time when
the employer refuses to pay its monetary equivalent after demand of commutation
or upon termination of the employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service incentive
leave, is in keeping with the rudimentary principle that in the implementation and
interpretation of the provisions of the Labor Code and its implementing
regulations, the workingmans welfare should be the primordial and paramount

consideration.[18] The policy is to extend the applicability of the decree to a

greater number of employees who can avail of the benefits under the law, which
is in consonance with the avowed policy of the State to give maximum aid and
protection to labor.[19]
In the case at bar, respondent had not made use of his service incentive
leave nor demanded for its commutation until his employment was terminated by
petitioner. Neither did petitioner compensate his accumulated service incentive
leave pay at the time of his dismissal. It was only upon his filing of a complaint
for illegal dismissal, one month from the time of his dismissal, that respondent
demanded from his former employer commutation of his accumulated leave
credits. His cause of action to claim the payment of his accumulated service
incentive leave thus accrued from the time when his employer dismissed him and
failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service
incentive leave pay only commenced from the time the employer failed to
compensate his accumulated service incentive leave pay at the time of his
dismissal. Since respondent had filed his money claim after only one month from
the time of his dismissal, necessarily, his money claim was filed within the
prescriptive period provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby
DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No.
68395 is hereby AFFIRMED. No Costs.
SO ORDERED.

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

MERCIDAR FISHING CORPORATION represented by its President

DOMINGO B. NAVAL, petitioner, vs. NATIONAL LABOR
RELATIONS
COMMISSION
and
FERMIN
AGAO,
JR., respondents.

DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the decision, dated August 30,
1993, of the National Labor Relations Commission dismissing the appeal of
petitioner Mercidar Fishing Corporation from the decision of the Labor Arbiter in
NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25,
1993, of the NLRC denying reconsideration.
This case originated from a complaint filed on September 20, 1990 by
private respondent Fermin Agao, Jr. against petitioner for illegal dismissal,
violation of P.D. No. 851, and non-payment of five days service incentive leave
for 1990. Private respondent had been employed as a bodegero or ships
quartermaster on February 12, 1988. He complained that he had been
constructively dismissed by petitioner when the latter refused him assignments
aboard its boats after he had reported to work on May 28, 1990.[1]
Private respondent alleged that he had been sick and thus allowed to go on
leave without pay for one month from April 28, 1990 but that when he reported to
work at the end of such period with a health clearance, he was told to come back
another time as he could not be reinstated immediately. Thereafter, petitioner
refused to give him work. For this reason, private respondent asked for a
certificate of employment from petitioner on September 6, 1990. However, when
he came back for the certificate on September 10, petitioner refused to issue the
certificate unless he submitted his resignation. Since private respondent refused
to submit such letter unless he was given separation pay, petitioner prevented him
from entering the premises.[2]
Petitioner, on the other hand, alleged that it was private respondent who
actually abandoned his work. It claimed that the latter failed to report for work
after his leave had expired and was, in fact, absent without leave for three months
until August 28, 1998. Petitioner further claims that, nonetheless, it assigned
private respondent to another vessel, but the latter was left behind on September
1, 1990. Thereafter, private respondent asked for a certificate of employment on
September 6 on the pretext that he was applying to another fishing company. On
September 10, 1990, he refused to get the certificate and resign unless he was
given separation pay.[3]
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a
decision disposing of the case as follows:

ACCORDINGLY, respondents are ordered to reinstate complainant

with backwages, pay him his 13th month pay and incentive leave pay
for 1990.
All other claims are dismissed.

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.
....

SO ORDERED.
Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the
appeal for lack of merit. The NLRC dismissed petitioners claim that it cannot be
held liable for service incentive leave pay by fishermen in its employ as the latter
supposedly are field personnel and thus not entitled to such pay under the
Labor Code.[4]
The NLRC likewise denied petitioners motion for reconsideration of its
decision in its order dated October 25, 1993.
Hence, this petition. Petitioner contends:
I
THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND
SUSTAINING THE VIEW THAT FISHING CREW MEMBERS, LIKE
FERMIN AGAO, JR., CANNOT BE CLASSIFIED AS FIELD PERSONNEL
UNDER ARTICLE 82 OF THE LABOR CODE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT
UPHELD THE FINDINGS OF THE LABOR ARBITER THAT HEREIN
PETITIONER HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR.,
FROM EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
ART. 82. Coverage. - The provisions of this Title [Working
Conditions and Rest Periods] shall apply to employees in all
establishments and undertakings whether for profit or not, but not to

...

...

Field personnel shall refer to non-agricultural employees who

regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty.
Petitioner argues essentially that since the work of private respondent is
performed away from its principal place of business, it has no way of verifying
his actual hours of work on the vessel. It contends that private respondent and
other fishermen in its employ should be classified as field personnel who have
no statutory right to service incentive leave pay.
In the case of Union of Filipro Employees (UFE) v. Vicar,[5] this Court
explained the meaning of the phrase whose actual hours of work in the field
cannot be determined with reasonable certainty in Art. 82 of the Labor Code, as
follows:
Moreover, the requirement that actual hours of work in the field
cannot be determined with reasonable certainty must be read in
conjunction with Rule IV, Book III of the Implementing Rules which
provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all employees
except:
....

...

...

(e) Field personnel and other employees whose

time and performance is unsupervised by the employer xxx
(Italics supplied)
While contending that such rule added another element not found in
the law (Rollo, p. 13), the petitioner nevertheless attempted to show
that its affected members are not covered by the abovementioned
rule. The petitioner asserts that the companys sales personnel are

strictly supervised as shown by the SOD (Supervisor of the Day)

schedule and the company circular dated March 15, 1984 (Annexes 2
and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause whose time and performance
is unsupervised by the employer did not amplify but merely
interpreted and expounded the clause whose actual hours of work in
the field cannot be determined with reasonable certainty. The former
clause is still within the scope and purview of Article 82 which
defines field personnel. Hence, in deciding whether or not an
employees actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such
employees time and performance is constantly supervised by the
employer.[6]
Accordingly, it was held in the aforementioned case that salesmen of Nestle
Philippines, Inc. were field personnel:
It is undisputed that these sales personnel start their field work at 8:00
a.m. after having reported to the office and come back to the office at
4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or
4:30 p.m. comprises the sales personnels working hours which can be
determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of
work in the field be reasonably ascertained. The company has no way
of determining whether or not these sales personnel, even if they
report to the office before 8:00 a.m. prior to field work and come back
at 4:30 p.m., really spend the hours in between in actual field work.[7]
In contrast, in the case at bar, during the entire course of their fishing
voyage, fishermen employed by petitioner have no choice but to remain on board
its vessel. Although they perform non-agricultural work away from petitioners
business offices, the fact remains that throughout the duration of their work they
are under the effective control and supervision of petitioner through the vessels
patron or master as the NLRC correctly held.[8]
Neither did petitioner gravely abuse its discretion in ruling that private
respondent had constructively been dismissed by petitioner. Such factual finding

of both the NLRC and the Labor Arbiter is based not only on the pleadings of the
parties but also on a medical certificate of fitness which, contrary to petitioners
claim, private respondent presented when he reported to work on May 28,
1990.[9] As the NLRC held:
Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell,
would like us to believe that the Arbiter abused his discretion (or
seriously erred in his findings of facts) in giving credence to the
factual version of the complainant. But it is settled that (W)hen
confronted with conflicting versions of factual matters, the Labor
Arbiter has the discretion to determine which party deserves
credence on the basis of evidence received. [Gelmart Industries
(Phils.), Inc. vs. Leogardo, 155 SCRA 403, 409, L-70544, November
5, 1987]. And besides, it is settled in this jurisdiction that to
constitute abandonment of position, there must be concurrence of the
intention to abandon and some overt acts from which it may be
inferred that the employee concerned has no more interest in working
(Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA 328), and that the filing
of the complaint which asked for reinstatement plus backwages
(Record, p. 20) is inconsistent with respondents defense of
abandonment (Hua Bee Shirt Factory vs. NLRC, 188 SCRA 586).[10]
It is trite to say that the factual findings of quasi-judicial bodies are
generally binding as long as they are supported substantially by evidence in the
record of the case.[11] This is especially so where, as here, the agency and its
subordinate who heard the case in the first instance are in full agreement as to the
facts.[12]
As regards the labor arbiters award which was affirmed by respondent
NLRC, there is no reason to apply the rule that reinstatement may not be ordered
if, as a result of the case between the parties, their relation is strained. [13] Even at
this late stage of this dispute, petitioner continues to reiterate its offer to reinstate
private respondent.[14]
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Regalado, Acting C.J., (Chairman), Melo, Puno, and Martinez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 169295-96

November 20, 2006

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner,

vs.
ERLINDA CASTANEDA, Respondent.
DECIS ION
PUNO, J.:
Before this Court is the Petition for Review on Certiorari 1 filed by Remington
Industrial Sales Corporation to reverse and set aside the Decision2 of the Fourth
Division of the Court of Appeals in CA-G.R. SP Nos. 64577 and 68477, dated
January 31, 2005, which dismissed petitioners consolidated petitions for
certiorari, and its subsequent Resolution,3 dated August 11, 2005, which denied
petitioners motion for reconsideration.
The antecedent facts of the case, as narrated by the Court of Appeals, are as
follows:
The present controversy began when private respondent, Erlinda Castaneda
("Erlinda") instituted on March 2, 1998 a complaint for illegal dismissal,
underpayment of wages, non-payment of overtime services, non-payment of
service incentive leave pay and non-payment of 13th month pay against
Remington before the NLRC, National Capital Region, Quezon City. The
complaint impleaded Mr. Antonio Tan in his capacity as the Managing Director
of Remington.
Erlinda alleged that she started working in August 1983 as company cook with a
salary of Php 4,000.00 for Remington, a corporation engaged in the trading
business; that she worked for six (6) days a week, starting as early as 6:00 a.m.

because she had to do the marketing and would end at around 5:30 p.m., or even
later, after most of the employees, if not all, had left the company premises; that
she continuously worked with Remington until she was unceremoniously
prevented from reporting for work when Remington transferred to a new site in
Edsa, Caloocan City. She averred that she reported for work at the new site in
Caloocan City on January 15, 1998, only to be informed that Remington no
longer needed her services. Erlinda believed that her dismissal was illegal
because she was not given the notices required by law; hence, she filed her
complaint for reinstatement without loss of seniority rights, salary differentials,
service incentive leave pay, 13th month pay and 10% attorneys fees.
Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a
domestic helper, not a regular employee; Erlinda worked as a cook and this job
had nothing to do with Remingtons business of trading in construction or
hardware materials, steel plates and wire rope products. It also contended that
contrary to Erlindas allegations that the (sic) she worked for eight (8) hours a
day, Erlindas duty was merely to cook lunch and "merienda", after which her
time was hers to spend as she pleased. Remington also maintained that it did not
exercise any degree of control and/or supervision over Erlindas work as her only
concern was to ensure that the employees lunch and "merienda" were available
and served at the designated time. Remington likewise belied Erlindas assertion
that her work extended beyond 5:00 p.m. as she could only leave after all the
employees had gone. The truth, according to Remington, is that Erlinda did not
have to punch any time card in the way that other employees of Remington did;
she was free to roam around the company premises, read magazines, and to even
nap when not doing her assigned chores. Remington averred that the illegal
dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda who
refused to report for work when Remington moved to a new location in Caloocan
City.
In a Decision4 dated January 19, 1999, the labor arbiter dismissed the complaint
and ruled that the respondent was a domestic helper under the personal service of
Antonio Tan, finding that her work as a cook was not usually necessary and
desirable in the ordinary course of trade and business of the petitioner
corporation, which operated as a trading company, and that the latter did not
exercise control over her functions. On the issue of illegal dismissal, the labor

arbiter found that it was the respondent who refused to go with the family of
Antonio Tan when the corporation transferred office and that, therefore,
respondent could not have been illegally dismissed.

Under the Labor Code as amended, an employee who reaches the age of sixty
years old (60 years) has the option to retire or to separate from the service with
payment of separation pay/retirement benefit.

Upon appeal, the National Labor Relations Commission (NLRC) rendered a

Decision,5 dated November 23, 2000, reversing the labor arbiter, ruling, viz:

In this case, we notice that complainant was already 60 years old at the time she
filed the complaint praying for separation pay or retirement benefit and some
money claims.

We are not inclined to uphold the declaration below that complainant is a

domestic helper of the family of Antonio Tan. There was no allegation by
respondent that complainant had ever worked in the residence of Mr. Tan. What
is clear from the facts narrated by the parties is that complainant continuously did
her job as a cook in the office of respondent serving the needed food for lunch
and merienda of the employees. Thus, her work as cook inured not for the benefit
of the family members of Mr. Tan but solely for the individual employees of
respondent.
Complainant as an employee of respondent company is even bolstered by no less
than the certification dated May 23, 1997 issued by the corporate secretary of the
company certifying that complainant is their bonafide employee. This is a solid
evidence which the Labor Arbiter simply brushed aside. But, such error would
not be committed here as it would be at the height of injustice if we are to declare
that complainant is a domestic helper.
Complainants work schedule and being paid a monthly salary of P4,000.00 are
clear indication that she is a company employee who had been employed to cater
to the food needed by the employees which were being provided by respondent to
form part of the benefit granted them.
With regard to the issue of illegal dismissal, we believe that there is more reason
to believe that complainant was not dismissed because allegedly she was the one
who refused to work in the new office of respondent. However, complainants
refusal to join the workforce due to poor eyesight could not be considered
abandonment of work or voluntary resignation from employment.

Based on Article 287 of the Labor Code as amended, complainant is entitled to be

paid her separation pay/retirement benefit equivalent to one-half (1/2) month for
every year of service. The amount of separation pay would be based on the
prescribed minimum wage at the time of dismissal since she was then underpaid.
In as much as complainant is underpaid of her wages, it behooves that she should
be paid her salary differential for the last three years prior to
separation/retirement.
xxx

xxx

xxx

WHEREFORE, premises considered, the assailed decision is hereby, SET

ASIDE, and a new one is hereby entered ordering respondents to pay
complainant the following:
1. Salary differential - P12,021.12 2. Service Incentive Leave Pay - 2,650.00 3.
13th Month Pay differential - 1,001.76 4. Separation Pay/retirement benefit 36,075.00
Total - P51,747.88
SO ORDERED.
Petitioner moved to reconsider this decision but the NLRC denied the motion.
This denial of its motion prompted petitioner to file a Petition for Certiorari 6 with
the Court of Appeals, docketed as CA-G.R. SP No. 64577, on May 4, 2001,
imputing grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the NLRC in (1) reversing in toto the decision of the labor arbiter, and
(2) awarding in favor of respondent salary differential, service incentive leave

pay, 13th month pay differential and separation benefits in the total sum
of P51,747.88.
While the petition was pending with the Court of Appeals, the NLRC rendered
another Decision7 in the same case on August 29, 2001. How and why another
decision was rendered is explained in that decision as follows:
On May 17, 2001, complainant filed a Manifestation praying for a resolution of
her Motion for Reconsideration and, in support thereof, alleges that, sometime
December 18, 2000, she mailed her Manifestation and Motion for
Reconsideration registered as Registered Certificate No. 188844; and that the said
mail was received by the NLRC, through a certain Roland Hernandez, on
December 26, 2000. Certifications to this effect was issued by the Postmaster of
the Sta. Mesa Post Office bearing the date May 11, 2001 (Annexes A and B,
Complainants Manifestation).

issuing the second decision despite losing its jurisdiction due to the pendency of
the first petition for certiorari with the Court of Appeals, and (2) assuming it still
had jurisdiction to issue the second decision notwithstanding the pendency of the
first petition for certiorari with the Court of Appeals, that its second decision has
no basis in law since respondents motion for reconsideration, which was made
the basis of the second decision, was not filed under oath in violation of Section
14, Rule VII9 of the New Rules of Procedure of the NLRC and that it contained
no certification as to why respondents motion for reconsideration was not
decided on time as also required by Section 10, Rule VI10 and Section 15, Rule
VII11 of the aforementioned rules.
Upon petitioners motion, the Court of Appeals ordered the consolidation of the
two (2) petitions, on January 24, 2002, pursuant to Section 7, par. b(3), Rule 3 of
the Revised Rules of the Court of Appeals. It summarized the principal issues
raised in the consolidated petitions as follows:

Evidence in support of complainants having actually filed a Motion for

Reconsideration within the reglementary period having been sufficiently
established, a determination of its merits is thus, in order.

1. Whether respondent is petitioners regular employee or a domestic helper;

On the merits, the NLRC found respondents motion for reconsideration

meritorious leading to the issuance of its second decision with the following
dispositive portion:

3. Whether the second NLRC decision promulgated during the pendency of the
first petition for certiorari has basis in law.

WHEREFORE, premises considered, the decision dated November 23, 2000, is

MODIFIED by increasing the award of retirement pay due the complainant in the
total amount of SIXTY TWO THOUSAND FOUR HUNDRED THIRTYSEVEN and 50/100 (P62,437.50). All other monetary relief so adjudged therein
are maintained and likewise made payable to the complainant.
SO ORDERED.
Petitioner challenged the second decision of the NLRC, including the resolution
denying its motion for reconsideration, through a second Petition for
Certiorari8 filed with the Court of Appeals, docketed as CA-G.R. SP No. 68477
and dated January 8, 2002, this time imputing grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of the NLRC in (1)

2. Whether respondent was illegally dismissed; and

On January 31, 2005, the Court of Appeals dismissed the consolidated petitions
for lack of merit, finding no grave abuse of discretion on the part of the NLRC in
issuing the assailed decisions.
On the first issue, it upheld the ruling of the NLRC that respondent was a regular
employee of the petitioner since the former worked at the company premises and
catered not only to the personal comfort and enjoyment of Mr. Tan and his
family, but also to that of the employees of the latter. It agreed that petitioner
enjoys the prerogative to control respondents conduct in undertaking her
assigned work, particularly the nature and situs of her work in relation to the
petitioners workforce, thereby establishing the existence of an employeremployee relationship between them.

On the issue of illegal dismissal, it ruled that respondent has attained the status of
a regular employee in her service with the company. It noted that the NLRC
found that no less than the companys corporate secretary certified that
respondent is a bonafide company employee and that she had a fixed schedule
and routine of work and was paid a monthly salary of P4,000.00; that she served
with petitioner for 15 years starting in 1983, buying and cooking food served to
company employees at lunch and merienda; and that this work was usually
necessary and desirable in the regular business of the petitioner. It held that as a
regular employee, she enjoys the constitutionally guaranteed right to security of
tenure and that petitioner failed to discharge the burden of proving that her
dismissal on January 15, 1998 was for a just or authorized cause and that the
manner of dismissal complied with the requirements under the law.

Hence, the present petition for review.

Finally, on petitioners other arguments relating to the alleged irregularity of the

second NLRC decision, i.e., the fact that respondents motion for reconsideration
was not under oath and had no certification explaining why it was not resolved
within the prescribed period, it held that such violations relate to procedural and
non-jurisdictional matters that cannot assume primacy over the substantive merits
of the case and that they do not constitute grave abuse of discretion amounting to
lack or excess of jurisdiction that would nullify the second NLRC decision.

The petitioner contends that the respondents motion for reconsideration, upon
which the second NLRC decision was based, was not under oath and did not
contain a certification as to why it was not decided on time as required under the
New Rules of Procedure of the NLRC.13 Furthermore, the former also raises for
the first time the contention that respondents motion was filed beyond the ten
(10)-calendar day period required under the same Rules,14 since the latter
received a copy of the first NLRC decision on December 6, 2000, and respondent
filed her motion only on December 18, 2000. Thus, according to petitioner, the
respondents motion for reconsideration was a mere scrap of paper and the
second NLRC decision has no basis in law.

The Court of Appeals denied petitioners contention that the NLRC lost its
jurisdiction to issue the second decision when it received the order indicating the
Court of Appeals initial action on the first petition for certiorari that it filed. It
ruled that the NLRCs action of issuing a decision in installments was not
prohibited by its own rules and that the need for a second decision was justified
by the fact that respondents own motion for reconsideration remained unresolved
in the first decision. Furthermore, it held that under Section 7, Rule 65 of the
Revised Rules of Court,12 the filing of a petition for certiorari does not interrupt
the course of the principal case unless a temporary restraining order or a writ of
preliminary injunction has been issued against the public respondent from further
proceeding with the case.
From this decision, petitioner filed a motion for reconsideration on February 22,
2005, which the Court of Appeals denied through a resolution dated August 11,
2005.

The petitioner raises the following errors of law: (1) the Court of Appeals erred in
affirming the NLRCs ruling that the respondent was petitioners regular
employee and not a domestic helper; (2) the Court of Appeals erred in holding
that petitioner was guilty of illegal dismissal; and (3) the Court of Appeals erred
when it held that the issuance of the second NLRC decision is proper.
The petition must fail. We affirm that respondent was a regular employee of the
petitioner and that the latter was guilty of illegal dismissal.
Before going into the substantive merits of the present controversy, we shall first
resolve the propriety of the issuance of the second NLRC decision.

We do not agree.
It is well-settled that the application of technical rules of procedure may be
relaxed to serve the demands of substantial justice, particularly in labor
cases.15 Labor cases must be decided according to justice and equity and the
substantial merits of the controversy.16 Rules of procedure are but mere tools
designed to facilitate the attainment of justice.17 Their strict and rigid application,
which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be avoided.18
This Court has consistently held that the requirement of verification is formal,
and not jurisdictional. Such requirement is merely a condition affecting the form

of the pleading, non-compliance with which does not necessarily render it fatally
defective. Verification is simply intended to secure an assurance that the
allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good
faith.19 The court may order the correction of the pleading if verification is
lacking or act on the pleading although it is not verified, if the attending
circumstances are such that strict compliance with the rules may be dispensed
with in order that the ends of justice may thereby be served.20
Anent the argument that respondents motion for reconsideration, on which the
NLRCs second decision was based, was filed out of time, such issue was only
brought up for the first time in the instant petition where no new issues may be
raised by a party in his pleadings without offending the right to due process of the
opposing party.
Nonetheless, the petitioner asserts that the respondent received a copy of the
NLRCs first decision on December 6, 2000, and the motion for reconsideration
was filed only on December 18, 2000, or two (2) days beyond the ten (10)calendar day period requirement under the New Rules of Procedure of the NLRC
and should not be allowed.21
This contention must fail.
Under Article 22322 of the Labor Code, the decision of the NLRC shall be final
and executory after ten (10) calendar days from the receipt thereof by the parties.
While it is an established rule that the perfection of an appeal in the manner and
within the period prescribed by law is not only mandatory but jurisdictional, and
failure to perfect an appeal has the effect of rendering the judgment final and
executory, it is equally settled that the NLRC may disregard the procedural lapse
where there is an acceptable reason to excuse tardiness in the taking of the
appeal.23 Among the acceptable reasons recognized by this Court are (a) counsel's
reliance on the footnote of the notice of the decision of the Labor Arbiter that "the
aggrieved party may appeal. . . within ten (10) working days"; 24 (b) fundamental
consideration of substantial justice;25 (c) prevention of miscarriage of justice or of
unjust enrichment, as where the tardy appeal is from a decision granting

separation pay which was already granted in an earlier final decision; 26 and (d)
special circumstances of the case combined with its legal merits27 or the amount
and the issue involved.28
We hold that the particular circumstances in the case at bar, in accordance with
substantial justice, call for a liberalization of the application of this rule. Notably,
respondents last day for filing her motion for reconsideration fell on December
16, 2000, which was a Saturday. In a number of cases,29 we have ruled that if the
tenth day for perfecting an appeal fell on a Saturday, the appeal shall be made on
the next working day. The reason for this ruling is that on Saturdays, the office of
the NLRC and certain post offices are closed. With all the more reason should
this doctrine apply to respondents filing of the motion for reconsideration of her
cause, which the NLRC itself found to be impressed with merit. Indeed,
technicality should not be permitted to stand in the way of equitably and
completely resolving the rights and obligations of the parties for the ends of
justice are reached not only through the speedy disposal of cases but, more
importantly, through a meticulous and comprehensive evaluation of the merits of
a case.
Finally, as to petitioners argument that the NLRC had already lost its jurisdiction
to decide the case when it filed its petition for certiorari with the Court of
Appeals upon the denial of its motion for reconsideration, suffice it to state that
under Section 7 of Rule 6530 of the Revised Rules of Court, the petition shall not
interrupt the course of the principal case unless a temporary restraining order or a
writ of preliminary injunction has been issued against the public respondent from
further proceeding with the case. Thus, the mere pendency of a special civil
action for certiorari, in connection with a pending case in a lower court, does not
interrupt the course of the latter if there is no writ of injunction.31 Clearly, there
was no grave abuse of discretion on the part of the NLRC in issuing its second
decision which modified the first, especially since it failed to consider the
respondents motion for reconsideration when it issued its first decision.
Having resolved the procedural matters, we shall now delve into the merits of the
petition to determine whether respondent is a domestic helper or a regular
employee of the petitioner, and whether the latter is guilty of illegal dismissal.

Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and
contends that respondent is the latters domestic helper and not a regular
employee of the company since Mr. Tan has a separate and distinct personality
from the petitioner. It maintains that it did not exercise control and supervision
over her functions; and that it operates as a trading company and does not engage
in the restaurant business, and therefore respondents work as a cook, which was
not usually necessary or desirable to its usual line of business or trade, could not
make her its regular employee.
This contention fails to impress.
In Apex Mining Company, Inc. v. NLRC,32 this Court held that a househelper in
the staff houses of an industrial company was a regular employee of the said firm.
We ratiocinated that:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms
"househelper" or "domestic servant" are defined as follows:
"The term househelper as used herein is synonymous to the term domestic
servant and shall refer to any person, whether male or female, who renders
services in and about the employers home and which services are usually
necessary or desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employers family."
The foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employers home to minister exclusively to the
personal comfort and enjoyment of the employers family. Such definition covers
family drivers, domestic servants, laundry women, yayas, gardeners, houseboys
and similar househelps.
xxx

xxx

whether it is a corporation or a single proprietorship engaged in business or

industry or any other agricultural or similar pursuit, service is being rendered in
the staffhouses or within the premises of the business of the employer. In such
instance, they are employees of the company or employer in the business
concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is
assigned to certain aspects of the business of the employer that such househelper
or domestic servant may be considered as such an employee. The Court finds no
merit in making any such distinction. The mere fact that the househelper or
domestic servant is working within the premises of the business of the employer
and in relation to or in connection with its business, as in its staffhouses for its
guest or even for its officers and employees, warrants the conclusion that such
househelper or domestic servant is and should be considered as a regular
employee of the employer and not as a mere family househelper or domestic
servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as
amended.
In the case at bar, the petitioner itself admits in its position paper33 that
respondent worked at the company premises and her duty was to cook and
prepare its employees lunch and merienda. Clearly, the situs, as well as the
nature of respondents work as a cook, who caters not only to the needs of Mr.
Tan and his family but also to that of the petitioners employees, makes her fall
squarely within the definition of a regular employee under the doctrine
enunciated in the Apex Mining case. That she works within company premises,
and that she does not cater exclusively to the personal comfort of Mr. Tan and his
family, is reflective of the existence of the petitioners right of control over her
functions, which is the primary indicator of the existence of an employeremployee relationship.

xxx

The criteria is the personal comfort and enjoyment of the family of the employer
in the home of said employer. While it may be true that the nature of the work of
a househelper, domestic servant or laundrywoman in a home or in a company
staffhouse may be similar in nature, the difference in their circumstances is that in
the former instance they are actually serving the family while in the latter case,

Moreover, it is wrong to say that if the work is not directly related to the
employer's business, then the person performing such work could not be
considered an employee of the latter. The determination of the existence of an
employer-employee relationship is defined by law according to the facts of each
case, regardless of the nature of the activities involved.34 Indeed, it would be the
height of injustice if we were to hold that despite the fact that respondent was

made to cook lunch and merienda for the petitioners employees, which work
ultimately redounded to the benefit of the petitioner corporation, she was merely
a domestic worker of the family of Mr. Tan.
We note the findings of the NLRC, affirmed by the Court of Appeals, that no less
than the companys corporate secretary has certified that respondent is
a bonafide company employee;35 she had a fixed schedule and routine of work
and was paid a monthly salary of P4,000.00;36 she served with the company for
15 years starting in 1983, buying and cooking food served to company employees
at lunch and merienda, and that this service was a regular feature of employment
with the company.37
Indubitably, the Court of Appeals, as well as the NLRC, correctly held that based
on the given circumstances, the respondent is a regular employee of the
petitioner.1wphi1
Having determined that the respondent is petitioners regular employee, we now
proceed to ascertain the legality of her dismissal from employment.
Petitioner contends that there was abandonment on respondents part when she
refused to report for work when the corporation transferred to a new location in
Caloocan City, claiming that her poor eyesight would make long distance travel a
problem. Thus, it cannot be held guilty of illegal dismissal.
On the other hand, the respondent claims that when the petitioner relocated, she
was no longer called for duty and that when she tried to report for work, she was
told that her services were no longer needed. She contends that the petitioner
dismissed her without a just or authorized cause and that she was not given prior
notice, hence rendering the dismissal illegal.
We rule for the respondent.
As a regular employee, respondent enjoys the right to security of tenure under
Article 27938 of the Labor Code and may only be dismissed for a just 39 or
authorized40 cause, otherwise the dismissal becomes illegal and the employee
becomes entitled to reinstatement and full backwages computed from the time
compensation was withheld up to the time of actual reinstatement.

Abandonment is the deliberate and unjustified refusal of an employee to resume

his employment.41 It is a form of neglect of duty; hence, a just cause for
termination of employment by the employer under Article 282 of the Labor Code,
which enumerates the just causes for termination by the employer.42 For a valid
finding of abandonment, these two factors should be present: (1) the failure to
report for work or absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be
deduced that the employee has no more intention to work.43 The intent to
discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.44 This, the petitioner failed to do in the case at bar.
Alongside the petitioners contention that it was the respondent who quit her
employment and refused to return to work, greater stock may be taken of the
respondents immediate filing of her complaint with the NLRC. Indeed, an
employee who loses no time in protesting her layoff cannot by any reasoning be
said to have abandoned her work, for it is well-settled that the filing of an
employee of a complaint for illegal dismissal with a prayer for reinstatement is
proof enough of her desire to return to work, thus, negating the employers
charge of abandonment.45
In termination cases, the burden of proof rests upon the employer to show that the
dismissal is for a just and valid cause; failure to do so would necessarily mean
that the dismissal was illegal.46 The employers case succeeds or fails on the
strength of its evidence and not on the weakness of the employees defense.47 If
doubt exists between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter.48
IN VIEW WHEREOF, the petition is DENIED for lack of merit. The assailed
Decision dated January 31, 2005, and the Resolution dated August 11, 2005, of
the Court of Appeals in CA-G.R. SP Nos. 64577 and 68477 are AFFIRMED.
Costs against petitioner.
SO ORDERED.

After hearing, Labor Arbiter Jose G. Gutierrez found private respondents

guilty of illegal dismissal and accordingly ordered them to pay petitioners
claims. The dispositive portion of the Labor Arbiters decision reads:

REYNATO S. PUNO
Associate Justice
WE CONCUR:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered

declaring the complainants to have been illegally dismissed and ordering the
respondents to pay the complainants the following monetary awards:
[G.R. No. 111042. October 26, 1999]
AVELINO LAMBO

VICENTE

BELOCURA
AVELINO
LAMBO
and
VICENTE
BELOCURA, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION and J.C.
TAILOR SHOP and/or JOHNNY CO, respondents.
DECISION

I.

BACKWAGES

P64,896.00

P64,896.00

II. OVERTIME PAY

13,447.90

13,447.90

III. HOLIDAY PAY

1,399.30

1,399.30

IV. 13TH MONTH PAY

4,992.00

4,992.00

V. SEPARATION PAY

9,984.00

11,648.00

P94,719.20

P96,383.20

MENDOZA, J.:
[1]

This is a petition for certiorari to set aside the decision of the National
Labor Relations Commission (NLRC) which reversed the awards made by the
Labor Arbiter in favor of petitioners, except one for P4,992.00 to each,
representing 13th month pay.
The facts are as follows.
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors
by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985
and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. As in the case of the other 100 employees of
private respondents, petitioners were paid on a piece-work basis, according to the
style of suits they made. Regardless of the number of pieces they finished in a
day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private
respondents for illegal dismissal and sought recovery of overtime pay, holiday
pay, premium pay on holiday and rest day, service incentive leave pay, separation
pay, 13th month pay, and attorneys fees.

TOTAL
= P191,102.40
Add: 10% Attorneys
Fees
GRAND
TOTAL

19,110.24

P210,212.64

======
or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO
HUNDRED TWELVE AND 64/100 (P210,212.64).
All other claims are dismissed for lack of merit.

SO ORDERED.[2]
On appeal by private respondents, the NLRC reversed the decision of the
Labor Arbiter. It found that petitioners had not been dismissed from employment
but merely threatened with a closure of the business if they insisted on their
demand for a straight payment of their minimum wage, after petitioners, on
January 17, 1989, walked out of a meeting with private respondents and other
employees. According to the NLRC, during that meeting, the employees voted to
maintain the company policy of paying them according to the volume of work
finished at the rate ofP18.00 per dozen of tailored clothing materials. Only
petitioners allegedly insisted that they be paid the minimum wage and other
benefits. The NLRC held petitioners guilty of abandonment of work and
accordingly dismissed their claims except that for 13th month pay. The
dispositive portion of its decision reads:
WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated
and a new one entered ordering respondents to pay each of the complainants their
13th month pay in the amount of P4,992.00. All other monetary awards are
hereby deleted.
SO ORDERED.[3]
Petitioners allege that they were dismissed by private respondents as they
were about to file a petition with the Department of Labor and Employment
(DOLE) for the payment of benefits such as Social Security System (SSS)
coverage, sick leave and vacation leave. They deny that they abandoned their
work.
The petition is meritorious.
First. There is no dispute that petitioners were employees of private
respondents although they were paid not on the basis of time spent on the job but
according to the quantity and the quality of work produced by them. There are
two categories of employees paid by results: (1) those whose time and
performance are supervised by the employer. (Here, there is an element of
control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs
his work in the company premises.); and (2) those whose time and performance
are unsupervised. (Here, the employers control is over the result of the
work. Workers on pakyao and takay basis belong to this group.) Both classes of

workers are paid per unit accomplished. Piece-rate payment is generally

practiced in garment factories where work is done in the company premises,
while payment on pakyao and takay basis is commonly observed in the
agricultural industry, such as in sugar plantations where the work is performed in
bulk or in volumes difficult to quantify.[4] Petitioners belong to the first
category,i.e., supervised employees.
In determining the existence of an employer-employee relationship, the
following elements must be considered: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees conduct.[5] Of these elements, the most important
criterion is whether the employer controls or has reserved the right to control the
employee not only as to the result of the work but also as to the means and
methods by which the result is to be accomplished.[6]
In this case, private respondents exercised control over the work of
petitioners. As tailors, petitioners worked in the companys premises from 8:00
a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they
were paid on a piece-rate basis does not negate their status as regular employees
of private respondents. The term wage is broadly defined in Art. 97 of the
Labor Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission
basis. Payment by the piece is just a method of compensation and does not define
the essence of the relations.[7] Nor does the fact that petitioners are not covered by
the SSS affect the employer-employee relationship.
Indeed, the following factors show that petitioners, although piece-rate
workers, were regular employees of private respondents: (1) within the
contemplation of Art. 280 of the Labor Code, their work as tailors was necessary
or desirable in the usual business of private respondents, which is engaged in the
tailoring business; (2) petitioners worked for private respondents throughout the
year, their employment not being dependent on a specific project or season; and,
(3) petitioners worked for private respondents for more than one year.[8]
Second. Private respondents contend, however, that petitioners refused to
report for work after learning that the J.C. Tailoring and Dress Shop Employees
Union had demanded their (petitioners) dismissal for conduct unbecoming of
employees. In support of their claim, private respondents presented the
affidavits[9] of Emmanuel Y. Caballero, president of the union, and Amado
Cabaero, member, that petitioners had not been dismissed by private
respondents but that practically all employees of the company, including the
members of the union had asked management to terminate the services of

petitioners. The employees allegedly said they were against petitioners request
for change of the mode of payment of their wages, and that when a meeting was
called to discuss this issue, a petition for the dismissal of petitioners was
presented, prompting the latter to walk out of their jobs and instead file a
complaint for illegal dismissal against private respondents on January 17, 1989,
even before all employees could sign the petition and management could act upon
the same.

rights.[17] An employee who is merely constrained to accept the wages paid to

him is not precluded from recovering the difference between the amount he
actually received and that amount which he should have received.

To justify a finding of abandonment of work, there must be proof of a

deliberate and unjustified refusal on the part of an employee to resume his
employment. The burden of proof is on the employer to show an unequivocal
intent on the part of the employee to discontinue employment.[10] Mere absence is
not sufficient. It must be accompanied by manifest acts unerringly pointing to the
fact that the employee simply does not want to work anymore.[11]

As petitioners were illegally dismissed, they are entitled to reinstatement

with backwages. Considering that petitioners were dismissed from the service on
January 17, 1989, i.e., prior to March 21, 1989,[18] the Labor Arbiter correctly
applied the rule in the Mercury Drug case,[19] according to which the recovery of
backwages should be limited to three years without qualifications or
deductions. Any award in excess of three years is null and void as to the
excess.[20]

Private respondents failed to discharge this burden. Other than the selfserving declarations in the affidavits of their two employees, private respondents
did not adduce proof of overt acts of petitioners showing their intention to
abandon their work. On the contrary, the evidence shows that petitioners lost no
time in filing the case for illegal dismissal against private respondent. This fact
negates any intention on their part to sever their employment
relationship.[12] Abandonment is a matter of intention; it cannot be inferred or
presumed from equivocal acts.[13]

The Labor Arbiter correctly ordered private respondents to give separation

pay. Considerable time has lapsed since petitioners dismissal, so that
reinstatement would now be impractical and hardly in the best interest of the
parties. In lieu of reinstatement, separation pay should be awarded to petitioners
at the rate of one month salary for every year of service, with a fraction of at least
six (6) months of service being considered as one (1) year.[21]

[14]

Third. Private respondents invoke the compromise agreement, dated

March 2, 1993, between them and petitioner Avelino Lambo, whereby in
consideration of the sum of P10,000.00, petitioner absolved private respondents
from liability for money claims or any other obligations.
To be sure, not all quitclaims are per se invalid or against public policy. But
those (1) where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person or (2) where the terms of settlement are
unconscionable on their face are invalid. In these cases, the law will step in to
annul the questionable transaction.[15] However, considering that the Labor
Arbiter had given petitioner Lambo a total award of P94,719.20, the amount
of P10,000.00 to cover any and all monetary claims is clearly
unconscionable. As we have held in another case,[16]the subordinate position of
the individual employee vis-a-vis management renders him especially vulnerable
to its blandishments, importunings, and even intimidations, and results in his
improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims,
waivers or releases are looked upon with disfavor for being contrary to public
policy and are ineffective to bar claims for the full measure of the workers legal

Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay,
13th month pay, separation pay and attorneys fees, corresponding to 10% of the
total monetary awards, in favor of petitioners.

The awards for overtime pay, holiday pay and 13th month pay are in
accordance with our finding that petitioners are regular employees, although paid
on a piece-rate basis.[22] These awards are based on the following computation of
the Labor Arbiter:
AVELINO LAMBO
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.
P 64.00/day x 26 days
1,664.00/mo. x 36 mos.

=
=

P 59,904.00

13th Mo. Pay:

P 1,664.00/yr. x 3 yrs.
992.00

=
P64,896.00

4,

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 days =

49.00/day 8 hrs.

(15 mos. x 26 days + 12 days) = 402 days

6.12/hr. x 25%

*2 hours = 25%

1.53/hr. + P6.12/hr. =

402 days x 2 hrs./day = 804 hrs.

7.65/hr. x 126 hrs. =

P963.90

32.00/day 8 hrs.

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =

4.00/hr. x 25%

(13 mos. x 26 days + 2 days) = 340 days

1.00/hr. + P4.00/hr. =
5.00/hr. x 804 hrs.
May 1/87-Sept. 30/87 =

340 days x 2 hrs./day = 680 hrs.

P 4,020.00

4 mos. & 26 days =

(4 mos. x 26 days + 26 days) = 130 days
130 days x 2 hrs./day = 260 hrs.

63 days x 2 hrs./day = 126 hrs.

41.00/day 8 hrs.

P 64.00/day 8 hrs.

8.00/hr. x 25%
2.00/hr. + P8.00/hr.

=
=

10.00/hr. x 680
hrs.
=
P6,800.00

P13,447.90

=
III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

5.12/hr. x 25%

=
Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs

1.28/hr. + P5.12/hr. =
P 32.00/day x 200%
6.40/hr. x 260 hrs. =
Oct. 1/87-Dec. 13/87 =

P 1,664.00
64.00/day x 12 days

= P768.00

32.00/day x 12 days

= (384.00)

2 mos. & 11 days =

(2 mos. x 26 days + 11 days) = 63 days
32.00/day x 30%

P384.00

9.60/day x

8 days

76.80

460.80

P 64.00/day x 26 days

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

1,664.00/yr. x 3 yrs.

P 41.00/day x 200%

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.

82.00/day x 3 days

= P246.00

1,664.00/mo. x 6 yrs.

41.00/day x 3 days

= (123.00) P123.00

TOTAL AWARD OF AVELINO LAMBO

41.00/day x 30%

4,992.00

9,984.00
P94,719.20

======
12.30/day x 3 days

36.90

159.90
VICENTE BELOCURA

Oct. 1/87 - Dec. 13/87 = 1 RH

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.
P

49.00/day x 200%

98.00/day x 1 day

P98.00

49.00/day x 1 day

(49.00)

Same computation as A. Lambo

P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

49.00
Same computation as A. Lambo

13,447.90

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89
P

64.00/day x 200%

=
Same computation as A. Lambo

128.00/day x 9 days

1,399.30

= P1,152.00
IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89

64.00/day x 9 days

(576.00) P 576.00
Same computation as A. Lambo

64.00/day x 30%

4,992.00

=
V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.

19.20/day x 8
days
=

153.60

729.60

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

1,399.30

P1,664.00/mo. x 7 yrs.

TOTAL AWARD OF VICENTE BELOCURA

11,648.00
P96,383.20

=
====

from the total award of P94,719.20. Consequently, the award to each petitioner
should be as follows:

SUMMARY

AVELINO LAMBO

VICENTE

BELOCURA
AVELINO LAMBO VICENTE
BELOCURA
I. BACKWAGES

P64,896.00

II. OVERTIME PAY

13,447.90

I. BACKWAGES

P64,896.00

P64,896.00

II. OVERTIME PAY

13,447.90

13,447.90

13,447.90

III.

HOLIDAY PAY

1,399.30

1,399.30
4,992.00

III.

HOLIDAY PAY

1,399.30

1,399.30

IV.

13TH MONTH PAY

4,992.00

IV.

13TH MO. PAY

4,992.00

4,992.00

V.

SEPARATION PAY

9,984.00

SEPARATION PAY

9,984.00

11,648.00

V.

TOTAL P94,719.20

P96,383

94,719.20

Less

10,000.00

64,896.00

11,648.00

.20
TOTAL
= P191,102.40

GRAND TOTAL
ADD: 10% Attorneys Fees

P84,719.20

P96,383.20
P181,102.40

19,110.24
======

TOTAL

GRAND
P 210,212.64
vvvvvvvvvv

=======
Except for the award of attorneys fees in the amount of P19,110.24, the
above computation is affirmed. The award of attorneys fees should be
disallowed, it appearing that petitioners were represented by the Public
Attorneys Office. With regard to petitioner Avelino Lambo, the amount
of P10,000.00 paid to him under the compromise agreement should be deducted

WHEREFORE, the decision of the National Labor Relations Commission

is SET ASIDE and another one is RENDERED ordering private respondents to
pay petitioners the total amount of One Hundred Eighty-One Thousand One
Hundred Two Pesos and 40/100 (P181,102.40), as computed above.
SO ORDERED.
Buena, and De Leon, JJ., concur.
Bellosillo, (Chairman), and Quisumbing, JJ., on official leave.