Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-4148

July 16, 1952

MANILA TERMINAL COMPANY, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL
AID ASSOCIATION, respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as to the
petitioner, undertook the arrastre service in some of the piers in Manila's Port Area at the request
and under the control of the United States Army. The petitioner hired some thirty men as
watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per
day for the night shift. On February 1, 1946, the petitioner began the postwar operation of the
arrastre service at the present at the request and under the control of the Bureau of Customs, by
virtue of a contract entered into with the Philippine Government. The watchmen of the petitioner
continued in the service with a number of substitutions and additions, their salaries having been
raised during the month of February to P4 per day for the day shift and P6.25 per day for the
nightshift. On March 28, 1947, Dominador Jimenez, a member of the Manila Terminal Relief and
Mutual Aid Association, sent a letter to the Department of Labor, requesting that the matter of
overtime pay be investigated, but nothing was done by the Department. On April 29, 1947,
Victorino Magno Cruz and five other employees, also member of the Manila Transit Mutual Aid
Association, filed a 5-point demand with the Department of Labor, including overtime pay, but
the Department again filed to do anything about the matter. On May 27, 1947, the petitioner
instituted the system of strict eight-hour shifts. On June 19, 1947, the Manila Port Terminal
Police Association, not registered in accordance with the provisions of Commonwealth Act No.
213, filed a petition with the Court of Industrial Relations. On July 16, 1947, the Manila Terminal
Relief and Mutual Aid Association was organized for the first time, having been granted certificate
No. 375 by the Department of Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid
Association filed an amended petition with the Court of Industrial Relations praying, among
others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment. On May 9, 1949, by virtue of Customs Administrative
Order No. 81 and Executive Order No. 228 of the President of the Philippines, the entire police
force of the petitioner was consolidated with the Manila Harvor Police of the Customs Patrol
Service, a Government agency under the exclusive control of the Commissioner of Customs and
the Secretary of Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be
referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April 1, 1950, as
amended on April 18, 1950, while dismissing other demands of the Association for lack of
jurisdiction, ordered the petitioner to pay to its police force
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as
additional overtime compensation for the period from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m.
during the same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal holidays
during the same period;

(d) Additional compensation of 50 per cent for work performed on Sundays and legal holidays
from May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29, 1947 to
May 9, 1949.
With reference to the pay for overtime service after the watchmen had been integrated into the
Manila Harbor Police, Judge Yanson ruled that the court has no jurisdiction because it affects the
Bureau of Customs, an instrumentality of the Government having no independent personality
and which cannot be sued without the consent of the State. (Metran vs. Paredes, 45. Off. Gaz.,
2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for
reconsideration in so far its other demands were dismissed. Judge Yanson, concurred in by Judge
Jose S. Bautista, promulgated on July 13, 1950, a resolution denying both motions for
reconsideration. Presiding Judge Arsenio C. Roldan, in a separate opinion concurred in by Judge
Modesto Castillo, agreed with the decision of Judge Yanson of April 1, 1950, as to the dismissal of
other demands of the Association, but dissented therefrom as to the granting of overtime pay. In
a separate decisive opinion, Judge Juan S. Lanting concurred in the dismissal of other demands
of the Association. With respect to overtime compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for overtime on
regular days (not Sunday and legal holidays)during the period from the date of entrance to duty
to May 24, 1947, such compensation to consists of the amount corresponding to the four hours'
overtime at the regular rate and an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner should pay to
its watchmen the compensation that corresponds to the overtime (in excess of 8 hours) at the
regular rate only, that is, without any additional amount, thus modifying the decision under
review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and therefore the
decision should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions may be briefly
summed up in the following propositions: (1) The Court of Industrial Relations has no jurisdiction
to render a money judgment involving obligation in arrears. (2) The agreement under which its
police force were paid certain specific wages for twelve-hour shifts, included overtime
compensation. (3) The Association is barred from recovery by estoppel and laches. (4) the nullity
or invalidity of the employment contract precludes any recovery by the Association. (5)
Commonwealth Act No. 4444 does not authorize recovery of back overtime pay.
The contention that the Court of Industrial Relations has no jurisdiction to award a money
judgment was already overruled by this Court in G.R. No. L-4337, Detective & protective Bureau,
Inc. vs. Court of Industrial Relations and United Employees Welfare Association , 90 Phil., 665, in
this wise: "It is also argued that the respondent court has no jurisdiction to award overtime pay,
which is money judgment. We believe that under Commonwealth Act No. 103 the Court is
empowered to make the order for the purpose of settling disputes between the employer and
employee1. As a matter of fact this Court has confirmed an order of the Court of Industrial
Relations requiring the Elks Club to pay to its employees certain sum of money as overtime back
wages from June 3, 1939 to March 13, 1941. This, in spite the allegation of lack or excess of
jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80 Phil. 272)"
The important point stressed by the petitioner is that the contract between it and the Association
upon the commencement of the employment of its watchman was to the certain rates of pay,
including overtime compensation namely, P3 per day for the day shift and P6 per day for night
shift beginning September 1, 1945, and P4 per day shift and P6.25 per day for the night shift
since February, 1946. The record does not bear out these allegations. The petitioner has relied
merely on the facts that its watchmen had worked on twelve-hour shifts at specific wages per

day and that no complaint was made about the matter until, first on March 28, 1947 and,
secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of self-preservation, go from
place to place and from office to office in search for any employment, regardless of its terms and
conditions, their main concern in the first place being admission to some work. Specially for
positions requiring no special qualifications, applicants would be good as rejected if they ever try
to be inquisitive about the hours of work or the amount of salary, ever attempt to dictate their
terms. The petitioner's watchmen must have railroaded themselves into their employment, so to
speak, happy in the thought that they would then have an income on which to subsist. But, at
the same time, they found themselves required to work for twelve hours a day. True, there was
agreement to work, but can it fairly be supposed that they had the freedom to bargain in any
way, much less to insist in the observance of the Eight Hour Labor Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct. 159; 6 CCH
Labor Cases, Par. 51, 147, "A contract of employment, which provides for a weekly wage for a
specified number of hours, sufficient to cover both the statutory minimum wage and overtime
compensation, if computed on the basis of the statutory minimum wage, and which makes no
provision for a fixed hourly rate or that the weekly wage includes overtime compensation, does
not meet the requirements of the Act."
Moreover, we note that after the petition had instituted the strict eight-hour shifts, no reduction
was made in the salaries which its watchmen received under the twelve hour arrangement.
Indeed, as admitted by the petitioner, "when the members or the respondent union were placed
on strict eight-hour shifts, the lowest salary of all the members of the respondent union was
P165 a month, or P5.50 daily, for both day and night shifts." Although it may be argued that the
salary for the night shift was somewhat lessened, the fact that the rate for the day shift was
increased in a sense tends to militate against the contention that the salaries given during the
twelve-hour shifts included overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for more than
18 months, is not accurate, because the watchmen involved in this case did not enter the service
of the petitioner, at one time, on September 1, 1945. As Judge Lanting found, "only one of them
entered the service of the company on said date, very few during the rest of said month, some
during the rest of that year (1945) and in 1946, and very many in 1947, 1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective Bureau, Inc. vs.
Court of Industrial Relations and United Employees Welfare Association, supra, in which the facts
were as follows: "The record discloses that upon petition properly submitted, said court made an
investigation and found that the members of the United Employees Welfare Association
(hereafter called the Association) were in the employ of the petitioner Detective and Protective
Bureau, Inc. (herein called the Bureau) which is engaged in the business of furnishing security
guards to commercial and industrial establishments, paying to said members monthly salaries
out of what it received from the establishments benefited by guard service. The employment
called for daily tours of duty for more than eight hours, in addition to work on Sundays and
holidays. Nonetheless the members performed their labors without receiving extra
compensation." The only difference is that, while in said case the employees concerned were
paid monthly salaries, in the case now before us the wages were computed daily. In the case
cited, we held the following:

It appears that the Bureau had been granting the members of the Association, every
month, "two days off" days in which they rendered no service, although they received
salary for the whole month. Said Bureau contended below that the pay corresponding
to said 2 day vacation corresponded to the wages for extra work. The court rejected the
contention, quite properly we believe, because in the contract there was no agreement
to that effect; and such agreement, if any, would probably be contrary to the provisions
of the Eight-Hour Law (Act No. 444, sec. 6) and would be null and void ab initio.

 It is argued here, in opposition to the payment, that until the commencement of this
litigation the members of the Association never claimed for overtime pay. That may be
true. Nevertheless the law gives them the right to extra compensation. And they could
not be held to have impliedly waived such extra compensation, for the obvious reason
that could not have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to have impliedly
waived the right to overtime compensation, for the obvious reason that they could not have
expressly waived it."
The principle of estoppel and the laches cannot well be invoked against the Association. In the
first place, it would be contrary to the spirit of the Eight Hour Labor Law, under which as already
seen, the laborers cannot waive their right to extra compensation. In the second place, the law
principally obligates the employer to observe it, so much so that it punishes the employer for its
violation and leaves the employee or laborer free and blameless. In the third place, the
employee or laborer is in such a disadvantageous position as to be naturally reluctant or even
apprehensive in asserting any claim which may cause the employer to devise a way for
exercising his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby
the employee or laborer, who cannot expressly renounce their right to extra compensation under
the Eight-Hour Labor Law, may be compelled to accomplish the same thing by mere silence or
lapse of time, thereby frustrating the purpose of law by indirection.
While counsel for the petitioner has cited authorities in support of the doctrine invoked, there
are also authorities pointed out in the opinion of Judge Lanting to the contrary. Suffice it to say,
in this connection, that we are inclined to rule adversely against petitioner for the reasons
already stated.
The argument that the nullity or invalidity of the employment contract precludes recovery by the
Association of any overtime pay is also untenable. The argument, based on the supposition that
the parties are in pari delicto, was in effect turned down in Gotamo Lumber Co. vs. Court of
Industrial Relations,* 47 Off. Gaz., 3421, wherein we ruled: "The petitioner maintains that as the
overtime work had been performed without a permit from the Department of Labor, no extra
compensation should be authorized. Several decisions of this court are involved. But those
decisions were based on the reasoning that as both the laborer and employer were duty bound
to secure the permit from the Department of Labor, both were in pari delicto. However the
present law in effect imposed that duty upon the employer (C.A. No. 444). Such employer may
not therefore be heard to plead his own neglect as exemption or defense.
The employee in rendering extra service at the request of his employer has a right to
assume that the latter has complied with the requirement of the law, and therefore has
obtained the required permission from the Department of Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract between the
employer and the laborer or employee contrary to the provisions of this Act shall be null avoid ab
initio," (Commonwealth Act No. 444, sec. 6), obviously intended said provision for the benefit of
the laborers or employees. The employer cannot, therefore, invoke any violation of the act to
exempt him from liability for extra compensation. This conclusion is further supported by the fact
that the law makes only the employer criminally liable for any violation. It cannot be pretended
that, for the employer to commit any violation of the Eight-Hour Labor Law, the participation or
acquiescence of the employee or laborer is indispensable, because the latter in view of his need
and desire to live, cannot be considered as being on the same level with the employer when it
comes to the question of applying for and accepting an employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for recovery of back
overtime pay, and to support this contention it makes referrence to the Fair Labor Standards Act
of the United States which provides that "any employer who violates the provisions of section

206 and section 207 of this title shall be liable to the employee or employees affected in the
amount of their unpaid minimum wages or their unpaid overtime compensation as the case may
be," a provision not incorporated in Commonwealth Act No. 444, our Eight-Hour Labor Law.
We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444
expressly provides for the payment of extra compensation in cases where overtime services are
required, with the result that the employees or laborers are entitled to collect such extra
compensation for past overtime work. To hold otherwise would be to allow an employer to violate
the law by simply, as in this case, failing to provide for and pay overtime compensation.
The point is stressed that the payment of the claim of the Association for overtime pay covering
a period of almost two years may lead to the financial ruin of the petitioner, to the detriment of
its employees themselves. It is significant, however, that not all the petitioner's watchmen would
receive back overtime pay for the whole period specified in the appealed decision, since the
record shows that the great majority of the watchmen were admitted in 1946 and 1947, and
even 1948 and 1949. At any rate, we are constrained to sustain the claim of the Association as a
matter of simple justice, consistent with the spirit and purpose of the Eight-Hour Labor Law. The
petitioner, in the first place, was required to comply with the law and should therefore be made
liable for the consequences of its violation.
It is high time that all employers were warned that the public is interested in the strict
enforcement of the Eight-Hour Labor Law. This was designed not only to safeguard the health
and welfare of the laborer or employee, but in a way to minimize unemployment by forcing
employers, in cases where more than 8-hour operation is necessary, to utilize different shifts of
laborers or employees working only for eight hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it being
understood that the petitioner's watchmen will be entitled to extra compensation only from the
dates they respectively entered the service of the petitioner, hereafter to be duly determined by
the Court of Industrial Relations. So ordered, without costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angelo, and Labrador, JJ., concur.
Footnotes

1 Cf. The Shell Co. vs. National Labor Union, 46 Off. Gaz. Supp. 1, p. 97; 81 Phil., 135.
* 85 Phil. 291.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. L-63550-51 January 31, 1984
RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING CORPORATION,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO BOTICARIO, ISIDRO
FARIOLAN, FERNANDO SEVILLA, TOTONG ROLDAN, ROGER ESQUILLA, MARIO
MIRANDA, EDUARDO ESPINOSA, ALBERTO NOVERA, ANTONIO PATERNO, MARCIANO
PIADORA, MARIO ROMERO, CLINITO ESQUILLA, ALEJO BATOY, BOBBY QUITREZA,
ROLANDO DELA TORRE, HERNANI REVATEZ, RODOLFO SEVILLA, ROLANDO ANG,
JUANITO PONPON, HOSPINIANO CALINDEZ, JOSE MABULA, DEONG DE LEON,
MELENCIO CONEL and ALFREDO BULAONG, respondents.
Martinez, Bermudez & Associates for petitioners.
The Solicitor General for respondent NLRC.
MELENCIO-HERRERA, J.:
Petition for Certiorari, Prohibition and mandamus assailing the Decision of respondent National
Labor Relations Commission (NLRC) in Cases Nos. AB-4-11054-81 and AB-8-12354-81 entitled
Antonio Boticario, et al. vs. RJL Fishing Corporation and/or Peninsula Fishing Corporation , dated
November 26, 1982, as well as the Order, dated February 14, denying petitioners' Manifestation
and Omnibus Motion to dismiss private respondents' appeal. The dispositive portion of the
challenged resolution reads:
WHEREFORE, in view of the foregoing considerations, the Decision appealed
from is hereby set aside and another one entered, directing respondentsappellees: (1) to reinstate complainants-appellants to their former work, without
loss of seniority rights and other privileges appertaining thereto; (2) to pay
complainants-appellants full backwages computed from the date they were
dismissed up to the date they are actually reinstated; (3) to pay complainantsappellants legal holiday pay, emergency living allowance and 13th month pay in
accordance with law; and (4) to pay complainants-appellants who are entitled to
incentive leave pay, as herein above determined, according to law.
The claims for overtime pay and premium pay for holiday and rest day are
dismissed.

SO ORDERED. 1
This case was originally assigned to the Second Division but because of the pendency of a lowernumbered case, G.R. No. 63474, entitled RJL Martinez Fishing Corporation vs. National Labor
Relations Commission, et als. before the First Division, involving the same petitioners and their
workers (albeit a different group and not exactly Identical issues), this case was transferred to
the latter, Division for proper action and determination. G.R. No. 63474 was dismissed by the
First Division on August 17, 1983 for lack of merit.

Petitioner corporations are principally engaged in the deep-sea fishing business. Since 1978,
private respondents were employed by them as stevedores at Navotas Fish Port for the unloading
of tuna fish catch from petitioners' vessels and then loading them on refrigerated vans for
shipment abroad.
On March 27, 1981, private respondents Antonio Boticario, and thirty (30) others, upon the
premise that they are petitioners' regular employees, filed a complaint against petitioners for
non-payment of overtime pay, premium pay, legal holiday pay, emergency allowance under P.D.
Nos. 525, 1123, 1614, 1634, 1678, 1713, 1751, 13th month pay (P.D. 851), service incentive
leave pay and night shift differential. 2
Claiming that they were dismissed from employment on March 29, 1981 as a retaliatory measure
for their having failed the said complaint private respondents filed on the said complaint, private
respondents filed on April 21, 1981 another complaint against petitioners for Illegal Dismissal
and for Violation of Article 118 of the Labor Code, as amended. 3 Upon petitioners' motion, these
two cases were consolidated and tried jointly.
In disputing any employer-employee relationship between them, petitioners contend that private
respondents are contract laborers whose work terminated upon completion of each unloading,
and that in the absence of any boat arrivals, private respondents did not work for petitioners but
were free to work or seek employment with other fishing boat operators.
On February 25, 1982, the Labor Arbiter upheld petitioners' position ruling that the latter are
extra workers, who were hired to perform specific tasks on contractual basis; that their work is
intermittent depending on the arrival of fishing vessels; that if there are no fish to unload and
load, they work for some other fishing boat operators; that private respondent Antonio Boticario
had executed an employment contract under which he agreed to act as a labor contractor and
that the other private respondents are his men; that even assuming that private respondents are
employees of petitioners, their employer-employee relation is co-terminous with each unloading
and loading job; that in the same manner, petitioners are not under any obligation to hire
petitioners exclusively, hence, when they were not given any job on March 29, 1981, no
dismissal was effected but that they were merely not rehired. 4
On April 1, 1982, private respondents received the Decision of the Labor Arbiter dismissing their
complaints. On April 19, 1982, they filed an appeal before respondent NLRC, which took
cognizance thereof.
In its Decision of November 26, 1982, the NLRC reversed the findings of the Labor Arbiter, and
resolved, as previously stated, to uphold the existence of employer-employee relationship
between the parties.
Petitioners resorted to a "Manifestation and Omnibus Motion to Dismiss Appeal and to Vacate
and/or to Declare Null and Void the Decision of this Honorable Commission Promulgated on
November 25 (should be 26), 1982" but the same was denied, hence, the instant recourse.
As prayed for, a Temporary Restraining Order to enjoin the enforcement of the questioned
decision of respondent NLRC was issued on April 20, 1983, and on August 15, 1983, the Petition
was given due course by the Second Division.
Petitioners submit the following issues for resolution:
I. Whether or not the appeal from the decision of Labor Arbiter filed by private
respondents is within the l0-day reglementary period;
II. Whether or not respondent NLRC erred in reversing the decision of the Labor
Arbiter despite the failure to furnish petitioners with a copy of the appeal;
III. Whether or not there is an employer-employee relationship between the
parties;

 IV. Whether or not private respondents are entitled to legal holiday pay,
emergency living allowance, thirteenth month pay and incentive leave pay.
1. Petitioners, joined by the Solicitor General, contend that the appeal filed by private
respondents from the Decision of the Labor Arbiter was filed out of time considering that they
received copy of the same on April 1, 1982 but that they filed their appeal only on April 19,
1982, or 18 days later. If we were to reckon the 10-day reglementary period to appeal as
calendar days, as held in the case of Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, et al.
5 , private respondents' appeal was, indeed, out of time. However, it was clear from Vir-Jen that
the calendar day basis of computation would apply only "henceforth" or to future cases. That
ruling was not affected by this Court's Resolution of November 18, 1983 reconsidering its
Decision of July 20, 1982. When the appeal herein was filed on April 19, 1982, the governing
proviso was found in Section 7, Rule XIII of the Rules and Regulations implementing the Labor
Code along with NLRC Resolution No. 1, Series of 1977, which based the computation on
"working days". They very face of the Notice of Decision itself 6 indicated aggrieved party could
appeal within 10 "working days" from receipt of copy of the resolution appealed from. From April
1 to April 19, 1982 is exactly ten (10) working days considering the Holy Week and the two
Saturdays and Sundays that supervened in between that period. In other words, private
respondents' appeal, having been filed during the time that the prevailing period of appeal was
ten (10) working days and prior to the Vir-Jen case promulgated on July 20, 1982, it must be
held to have been timely filed.
2. Anent the failure of private respondents to furnish petitioners with a copy of their
memorandum on appeal, suffice it to state that the same is not fatal to the appeal. 7
3. The issue of the existence of an employer-employee relationship between the parties is
actually a question of fact, and the finding of the NLRC on this point is bonding upon us, the
exceptions to the general rule being absent in this case. Besides the continuity of employment is
not the determining factor, but rather whether the work of the laborer is part of the regular
business or occupation of the employer. 8 We are thus in accord with the findings of respondent
NLRC in this regard.
Although it may be that private respondents alternated their employment on different vessels
when they were not assigned to petitioners' boats, that did not affect their employee status. The
evidence also establishes that petitioners had a fleet of fishing vessels with about 65 ship
captains, and as private respondents contended, when they finished with one vessel, they were
instructed to wait for the next. As respondent NLRC had found:

We further find that the employer-employee relationship between the parties

herein is not co-terminous with each loading and unloading job. As earlier
shown, respondents are engaged in the business of fishing. For this purpose,
they have a fleet of fishing vessels. Under this situation, respondents' activity of
catching fish is a continuous process and could hardly be considered as seasonal
in nature. So that the activities performed by herein complainants, i.e.
unloading the catch of tuna fish from respondents' vessel and then loading the
same to refrigerated vans, are necessary or desirable in the business of
respondents. This circumstances makes the employment of complainants a
regular one, in the sense that it does not depend on any specific project or
seasonal activity. 9
The employment contract signed by Antonio Boticario, 10 which described him as "labor
contractor", is not really so inasmuch as wages continued to be paid by petitioners and he and
the other workers were uniformly paid. He was merely asked the petitioners to recruit other
workers. Besides, labor-contracting is prohibited under Sec. 9(b), Rule VIII, Book III Rules
and Regulations Implementing the Labor Code as amended. 11 Directly in point and controlling
is the ruling in an analogous case, Philippine Fishing Boat Officers and Engineers Union vs. CIR,

12 reading:

The Court holds, therefore, that the employer-employee relationship existed

between the parties notwithstanding evidence to the fact that petitioners
Visayas and Bergado, even during the time that they worked with respondent
company alternated their employment on different vessels when they were not
assigned on the company's vessels. For, as was stressed in the above-quoted
case of Industrial-Commercial-Agricultural Workers Organization vs. CIR, 16
SCRA 562 [1966], "that during the temporary layoff the laborers are considered
free to seek other employment is natural, since the laborers are not being paid,
yet must find means of support" and such temporary cessation of operations
"should not mean starvation for employees and their families."
4. Indeed, considering the length of time that private respondents have worked for petitioner
since 1978 there is justification to conclude that they were engaged to perform activities
usually necessary or desirable in the usual business or trade of petitioners and are, therefore,
regular employees. 13 As such, they are entitled to the benefits awarded them by respondent
NLRC.
WHEREFORE, the instant Petition for Certiorari, Prohibition and Mandamus is hereby dismissed
and the Temporary Restraining Order heretofore issued is hereby dissolved.
Costs against petitioners.
SO ORDERED.
Teehankee (Chairman), Plana, Relova and Gutierrez, Jr., JJ., concur.
Footnotes
1 p. 96, Rollo.

2 p. 32, Ibid.
3 p. 33, Ibid.
4 Labor Arbiter Decision, pp. 66-67, Ibid.
5 115 SCRA 347, July 20, 1982.
6 p. 70, Rollo.
7 JD Magpayo Customs Brokerage Corp. vs. NLRC, et al., 118 SCRA 645 (1982).
8 Art. 281, Labor Code, as amended; Philippine Fishing Boat Officers and
Engineer Union vs. Court of Industrial Relations, 112 SCRA 159 (1982).
9 NLRC Decision, p. 94, Rollo.
10 Annex "I-3", Petition.
11 "Sec. 9. Labor-only contracting.
xxx xxx xxx
(b) Labor-only contracting as defined herein is hereby prohibited and the person
acting as contractor shall be considered merely as an agent or intermediary of
the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
xxx xxx xxx
12 112 SCRA 159 (1982).

 13 Article 281, Labor Code, as amended.

FIRST DIVISION [G. R. No. 123938. May 21, 1998]

LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA MARIE
OCAMPO, MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY
GARCIA, IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO,
CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY
DERACO, JANET DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY,
ELIZA SALAZAR, GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA,
MERLY CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA,
LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T.
OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD, EVELYN MANALO, NORA PATIO,
JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO,
SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN, ELIZABETH
MERCADO, JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS,
VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA PATIO,
ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY GELISANGA,
JANETH MANARANG, AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ,
LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO
DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA
CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA
CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN, JULIE DAVID, GRACE VILLANUEVA, VIRGINIA
MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA RONOZ, IMELDA MENDOZA, EDNA
CANLAS and ANGELA CANLAS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO KEHYENG and
MRS. EVELYN KEHYENG, respondents.
DECISION
DAVIDE, JR., J.:
In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March
1995 resolution[1] of the National Labor Relations Commission (NLRC) in NLRC RAB III Case No.
01-1964-91 which affirmed the Decision[2] of Labor Arbiter Ariel C. Santos dismissing their
complaint for utter lack of merit.
The antecedents of this case as summarized by the Office of the Solicitor General in its
Manifestation and Motion in Lieu of Comment,[3] are as follows:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of
respondent Empire Food Products, which hired them on various dates (Paragraph 1, Annex A of
Petition, Annex B; Page 2, Annex F of Petition).
Petitioners filed against private respondents a complaint for payment of money claim[s] and for
violation of labor standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They also filed a
petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining

representative (Case No. R0300-9010-RU-005).

On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and
private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products,
Inc. entered into a Memorandum of Agreement which provided, among others, the following:
1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress
with the DOLE, Management of the Empire Food Products has no objection [to] the direct
certification of the LCP Labor Congress and is now recognizing the Labor Congress of the
Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and
Representative for all rank and file employees of the Empire Food Products regarding WAGES,
HOURS OF WORK, AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT;
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC parties
jointly and mutually agreed that the issues thereof, shall be discussed by the parties and
resolve[d] during the negotiation of the Collective Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment of the
Employees Wages within fifteen (15) days from the signing of this Agreement and further agreed
to register all the employees with the SSS;
4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll
deduction UNION DUES and other Assessment[s] upon submission by the LCP Labor Congress
individual Check-Off Authorization[s] signed by the Union Members indicating the amount to be
deducted and further agreed all deduction[s] made representing Union Dues and Assessment[s]
shall be remitted immediately to the LCP Labor Congress Treasurer or authorized representative
within three (3) or five (5) days upon deductions [sic], Union dues not deducted during the
period due, shall be refunded or reimbursed by the Employer/Management.
Employer/Management further agreed to deduct Union dues from non-union members the same
amount deducted from union members without need of individual Check-Off Authorizations [for]
Agency Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that
NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the
Calendar of the National Labor Relations Commission(NLRC), while the Petition for direct
certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP
Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments
[sic], Threats, Interferences [sic] of their respective rights under the law, no Vengeance or
Revenge by each partner nor any act of ULP which might disrupt the operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the
propose[d] CBA, this Memorandum of Agreement shall govern the parties in the exercise of their
respective rights involving the Management of the business and the terms and condition[s] of
employment, and whatever problems and grievances may arise by and between the parties shall
be resolved by them, thru the most cordial and good harmonious relationship by communicating
the other party in writing indicating said grievances before taking any action to another forum or
government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect,
abide and comply with all the terms and conditions hereof. Further agreed that violation by the
parties of any provision herein shall constitute an act of ULP. (Annex A of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum
of agreement and certified LCP as the sole and exclusive bargaining agent among the rank-andfile employees of Empire Food Products for purposes of collective bargaining with respect to
wages, hours of work and other terms and conditions of employment (Annex B of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private
respondents a proposal for collective bargaining (Annex C of Petition).

On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-196491 against private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to
self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages. (Annex D of Petition)
After the submission by the parties of their respective position papers and presentation of
testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges
of unfair labor practice, union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners prayer for actual, moral and exemplary damages.
Labor Arbiter Santos, however, directed the reinstatement of the individual complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a
cardinal rule in every establishment that a payroll and other papers evidencing hours of work,
payments, etc. shall always be maintained and subjected to inspection and visitation by
personnel of the Department of Labor and Employment. As such penalty, respondents should not
escape liability for this technicality, hence, it is proper that all individual complainants except
those who resigned and executed quitclaim[s] and releases prior to the filing of this complaint
should be reinstated to their former position[s] with the admonition to respondents that any
harassment, intimidation, coercion or any form of threat as a result of this immediately
executory reinstatement shall be dealt with accordingly.
SO ORDERED. (Annex G of Petition)
On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972
[sic] and remanded the case to the Labor Arbiter for further proceedings for the following
reasons:
The Labor Arbiter, through his decision, noted that xxx complainant did not present any single
witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng,
Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan xxx (p. 183, Records), that xxx complainant
before the National Labor Relations Commission must prove with definiteness and clarity the
offense charged. xxx (Record, p. 183); that xxx complainant failed to specify under what
provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute
unfair labor practice xxx (Record, p. 183); that complainants failed to present any witness who
may describe in what manner respondents have committed unfair labor practice xxx (Record, p.
185); that xxx complainant LCP failed to present anyone of the so-called 99 complainants in
order to testify who committed the threats and intimidation xxx (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant
presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8
March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT,
as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the
proceedings on record show that complainant further presented other witnesses, namely:
ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE
GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16
May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and
Testimonial Evidence was made by complainant on June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants
which are now on record. Other individual complainants should have been summoned with the
end in view of receiving their testimonies. The complainants should be afforded the time and

opportunity to fully substantiate their claims against the respondents. Judgment should be
rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon
to consider and pass upon the issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view [that] the case should be remanded to the
Labor Arbiter of origin for further proceedings.(Annex H of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
Complainants failed to present with definiteness and clarity the particular act or acts constitutive
of unfair labor practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima
facie evidence of probability that a criminal offense may have been committed so as to warrant
the filing of a criminal information before the regular court. Hence, evidence which is more than
a scintilla is required in order to declare respondents/employers guilty of unfair labor practice.
Failing in this regard is fatal to the cause of complainants. Besides, even the charge of illegal
lockout has no leg to stand on because of the testimony of respondents through their guard
Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants
refused and failed to report for work, hence guilty of abandoning their post without permission
from respondents. As a result of complainants[] failure to report for work, the cheese curls ready
for repacking were all spoiled to the prejudice of respondents. Under cross-examination,
complainants failed to rebut the authenticity of respondents witness testimony.
As regards the issue of harassments [sic], threats and interference with the rights of employees
to self-organization which is actually an ingredient of unfair labor practice, complainants failed to
specify what type of threats or intimidation was committed and who committed the same. What
are the acts or utterances constitutive of harassments [sic] being complained of? These are the
specifics which should have been proven with definiteness and clarity by complainants who
chose to rely heavily on its position paper through generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned,
both parties agreed that:
2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with
the NLRC, parties jointly and mutually agreed that the issues thereof shall be
discussed by the parties and resolve[d] during the negotiation of the CBA.
The aforequoted provision does not speak of [an] obligation on the part of respondents but on a
resolutory condition that may occur or may not happen. This cannot be made the basis of an
imposition of an obligation over which the National Labor Relations Commission has exclusive
jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the contrary.
The enumeration of complainants wages in their consolidated Affidavits of merit and position
paper which implies underpayment has no leg to stand on in the light of the fact that
complainants admission that they are piece workers or paid on a pakiao [basis] i.e. a certain
amount for every thousand pieces of cheese curls or other products repacked. The only limitation
for piece workers or pakiao workers is that they should receive compensation no less than the
minimum wage for an eight (8) hour work [sic]. And compliance therewith was satisfactorily
explained by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31,
1991 hearing. On cross-examination, complainants failed to rebut or deny Gonzalo Kehyengs
testimony that complainants have been even receiving more than the minimum wage for an
average workers [sic]. Certainly, a lazy worker earns less than the minimum wage but the same
cannot be attributable to respondents but to the lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad
faith or fraud was ever proven to have been perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit.
(Annex I of Petition).[4]

On appeal, the NLRC, in its Resolution dated 29 March 1995,[5] affirmed in toto the decision of
Labor Arbiter Santos. In so doing, the NLRC sustained the Labor Arbiters findings that: (a) there
was a dearth of evidence to prove the existence of unfair labor practice and union busting on the
part of private respondents; (b) the agreement of 23 October 1990 could not be made the basis
of an obligation within the ambit of the NLRCs jurisdiction, as the provisions thereof, particularly
Section 2, spoke of a resolutory condition which could or could not happen; (c) the claims for
underpayment of wages were without basis as complainants were admittedly pakiao workers and
paid on the basis of their output subject to the lone limitation that the payment conformed to
the minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October
1995,[6] petitioners filed the instant special civil action for certiorari raising the following issues:
I
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION
GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE
EVIDENCE FAVORABLE TO HEREIN PETITIONERS, APPLICABLE JURISPRUDENCE BUT ALSO
ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS]
TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS RIGHT TO DUE PROCESS
BUT WOULD RESULT [IN] MANIFEST INJUSTICE.
II
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT
DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION,
SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS OF WORK
AND DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR
CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD.
IV
WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR
DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY
BENEFITS, DAMAGES AND ATTORNEYS FEES.[7]
We required respondents to file their respective Comments.
In their Manifestation and Comment, private respondents asserted that the petition was filed out
of time. As petitioners admitted in their Notice to File petition for Review on Certiorari that they
received a copy of the resolution (denying their motion for reconsideration) on 13 December
1995, they had only until 29 December 1995 to file the petition. Having failed to do so, the NLRC
thus already entered judgment in private respondents favor.
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a
petition for review on their behalf, mistook which reglementary period to apply. Instead of using
the reasonable time criterion for certiorari under Rule 65, he used the 15-day period for petitions
for review on certiorari under Rule 45. They hastened to add that such was a mere technicality
which should not bar their petition from being decided on the merits in furtherance of substantial
justice, especially considering that respondents neither denied nor contradicted the facts and
issues raised in the petition.
In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG)
sided with petitioners. It pointed out that the Labor Arbiter, in finding that petitioners abandoned
their jobs, relied solely on the testimony of Security Guard Rolando Cairo that petitioners refused
to work on 21 January 1991, resulting in the spoilage of cheese curls ready for repacking.
However, the OSG argued, this refusal to report for work for a single day did not constitute
abandonment, which pertains to a clear, deliberate and unjustified refusal to resume

employment, and not mere absence. In fact, the OSG stressed, two days after allegedly
abandoning their work, petitioners filed a complaint for, inter alia, illegal lockout or illegal
dismissal. Finally, the OSG questioned the lack of explanation on the part of Labor Arbiter Santos
as to why he abandoned his original decision to reinstate petitioners.
In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment.
In its Comment, the NLRC invokes the general rule that factual findings of an administrative
agency bind a reviewing court and asserts that this case does not fall under the exceptions. The
NLRC further argues that grave abuse of discretion may not be imputed to it, as it affirmed the
factual findings and legal conclusions of the Labor Arbiter only after carefully reviewing, weighing
and evaluating the evidence in support thereof, as well as the pertinent provisions of law and
jurisprudence.
In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not
supported by substantial evidence; that abandonment was not proved; and that much credit was
given to self-serving statements of Gonzalo Kehyeng, owner of Empire Foods, as to payment of
just wages.
On 7 July 1997, we gave due course to the petition and required the parties to file their
respective memoranda. However, only petitioners and private respondents filed their
memoranda, with the NLRC merely adopting its Comment as its Memorandum.
We find for petitioners.
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing
under the circumstances. Initially, we are unable to discern any compelling reason justifying the
Labor Arbiters volte face from his 14 April 1992 decision reinstating petitioners to his
diametrically opposed 27 July 1994 decision, when in both instances, he had before him
substantially the same evidence. Neither do we find the 29 March 1995 NLRC resolution to have
sufficiently discussed the facts so as to comply with the standard of substantial evidence. For
one thing, the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiters
factual findings, staunchly declaring that it was not about to substitute [its] judgment on
matters that are within the province of the trier of facts. Yet, in the 21 July 1992 NLRC
resolution,[8] it chastised the Labor Arbiter for his errors both in judgment and procedure, for
which reason it remanded the records of the case to the Labor Arbiter for compliance with the
pronouncements therein.
What cannot escape from our attention is that the Labor Arbiter did not heed the observations
and pronouncements of the NLRC in its resolution of 21 July 1992, neither did he understand the
purpose of the remand of the records to him. In said resolution, the NLRC summarized the
grounds for the appeal to be:
1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence
committed by the Labor Arbiter in rendering the decision.
2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of
facts.
After which, the NLRC observed and found:
Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants
who submitted their Consolidated Affidavit of Merit and Position Paper which was adopted as
direct testimonies during the hearing and cross-examined by respondents counsel.
The Labor Arbiter, through his decision, noted that x x x complainant did not present any single
witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng,
Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan x x x (Records, p. 183), that x x x
complainant before the National Labor Relations Commission must prove with definiteness and
clarity the offense charged. x x x (Record, p. 183; that x x x complainant failed to specify under
what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute

unfair labor practice x x x (Record, p. 183); that complainants failed to present any witness who
may describe in what manner respondents have committed unfair labor practice x x x (Record, p.
185); that x x x complainant a [sic] LCP failed to present anyone of the so called 99
complainants in order to testify who committed the threats and intimidation x x x (Record, p.
185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant
presented witnesses, namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8
March 1991, RECORD, p. 92), who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT,
as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the
proceedings on record show that complainant further presented other witnesses, namely:
ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENI
GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16
May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and
Testimonial Evidence was made by the complainant on June 24, 1991 (Record, p. 106-109).
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants
which are now on record. Other individual complainants should have been summoned with the
end in view of receiving their testimonies. The complainants should [have been] afforded the
time and opportunity to fully substantiate their claims against the respondents. Judgment should
[have been] rendered only based on the conflicting positions of the parties. The Labor Arbiter is
called upon to consider and pass upon the issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view the case should be remanded to the Labor
Arbiter of origin for further proceedings.
Further, We take note that the decision does not contain a dispositive portion or fallo. Such being
the case, it may be well said that the decision does not resolve the issues at hand. On another
plane, there is no portion of the decision which could be carried out by way of execution.
It may be argued that the last paragraph of the decision may be categorized as the dispositive
portion thereof:
xxxxx
The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a
cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of work,
payment, etc. shall always be maintained and subjected to inspection and visitation by personnel
of the Department of Labor and Employment. As such penalty, respondents should not escape
liability for this technicality, hence, it is proper that all the individual complainants except those
who resigned and executed quitclaim[s] and release[s] prior to the filing of this complaint should
be reinstated to their former position with the admonition to respondents that any harassment,
intimidation, coercion or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.
SO ORDERED.
It is Our considered view that even assuming arguendo that the respondents failed to maintain
their payroll and other papers evidencing hours of work, payment etc., such circumstance,
standing alone, does not warrant the directive to reinstate complainants to their former
positions. It is [a] well settled rule that there must be a finding of illegal dismissal before
reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision,
after receiving evidence, considering and resolving the same, the requisite dispositive portion.[9]
Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim
to this stinging rebuke at the hands of the NLRC. Thus does it appear to us that the Labor
Arbiter, in concluding in his 27 July 1994 Decision that petitioners abandoned their work, was
moved by, at worst, spite, or at best, lackadaisically glossed over petitioners evidence. On this
score, we find the following observations of the OSG most persuasive:

In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied
on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused
to work. As a result of their failure to work, the cheese curls ready for repacking on said date
were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not amount
to abandonment of work. In fact two (2) days after the reported abandonment of work or on
January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal
lockout and/or illegal dismissal. In several cases, this Honorable Court held that one could not
possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal
dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus
Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190
SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and
Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated, supra, this Honorable Court
explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an action seeking
for his reinstatement. We can not believe that Caballo, who had worked for Atlas for two years
and ten months, would simply walk away from his job unmindful of the consequence of his act,
i.e. the forfeiture of his accrued employment benefits. In opting to finally to [sic] contest the
legality of his dismissal instead of just claiming his separation pay and other benefits, which he
actually did but which proved to be futile after all, ably supports his sincere intention to return to
work, thus negating Atlas stand that he had abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and
unjustified refusal to resume employment and not mere absence that constitutes abandonment.
The absence of petitioner employees for one day on January 21, 1991 as testified [to] by
Security Guard Orlando Cairo did not constitute abandonment.
In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the petitioner
employees and admonished the private respondents that any harassment, intimidation, coercion
or any form of threat as a result of this immediately executory reinstatement shall be dealt with
accordingly.
In his second decision, Labor Arbiter Santos did not state why he was abandoning his previous
decision directing the reinstatement of petitioner employees.
By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter
impliedly held that they did not abandon their work but were not allowed to work without just
cause.
That petitioner employees are pakyao or piece workers does not imply that they are not regular
employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and
fruit processing company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497), this
Honorable Court held that the work of merchandisers of processed food, who coordinate with
grocery stores and other outlets for the sale of the processed food is necessary in the day-to-day
operation[s] of the company. With more reason, the work of processed food repackers is
necessary in the day-to-day operation[s] of respondent Empire Food Products.[10]
It may likewise be stressed that the burden of proving the existence of just cause for dismissing
an employee, such as abandonment, rests on the employer, [11] a burden private respondents
failed to discharge.
Private respondents, moreover, in considering petitioners employment to have been terminated
by abandonment, violated their rights to security of tenure and constitutional right to due
process in not even serving them with a written notice of such termination.[12] Section 2, Rule
XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or omission constituting the grounds for his dismissal.

In cases of abandonment of work, the notice shall be served at the workers last known address.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of
the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking
into account the number of employees involved, the length of time that has lapsed since their
dismissal, and the perceptible resentment and enmity between petitioners and private
respondents which necessarily strained their relationship, reinstatement would be impractical
and hardly promotive of the best interests of the parties. In lieu of reinstatement then,
separation pay at the rate of one month for every year of service, with a fraction of at least six
(6) months of service considered as one (1) year, is in order.[13]
That being said, the amount of back wages to which each petitioner is entitled, however, cannot
be fully settled at this time. Petitioners, as piece-rate workers having been paid by the piece,[14]
there is need to determine the varying degrees of production and days worked by each worker.
Clearly, this issue is best left to the National Labor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13 th month pay and service
incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their
complaint,[15] we hold that petitioners are so entitled to these benefits. Three (3) factors lead
us to conclude that petitioners, although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners tasks, their job of repacking snack food was
necessary or desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners worked for private
respondents throughout the year, their employment not having been dependent on a specific
project or season; and third, the length of time[16] that petitioners worked for private
respondents. Thus, while petitioners mode of compensation was on a per piece basis, the status
and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such
as nighttime pay, holiday pay, service incentive leave[17] and 13th month pay,[18] inter alia,
field personnel and other employees whose time and performance is unsupervised by the
employer, including those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of the time consumed in
the performance thereof. Plainly, petitioners as piece-rate workers do not fall within this group.
As mentioned earlier, not only did petitioners labor under the control of private respondents as
their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota
as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote
hereunder, piece workers are specifically mentioned as being entitled to holiday pay.
SEC. 8. Holiday pay of certain employees.(b) Where a covered employee is paid by results or output, such as payment on piece work,
his holiday pay shall not be less than his average daily earnings for the last seven (7)
actual working days preceding the regular holiday: Provided, however, that in no case
shall the holiday pay be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13 th Month Pay Law, in view of
the modifications to P.D. No. 851[19] by Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those exempted from paying 13 th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or task basis,
and those who are paid a fixed amount for performing specific work, irrespective of
the time consumed in the performance thereof, except where the workers are paid
on piece-rate basis in which case the employer shall grant the required 13th
month pay to such workers. (italics supplied)

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall
under the piece-rate category as those who are paid a standard amount for every piece or unit of
work produced that is more or less regularly replicated, without regard to the time spent in
producing the same.[20]
As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of
the Implementing Rules, workers who are paid by results including those who are paid on piecework, takay, pakiao, or task basis, if their output rates are in accordance with the standards
prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been
fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to
receive overtime pay. Here, private respondents did not allege adherence to the standards set
forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are
beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more,
the National Labor Relations Commission would be in a better position to determine the exact
amounts owed petitioners, if any.
As to the claim that private respondents violated petitioners right to self-organization, the
evidence on record does not support this claim. Petitioners relied almost entirely on documentary
evidence which, per se, did not prove any wrongdoing on private respondents part. For example,
petitioners presented their complaint[21] to prove the violation of labor laws committed by
private respondents. The complaint, however, is merely the pleading alleging the plaintiffs cause
or causes of action.[22] Its contents are merely allegations, the verity of which shall have to be
proved during the trial. They likewise offered their Consolidated Affidavit of Merit and Position
Paper[23] which, like the offer of their Complaint, was a tautological exercise, and did not help
nor prove their cause. In like manner, the petition for certification election[24] and the
subsequent order of certification[25] merely proved that petitioners sought and acquired the
status of bargaining agent for all rank-and-file employees. Finally, the existence of the
memorandum of agreement[26] offered to substantiate private respondents non-compliance
therewith, did not prove either compliance or non-compliance, absent evidence of concrete,
overt acts in contravention of the provisions of the memorandum.
IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution of the National
Labor Relations Commission of 29 March 1995 and the Decision of the Labor Arbiter of 27 July
1994 in NLRC Case No. RAB-III-01-1964-91 are hereby SET ASIDE, and another is hereby
rendered:
1. DECLARING petitioners to have been illegally dismissed by private respondents, thus entitled
to full back wages and other privileges, and separation pay in lieu of reinstatement at the rate of
one months salary for every year of service with a fraction of six months of service considered as
one year;
2. REMANDING the records of this case to the National Labor Relations Commission for its
determination of the back wages and other benefits and separation pay, taking into account the
foregoing observations; and
3. DIRECTING the National Labor Relations Commission to resolve the referred issues within
sixty (60) days from its receipt of a copy of this decision and of the records of the case and to
submit to this Court a report of its compliance hereof within ten (10) days from the rendition of
its resolution.
Costs against private respondents.
SO ORDERED.
Bellosillo, Vitug, Panganiban, and Quisumbing, JJ., concur.

SECOND DIVISION
[G.R. No. 132805. February 2, 1999]
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR. HERMINIO A. FABROS,
respondents.
DECISION
PUNO, J.:
Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations Commission
dismissing its appeal from the decision of Labor Arbiter Romulus S. Protacio which declared the
suspension of private respondent Dr. Herminio A. Fabros illegal and ordered petitioner to pay
private respondent the amount equivalent to all the benefits he should have received during his
period of suspension plus P500,000.00 moral damages.
The facts are as follow:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at
the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00
midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have
his dinner at his residence, which was about five-minute drive away. A few minutes later, the
clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel
Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private
respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in
the evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent
reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient.
Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the
Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required
private respondent to explain why no disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and
brought the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged private

respondent with abandonment of post while on duty. He was given ten days to submit a written
answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He
further denied that he abandoned his post on February 17, 1994. He said that he only left the
clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon
being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner company
decided to suspend private respondent for three months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision[1] declaring the
suspension of private respondent illegal. It also ordered petitioner to pay private respondent the
amount equivalent to all the benefits he should have received during his period of suspension
plus P500,000.00 moral damages. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the suspension
of complainant as illegal, and ordering the respondents the restitution to the complainant of all
employment benefits equivalent to his period of suspension, and the payment to the complainant
of P500,000.00 by way of moral damages.[2]
Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that the
decision of the Labor Arbiter is supported by the facts on record and the law on the matter.[3]
The NLRC likewise denied petitioners motion for reconsideration.[4]
Hence, this petition raising the following arguments:
1. The public respondents acted without or in excess of their jurisdiction and with grave abuse of
discretion in nullifying the 3-month suspension of private respondent despite the fact that the
private respondent has committed an offense that warranted the imposition of disciplinary
action.
2. The public respondents acted without or in excess of their jurisdiction and with grave abuse of
discretion in holding the petitioner liable for moral damages:
(a) Despite the fact that no formal hearing whatsoever was conducted for
complainant to substantiate his claim;
(b) Despite the absence of proof that the petitioner acted in bad faith in imposing
the 3-month suspension; and
(c) Despite the fact that the Labor Arbiter's award of moral damages is highly
irregular, considering that it was more than what the private respondent prayed
for.[5]
We find that public respondents did not err in nullifying the three-month suspension of private
respondent. They, however, erred in awarding moral damages to private respondent.
First, as regards the legality of private respondents suspension. The facts do not support
petitioners allegation that private respondent abandoned his post on the evening of February 17,
1994. Private respondent left the clinic that night only to have his dinner at his house, which was
only a few minutes drive away from the clinic. His whereabouts were known to the nurse on duty
so that he could be easily reached in case of emergency. Upon being informed of Mr. Acostas
condition, private respondent immediately left his home and returned to the clinic. These facts
belie petitioners claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the
company premises for not less than eight (8) hours. Hence, he may not leave the company
premises during such time, even to take his meals.
We are not impressed.

Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work of any employee shall not exceed
eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000)
or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular
office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals,
except where the exigencies of the service require that such personnel work for six (6) days or
forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at
least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this
Article, health personnel shall include: resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes timeoff for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular meals, except in the following cases when a meal
period of not less than twenty (20) minutes may be given by the employer provided that such
shorter meal period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical
exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on
machineries, equipment or installations to avoid serious loss which the employer would
otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private
respondents act, therefore, of going home to take his dinner does not constitute abandonment.
We now go to the award of moral damages to private respondent.
Not every employee who is illegally dismissed or suspended is entitled to damages. As a rule,
moral damages are recoverable only where the dismissal or suspension of the employee was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy.[6] Bad faith does not simply mean
negligence or bad judgment. It involves a state of mind dominated by ill will or motive. It implies
a conscious and intentional design to do a wrongful act for a dishonest purpose or some moral
obliquity.[7] The person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes good faith.[8]
In the case at bar, there is no showing that the management of petitioner company was moved
by some evil motive in suspending private respondent. It suspended private respondent on an
honest, albeit erroneous, belief that private respondents act of leaving the company premises to
take his meal at home constituted abandonment of post which warrants the penalty of
suspension. Also, it is evident from the facts that petitioner gave private respondent all the
opportunity to refute the charge against him and to defend himself. These negate the existence

of bad faith on the part of petitioner. Under the circumstances, we hold that private respondent
is not entitled to moral damages.
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the assailed decision
awarding moral damages to private respondent is DELETED. All other aspects of the decision are
AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 78210 February 28, 1989
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL
TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO
RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL,
JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS,
HEREIN REPRESENTED BY KORONADO B. APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON,
HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and
STANDARD (PHILIPPINES) FRUIT CORPORATION, respondents.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private respondent.
PARAS, J.:
This is a petition for review on certiorari of the decision of the National Labor Relations
Commission dated December 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica et
al. vs. Standard (Phil.) Fruits Corporation (STANFILCO) which affirmed the decision of Labor
Arbiter Pedro C. Ramos, NLRC, Special Task Force, Regional Arbitration Branch No. XI, Davao City
dismissing the claim of petitioners.
This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco
for assembly time, moral damages and attorney's fees, with the aforementioned Regional
Arbitration Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex "C", pp. 30-40;
Annex "D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9,
1985 (Annex 'E', Rollo, pp. 51-58) in favor of private respondent STANFILCO, holding that:

Given these facts and circumstances, we cannot but agree with respondent that
the pronouncement in that earlier case, i.e. the thirty-minute assembly time
long practiced cannot be considered waiting time or work time and, therefore,
not compensable, has become the law of the case which can no longer be

disturbed without doing violence to the time- honored principle of res-judicata.

WHEREFORE, in view of the foregoing considerations, the instant complaint
should therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of complainant and the
opposition of respondents, the First Division of public respondent NLRC composed of Acting
Presiding Commissioner Franklin Drilon, Commissioner Conrado Maglaya, Commissioner Rosario
D. Encarnacion as Members, promulgated its Resolution, upholding the Labor Arbiters' decision.
The Resolution's dispositive portion reads:
'Surely, the customary functions referred to in the above- quoted provision of
the agreement includes the long-standing practice and institutionalized noncompensable assembly time. This, in effect, estopped complainants from
pursuing this case.
The Commission cannot ignore these hard facts, and we are constrained to
uphold the dismissal and closure of the case.
WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by private
respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for lack of merit
petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).
Hence this petition for review on certiorari filed on May 7, 1987.
The Court in the resolution of May 4, 1988 gave due course to this petition.
Petitioners assign the following issues:
1) Whether or not the 30-minute activity of the petitioners before the scheduled
working time is compensable under the Labor Code.

2) Whether or not res judicata applies when the facts obtaining in the prior case
and in the case at bar are significantly different from each other in that there is
merit in the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople in view of
the compromise agreement novating it and the withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the enforcement of
labor standards (Rollo, p. 10).
Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the
assembly area is compensable as working time (from 5:30 to 6:00 o'clock in the morning) since
these preliminary activities are necessarily and primarily for private respondent's benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter, they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and
equipment.

 (d) Lastly, they travel to the field bringing with them their tools, equipment and
materials.
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not new, the very
same claim having been brought against herein respondent by the same group of rank and file
employees in the case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No.
26-LS-XI-76 which was filed way back April 27, 1976 when ALU was the bargaining agent of
respondent's rank and file workers. The said case involved a claim for "waiting time", as the
complainants purportedly were required to assemble at a designated area at least 30 minutes
prior to the start of their scheduled working hours "to ascertain the work force available for the
day by means of a roll call, for the purpose of assignment or reassignment of employees to such
areas in the plantation where they are most needed." (Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case
(Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76
where significant findings of facts and conclusions had already been made on the matter.
The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and institutionalized by
mutual consent of the parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as waiting time within the purview
of Section 5, Rule I, Book III of the Rules and Regulations Implementing the
Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary
practice of the employees, and the proceedings attendant thereto are not
infected with complexities as to deprive the workers the time to attend to other
personal pursuits. They are not new employees as to require the company to
deliver long briefings regarding their respective work assignments. Their houses
are situated right on the area where the farm are located, such that after the
roll call, which does not necessarily require the personal presence, they can go
back to their houses to attend to some chores. In short, they are not subject to
the absolute control of the company during this period, otherwise, their failure
to report in the assembly time would justify the company to impose disciplinary
measures. The CBA does not contain any provision to this effect; the record is
also bare of any proof on this point. This, therefore, demonstrates the
indubitable fact that the thirty (30)-minute assembly time was not primarily
intended for the interests of the employer, but ultimately for the employees to
indicate their availability or non-availability for work during every working day.
(Annex "E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public respondent National
Labor Relations Commission committed a grave abuse of discretion in its resolution of December
17, 1986.
The facts on which this decision was predicated continue to be the facts of the case in this
questioned resolution of the National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very same claim which they filed
through the ALU and which records show had already long been considered terminated and
closed by this Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that
petitioners' claim is already barred by res-judicata.
Be that as it may, petitioners' claim that there was a change in the factual scenario which are
"substantial changes in the facts" makes respondent firm now liable for the same claim they
earlier filed against respondent which was dismissed. It is thus axiomatic that the noncompensability of the claim having been earlier established, constitute the controlling legal rule

or decision between the parties and remains to be the law of the case making this petition
without merit.
As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar
principle of res judicata. There will be no end to this controversy if the light of the Minister of
Labor's decision dated May 12, 1979 that had long acquired the character of finality and which
already resolved that petitioners' thirty (30)-minute assembly time is not compensable, the
same issue can be re-litigated again." (Rollo, p. 183)
This Court has held:

In this connection account should be taken of the cognate principle that res
judicata operates to bar not only the relitigation in a subsequent action of the
issues squarely raised, passed upon and adjudicated in the first suit, but also
the ventilation in said subsequent suit of any other issue which could have been
raised in the first but was not. The law provides that 'the judgment or order is,
with respect to the matter directly adjudged or as to any other matter that could
have been raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the action ..
litigating for the same thing and in the same capacity.' So, even if new causes of
action are asserted in the second action (e.g. fraud, deceit, undue machinations
in connection with their execution of the convenio de transaccion), this would
not preclude the operation of the doctrine of res judicata. Those issues are also
barred, even if not passed upon in the first. They could have been, but were
not, there raised. (Vda. de Buncio v. Estate of the late Anita de Leon, 156 SCRA
352 [1987]).
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise
because their jurisdiction is confined to specific matters are accorded not only respect but at
times even finality if such findings are supported by substantial evidence (Special Events &
Central Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan
v. NLRC, 127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75
SCRA 162 [1977]; Mamerto v. Inciong, 118 SCRA 265 (1982]; National Federation of Labor
Union (NAFLU) v. Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo,
Jr., 152 SCRA 453 [1987]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition)
pointed out in detail the basis of his findings and conclusions, and no cogent reason can be found
to disturb these findings nor of those of the National Labor Relations Commission which affirmed
the same.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the
National Labor Relations Commission is AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla and Regalado, JJ., concur.

Separate Opinions
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a

controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained
of was a mere "assembly time" and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
The thirty (30)-minute assembly time long practiced and institutionalized by
mutual consent of the parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as 'waiting time' within the purview
of Section 5, Rule 1, Book III of the Rules and Regulations Implementing the
Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary
practice of the employees, and the proceedings attendant thereto are not
infected with complexities as to deprive the workers the time to attend to other
personal pursuits. They are not new employees as to require the company to
deliver long briefings regarding their respective work assignments. Their houses
are situated right on the area where the farms are located, such that after the
roll call, which does not necessarily require the personal presence, they can go
back to their houses to attend to some chores.
In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does not contain any
provision to this effect; the record is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact that the thirty (30)-minute
assembly time was not primarily intended for the interests of the employer, but
ultimately for the employees to indicate their availability or non-availability for
work during every working day. (Decision, 6.)
Precisely, it is the petitioners' contention that the assembly time in question had since
undergone dramatic changes, thus:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter,they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and
equipment.

(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials. (Supra, 4-5.)
The petitioners have vehemently maintained that in view thereof, the instant case should be
distinguished from the first case. And I do not believe that the respondents have successfully
rebutted these allegations. The Solicitor General relies solely on the decision of then Minister
Ople, the decision the petitioners precisely reject in view of the changes in the conditions of the
parties. The private respondent on the other hand insists that these practices were the same
practices taken into account in ALU v. STANFILCO. If this were so, the Ople decision was silent
thereon.
It is evident that the Ople decision was predicated on the absence of any insinuation of
obligatoriness in the course or after the assembly activities on the part of the employees.(" . .
[T]hey are not subject to the absolute control of the company during this period, otherwise, their
failure to report in the assembly time would justify the company to impose disciplinary
measures;" supra, 6.) As indicated, however, by the petitioners, things had since changed, and
remarkably so, and the latter had since been placed under a number of restrictions. My
considered opinion is that the thirty-minute assembly time had become, in truth and fact, a

"waiting time" as contemplated by the Labor Code.

I vote, then, to grant the petition.

Separate Opinions
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a
controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained
of was a mere "assembly time" and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
The thirty (30)-minute assembly time long practiced and institutionalized by
mutual consent of the parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as 'waiting time' within the purview
of Section 5, Rule 1, Book III of the Rules and Regulations Implementing the
Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary
practice of the employees, and the proceedings attendant thereto are not
infected with complexities as to deprive the workers the time to attend to other
personal pursuits. They are not new employees as to require the company to
deliver long briefings regarding their respective work assignments. Their houses
are situated right on the area where the farms are located, such that after the
roll call, which does not necessarily require the personal presence, they can go
back to their houses to attend to some chores.
In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does not contain any
provision to this effect; the record is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact that the thirty (30)-minute
assembly time was not primarily intended for the interests of the employer, but
ultimately for the employees to indicate their availability or non-availability for
work during every working day. (Decision, 6.)
Precisely, it is the petitioners' contention that the assembly time in question had since
undergone dramatic changes, thus:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter,they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and
equipment.

(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials. (Supra, 4-5.)
The petitioners have vehemently maintained that in view thereof, the instant case should be
distinguished from the first case. And I do not believe that the respondents have successfully

rebutted these allegations. The Solicitor General relies solely on the decision of then Minister
Ople, the decision the petitioners precisely reject in view of the changes in the conditions of the
parties. The private respondent on the other hand insists that these practices were the same
practices taken into account in ALU v. STANFILCO. If this were so, the Ople decision was silent
thereon.
It is evident that the Ople decision was predicated on the absence of any insinuation of
obligatoriness in the course or after the assembly activities on the part of the employees.(" . .
[T]hey are not subject to the absolute control of the company during this period, otherwise, their
failure to report in the assembly time would justify the company to impose disciplinary
measures;" supra, 6.) As indicated, however, by the petitioners, things had since changed, and
remarkably so, and the latter had since been placed under a number of restrictions. My
considered opinion is that the thirty-minute assembly time had become, in truth and fact, a
"waiting time" as contemplated by the Labor Code.
I vote, then, to grant the petition.

FIRST DIVISION
[G.R. No. L-63122. February 20, 1984.]
UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner, v. UNIVERSITY OF
PANGASINAN And NATIONAL LABOR RELATIONS COMMISSION, Respondents.
Tanopo, Serafico, Juanitez & Callanta Law Office and Hermogenes S. Decano for
Petitioner.
The Solicitor General for Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAWS; PRESIDENTIAL DECREES ON EMERGENCY

COST OF LIVING ALLOWANCE; REQUISITES FOR ENTITLEMENT TO ALLOWANCES PROVIDED
THEREUNDER. The various Presidential Decrees on ECOLAs to wit: PDs 1614, 1634, 1678 and
1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be paid in full
the required monthly allowance regardless of the number of their regular working days if they
incur no absences during the month. If they incur absences without pay, the amounts
corresponding to the absences may be deducted from the monthly allowance . . ." ; and on
"Leave of Absence Without Pay", that "All covered employees shall be entitled to the allowance
provided herein when they are on leave of absence with pay."cralaw virtua1aw library
2. ID.; ID.; ID.; "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE CASE AT BAR. It is beyond
dispute that the petitioners members are full-time employees receiving their monthly salaries
irrespective of the number of working days or teaching hours in a month. However, they find

themselves in a most peculiar situation whereby they are forced to go on leave during semestral
breaks. These semestral breaks are in the nature of work interruptions beyond the employees
control. The duration of the semestral break varies from year to year dependent on a variety of
circumstances affecting at times only the private respondent but at other times all educational
institutions in the country. As such, these breaks cannot be considered as absences within the
meaning of the law for which deductions may be made from monthly allowances. The "No work,
no pay" principle does not apply in the instant case. The petitioners members received their
regular salaries during this period. It is clear from the aforequoted provision of law that it
contemplates a "no work" situation where the employees voluntarily absent themselves.
Petitioners, in the case at bar, certainly do not, ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained to take mandatory leave from work. For this they
cannot be faulted nor can they be begrudged that which is due them under the law.
3. ID.; ID.; ID.; EMPLOYEES WHETHER PAID ON MONTHLY OR DAILY BASIS ENTITLED TO DAILY
LIVING ALLOWANCE WHEN PAID THEIR BASIC WAGE. Respondents contention that the
"factor receiving a salary alone should not be the basis of receiving ECOLA", is likewise, without
merit. Particular attention is brought to the Implementing Rules and Regulations of Wage Order
No. 1 to wit: "Sec. 5. Allowance for Unworked Days. a) All covered employees whether paid on
a monthly or daily basis shall be entitled to their daily living allowance when they are paid their
basic.." . .
4. ID.; ID.; ID.; PURPOSE OF THE LAW. The legal principles of "No work, no pay; No pay, no
ECOLA" must necessarily give way to the purpose of the law to augment the income of
employees to enable them to cope with the harsh living conditions brought about by inflation;
and to protect employees and their wages against the ravages brought by these conditions.
Significantly, it is the commitment of the State to protect labor and to provide means by which
the difficulties faced by the working force may best be alleviated.
5. ID.; ID.; ID.; PRESIDENTIAL DECREE 451; CONSTRUED. Respondent overlooks the
elemental principle of statutory construction that the general statements in the whereas clauses
cannot prevail over the specific or particular statements in the law itself which define or limit the
purposes of the legislation or proscribe certain acts. True, the whereas clauses of PD 451 provide
for salary and or wage increase and other benefits, however, the same do not delineate the
source of such funds and it is only in Section 3 which provides for the limitations wherein the
intention of the framers of the law is clearly outlined. The law is clear. The sixty (60%) percent
incremental proceeds from the tuition increase are to be devoted entirely to wage or salary
increases which means increases in basic salary. The law cannot be construed to include
allowances which are benefits over and above the basic salaries of the employees.
6. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF NATIONAL LABOR RELATIONS COMMISSION
ARE BINDING WHEN FULLY SUBSTANTIATED BY EVIDENCE. As evidenced by the payrolls
submitted by them during the period September 16 to September 30, 1981, the faculty
members have been paid for the extra loads. We agree with the respondents that this issue
involves a question of fact properly within the competence of the respondent NLRC to pass upon.
The findings of fact of the respondent Commission are binding on this Court there being no
indication of their being unsubstantiated by evidence.

DECISION

GUTIERREZ, JR., J.:

This is a petition for review on certiorari pursuant to Rule 65 of the Rules of Court to annul and
to set aside the decision of respondent National Labor Relations Commission (NLRC) dated
October 25, 1982, dismissing the appeal of petitioner in NLRC Case No. RBI-47-82, entitled
"University of Pangasinan Faculty Union, complainant, versus University of Pangasinan,
Respondent." chanrobles law library : red
Petitioner is a labor union composed of faculty members of the respondent University of
Pangasinan, an educational institution duly organized and existing by virtue of the laws of the
Philippines.
On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a
complaint against the private respondent with the Arbitration Branch of the NLRC, Dagupan
District Office, Dagupan City. The complaint seeks: (a) the payment of Emergency Cost of Living
Allowances (ECOLA) for November 7 to December 5, 1981, a semestral break; (b) salary
increases from the sixty (60%) percent of the incremental proceeds of increased tuition fees;
and (c) payment of salaries for suspended extra loads.
The petitioners members are full-time professors, instructors, and teachers of respondent
University. The teachers in the college level teach for a normal duration of ten (10) months a
school year, divided into two (2) semesters of five (5) months each, excluding the two (2)
months summer vacation. These teachers are paid their salaries on a regular monthly basis.
In November and December, 1981, the petitioners members were fully paid their regular
monthly salaries. However, from November 7 to December 5, during the semestral break, they
were not paid their ECOLA. The private respondent claims that the teachers are not entitled
thereto because the semestral break is not an integral part of the school year and there being no
actual services rendered by the teachers during said period, the principle of "No work, no pay"
applies.
During the same school year (1981-1982), the private respondent was authorized by the
Ministry of Education and Culture to collect, as it did collect, from its students a fifteen (15%)
percent increase of tuition fees. Petitioners members demanded a salary increase effective the
first semester of said schoolyear to be taken from the sixty (60%) percent incremental proceeds
of the increased tuition fees. Private respondent refused, compelling the petitioner to include
said demand in the complaint filed in the case at bar. While the complaint was pending in the
arbitration branch, the private respondent granted an across-the-board salary increase of 5.86%.
Nonetheless, the petitioner is still pursuing full distribution of the 60% of the incremental
proceeds as mandated by the Presidential Decree No. 451.
Aside from their regular loads, some of petitioners members were given extra loads to handle
during the same 1981-1982 schoolyear. Some of them had extra loads to teach on September
21, 1981, but they were unable to teach as classes in all levels throughout the country were
suspended, although said days was proclaimed by the President of the Philippines as a working
holiday. Those with extra loads to teach on said day claimed they were not paid their salaries for
those loads, but the private respondent claims otherwise.
The issue to be resolved in the case at bar are the following:chanrob1es virtual 1aw library
I
"WHETHER OR NOT PETITIONERS MEMBERS ARE ENTITLED TO ECOLA DURING THE SEMESTRAL
BREAK FROM NOVEMBER 7 TO DECEMBER 5, 1981 OF THE 1981-82 SCHOOL YEAR.
II

"WHETHER OR NOT 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION FEES SHALL
BE DEVOTED EXCLUSIVELY TO SALARY INCREASE,
III
"WHETHER OR NOT ALLEGED PAYMENT OF SALARIES FOR EXTRA LOADS ON SEPTEMBER 21,
1981 WAS PROVEN BY SUBSTANTIAL EVIDENCE."cralaw virtua1aw library
Anent the first issue, the various Presidential Decrees on ECOLAs to wit: PDs 1614, 1634, 1678
and 1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be paid in
full the required monthly allowance regardless of the number of their regular working days if
they incur no absences during the month. If they incur absences without pay, the amounts
corresponding to the absences may be deducted from the monthly allowance . . ." ; and on
"Leave of Absence Without Pay", that "All covered employees shall be entitled to the allowance
provided herein when they are on leave of absence with pay."cralaw virtua1aw library
It is beyond dispute that the petitioners members are full-time employees receiving their
monthly salaries irrespective of the number of working days or teaching hours in a month.
However, they find themselves in a most peculiar situation whereby they are forced to go on
leave during semestral breaks. These semestral breaks are in the nature of work interruptions
beyond the employees control. The duration of the semestral break varies from year to year
dependent on a variety of circumstances affecting at times only the private respondent but at
other times all educational institutions in the country. As such, these breaks cannot be
considered as absences within the meaning of the law for which deductions may be made from
monthly allowances. The "No work, no pay" principle does not apply in the instant case. The
petitioners members received their regular salaries during this period. It is clear from the
aforequoted provision of law that it contemplates a "no work" situation where the employees
voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem,
absent themselves during semestral breaks. Rather, they are constrained to take mandatory
leave from work. For this they cannot be faulted nor can they be begrudged that which is due
them under the law. To a certain extent, the private respondent can specify dates when no
classes would be held. Surely, it was not the intention of the framers of the law to allow
employers to withhold employee benefits by the simple expedient of unilaterally imposing "no
work" days and consequently avoiding compliance with the mandate of the law for those
days.chanrobles.com.ph : virtual law library
Respondents contention that "the fact of receiving a salary alone should not be the basis of
receiving ECOLA", is, likewise, without merit. Particular attention is brought to the Implementing
Rules and Regulations of Wage Order No. 1 to wit.
SECTION 5. Allowance for Unworked Days.
"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their daily
living allowance when they are paid their basic wage."cralaw virtua1aw library
x

This provision, at once refutes the above contention. It is evident that the intention of the law is
to grant ECOLA upon the payment of basic wages. Hence, we have the principle of "No pay, no
ECOLA" the converse of which finds application in the case at bar. Petitioners cannot be
considered to be on leave without pay so as not to be entitled to ECOLA, for, as earlier stated,

the petitioners were paid their wages in full for the months of November and December of 1981,
notwithstanding the intervening semestral break. This, in itself, is a tacit recognition of the
rather unusual state of affairs in which teachers find themselves. Although said to be on forced
leave, professors and teachers are, nevertheless, burdened with the task of working during a
period of time supposedly available for rest and private matters. There are papers to correct,
students to evaluate, deadlines to meet, and periods within which to submit grading reports.
Although they may be considered by the respondent to be on leave, the semestral break could
not be used effectively for the teachers own purposes for the nature of a teachers job imposes
upon him further duties which must be done during the said period of time. Learning is a never
ending process. Teachers and professors must keep abreast of developments all the time.
Teachers cannot also wait for the opening of the next semester to begin their work. Arduous
preparation is necessary for the delicate task of educating our children. Teaching involves not
only an application of skill and an imparting of knowledge, but a responsibility which entails self
dedication and sacrifice. The task of teaching ends not with the perceptible efforts of the
petitioners members but goes beyond the classroom: a continuum where only the visible labor is
relieved by academic intermissions. It would be most unfair for the private respondent to
consider these teachers as employees on leave without pay to suit its purposes and, yet, in the
meantime, continue availing of their services as they prepare for the next semester or complete
all of the last semesters requirements. Furthermore, we may also by analogy apply the principle
enunciated in the Omnibus Rules Implementing the Labor Code to wit:chanrob1es virtual 1aw
library
Sec. 4. Principles in Determining Hours Worked. The following general principles shall govern
in determining whether the time spent by an employee is considered hours worked for purposes
of this Rule:chanrob1es virtual 1aw library
x

"(d) The time during which an employee is inactive by reason of interruptions in his work beyond
his control shall be considered time either if the imminence of the resumption of work requires
the employees presence at the place of work or if the interval is too brief to be utilized
effectively and gainfully in the employees own interest." (Emphasis supplied).
The petitioners members in the case at bar, are exactly in such a situation. The semestral break
scheduled is an interruption beyond petitioners control and it cannot be used "effectively nor
gainfully in the employees interest. Thus, the semestral break may also be considered as "hours
worked." For this, the teachers are paid regular salaries and, for this, they should be entitled to
ECOLA. Not only do the teachers continue to work during this short recess but much less do they
cease to live for which the cost of living allowance is intended. The legal principles of "No work,
no pay; No pay, no ECOLA" must necessarily give way to the purpose of the law to augment the
income of employees to enable them to cope with the harsh living conditions brought about by
inflation; and to protect employees and their wages against the ravages brought by these
conditions. Significantly, it is the commitment of the State to protect labor and to provide means
by which the difficulties faced by the working force may best be alleviated. To submit to the
respondents interpretation of the no work, no pay policy is to defeat this noble purpose. The
Constitution and the law mandate otherwise.chanrobles.com:cralaw:red
With regard to the second issue, we are called upon to interpret and apply Section 3 of
Presidential Decree 451 to wit:chanrob1es virtual 1aw library
SEC. 3. Limitations. The increase in tuition or other school fees or other charges as well as the
new fees or charges authorized under the next preceding section shall be subject to the following
conditions:jgc:chanrobles.com.ph

"(a) That no increase in tuition or other school fees or charges shall be approved unless sixty
(60%) per centum of the proceeds is allocated for increase in salaries or wages of the members
of the faculty and all other employees of the school concerned, and the balance for institutional
development, student assistance and extension services, and return to investments: Provided,
That in no case shall the return to investments exceed twelve (12%) per centum of the
incremental proceeds; . . ."cralaw virtua1aw library
x

This Court had the occasion to rule squarely on this point in the very recent case entitled,
University of the East v. University of the East Faculty Association, 117 SCRA 554. We held
that:jgc:chanrobles.com.ph
"In effect, the problem posed before Us is whether or not the reference in Section 3(a) to
increase in salaries or wages of the faculty and all other employees of the schools concerned as
the first purpose to which the incremental proceeds from authorized increases to tuition fees
may be devoted, may be construed to include allowances and benefits. In the negative, which is
the position of respondents, it would follow that such allowances must be taken in resources of
the school not derived from tuition fees.
"Without delving into the factual issue of whether or not there could be any such other
resources, We note that among the items of second purpose stated in provision in question is
return in investment. And the law provides only for a maximum, not a minimum. In other words,
the schools may get a return to investment of not more than 12%, but if circumstances warrant,
there is no minimum fixed by law which they should get.
"On this predicate, We are of the considered view that, if the school happen to have no other
resources to grant allowances and benefits, either mandated by law or secured by collective
bargaining, such allowances and benefits should be charged against the return to investments
referred to in the second purpose stated in Section 3(a) of P.D. 451."cralaw virtua1aw library
Private respondent argues that the above interpretation "disregarded the intention and spirit of
the law" which intention is clear from the "whereas" clauses as follows:jgc:chanrobles.com.ph
"It is imperative that private educational institutions upgrade classroom instruction . . . provide
salary and or wage increases and other benefits . . ."cralaw virtua1aw library
Respondent further contends that PD 451 was issued to alleviate the sad plight of private
schools, their personnel and all those directly or indirectly on school income as the decree was
aimed
". . . to upgrade classroom instruction by improving their facilities and bring competent teachers
in all levels of education, provide salary and or wage increases and other benefits to their
teaching, administrative, and other personnel to keep up with the increasing cost of living."
(Emphasis supplied)
Respondent overlooks the elemental principle of statutory construction that the general
statements in the whereas clauses cannot prevail over the specific or particular statements in
the law itself which define or limit the purposes of the legislation or proscribe certain acts. True,
the whereas clauses of PD 451 provide for salary and or wage increase and other benefits,
however, the same do not delineate the source of such funds and it is only in Section 3 which
provides for the limitations wherein the intention of the framers of the law is clearly outlined.
The law is clear. The sixty (60%) percent incremental proceeds from the tuition increase are to
be devoted entirely to wage or salary increases which means increases in basic salary. The law

cannot be construed to include allowances which are benefits over and above the basic salaries
of the employees. To charge such benefits to the 60% incremental proceeds would be to reduce
the increase in basic salary provided by law, an increase intended also to help the teachers and
other workers tide themselves and their families over these difficult economic times. chanrobles
virtual lawlibrary
This Court is not guilty of usurpation of legislative functions as claimed by the respondents. We
expressed the opinion in the University of the East case that benefits mandated by law and
collective bargaining may be charged to the 12% return on investments within the 40%
incremental proceeds of tuition increase. As admitted by respondent, we merely made this
statement as a suggestion in answer to the respondents query as to where then, under the law,
can such benefits be charged. We were merely interpreting the meaning of the law within the
confines of its provisions. The law provides that 60% should go to wage increases and 40% to
institutional developments, student assistance, extension services, and return on investments
(ROI). Under the law, the last item ROI has flexibility sufficient to accommodate other purposes
of the law and the needs of the university. ROI is not set aside for any one purpose of the
university such as profits or returns on investments. The amount may be used to comply with
other duties and obligations imposed by law which the university exercising managerial
prerogatives finds cannot under present circumstances, be funded by other revenue sources. It
may be applied to any other collateral purpose of the university or invested elsewhere. Hence,
the framers of the law intended this portion of the increases in tuition fees to be a general fund
to cover up for the universitys miscellaneous expenses and, precisely, for this reason, it was not
so delimited. Besides, ROI is a return or profit over and above the operating expenditures of the
university, and still, over and above the profits it may have had prior to the tuition increase. The
earning capacities of private educational institutions are not dependent on the increases in
tuition fees allowed by P.D. 451. Accommodation of the allowances required by law require wise
and prudent management of all the university resources together with the incremental proceeds
of tuition increases. Cognizance should be taken of the fact that the private respondent had,
before PD 451, managed to grant all allowances required by law. It cannot now claim that it
could not afford the same, considering that additional funds are even granted them by the law in
question. We find no compelling reason, therefore, to deviate from our previous ruling in the
University of the East case even as we take the second hard look at the decision requested by
the private Respondent. This case was decided in 1982 when PDs 1614, 1634, 1678, and 1713
which are also the various Presidential Decrees on ECOLA were already in force. PD 451 was
interpreted in the light of these subsequent legislations which bear upon but do not modify nor
amend, the same. We need not go beyond the ruling in the University of the East case.
Coming now to the third issue, the respondents are of the considered view that as evidenced by
the payrolls submitted by them during the period September 16 to September 30, 1981, the
faculty members have been paid for the extra loads. We agree with the respondents that this
issue involves a question of fact properly within the competence of the respondent NLRC to pass
upon. The findings of fact of the respondent Commission are binding on this Court there being no
indication of their being unsubstantiated by evidence. We find no grave abuse in the findings of
respondent NLRC on this matter to warrant reversal. Assuming arguendo, however, that the
petitioners have not been paid for these extra loads, they are not entitled to payment following
the principles of "No work, no pay." This time, the rule applies. Involved herein is a matter
different from the payment of ECOLA under the first issue. We are now concerned with extra, not
regular loads for which the petitioners are paid regular salaries every month regardless of the
number of working days or hours in such a month. Extra loads should be paid for only when
actually performed by the employee. Compensation is based, therefore, on actual work done and
on the number of hours and days spent over and beyond their regular hours of duty. Since there
was no work on September 21, 1981, it would now be unfair to grant petitioners demand for
extra wages on that day.chanrobles law library : red
Finally, disposing of the respondents charge of petitioners lack of legal capacity to sue, suffice it

to say that this question can no longer be raised initially on appeal or certiorari. It is quite
belated for the private respondent to question the personality of the petitioner after it had dealt
with it as a party in the proceedings below. Furthermore, it was not disputed that the petitioner
is a duly registered labor organization and as such has the legal capacity to sue and be sued.
Registration grants it the rights of a legitimate labor organization and recognition by the
respondent University is not necessary for it to institute this action in behalf of its members to
protect their interests and obtain relief from grievances. The issues raised by the petitioner do
not involve pure money claims but are more intricately intertwined with conditions of
employment.
WHEREFORE the petition for certiorari is hereby GRANTED. The private respondent is ordered to
pay its regular fulltime teachers/employees emergency cost of living allowances for the
semestral break from November 7 to December 5, 1981 and the undistributed balance of the
sixty (60%) percent incremental proceeds from tuition increases for the same schoolyear as
outlined above. The respondent Commission is sustained insofar as it DENIED the payment of
salaries for the suspended extra loads on September 21, 1981.
SO ORDERED.
Teehankee, Melencio-Herrera, Plana and Relova, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 96078 January 9, 1992
HILARIO RADA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR
CONSULTANTS AND PLANNERS, INC., respondents.
Cabellero, Calub, Aumentado & Associates Law Offices for petitioner.
REGALADO, J.:
In this special civil action for certiorari, petitioner Rada seeks to annul the decision of respondent
National Labor Relations Commission (NLRC), dated November 19, 1990, reversing the decision
of the labor arbiter which ordered the reinstatement of petitioner with backwages and awarded
him overtime pay. 1
The facts, as stated in the Comment of private respondent Philnor Consultants and Planners, Inc.
(Philnor), are as follows:

Petitioner's initial employment with this Respondent was under a "Contract of

Employment for a Definite Period" dated July 7, 1977, copy of which is hereto
attached and made an integral part hereof as Annex A whereby Petitioner was
hired as "Driver" for the construction supervision phase of the Manila North
Expressway Extension, Second Stage (hereinafter referred to as MNEE Stage 2)
for a term of "about 24 months effective July 1, 1977.
xxx xxx xxx

 Highlighting the nature of Petitioner's employment, Annex A specifically provides

as follows:
It is hereby understood that the Employer does not have a
continuing need for the services of the Employee beyond the
termination date of this contract and that the Employee's services
shall automatically, and without notice, terminate upon the
completion of the above specified phase of the project; and that it
is further understood that the engagement of his/her services is
coterminus with the same and not with the whole project or other
phases thereof wherein other employees of similar position as
he/she have been hired. (Par. 7, emphasis supplied)
Petitioner's first contract of employment expired on June 30, 1979. Meanwhile,
the main project, MNEE Stage 2, was not finished on account of various
constraints, not the least of which was inadequate funding, and the same was
extended and remained in progress beyond the original period of 2.3 years.
Fortunately for the Petitioner, at the time the first contract of employment
expired, Respondent was in need of Driver for the extended project. Since
Petitioner had the necessary experience and his performance under the first
contract of employment was found satisfactory, the position of Driver was
offered to Petitioner, which he accepted. Hence a second Contract of
Employment for a Definite Period of 10 months, that is, from July 1, 1979 to
April 30, 1980 was executed between Petitioner and Respondent on July 7,
1979. . . .
In March 1980 some of the areas or phases of the project were completed, but
the bulk of the project was yet to be finished. By that time some of those
project employees whose contracts of employment expired or were about to
expire because of the completion of portions of the project were offered another
employment in the remaining portion of the project. Petitioner was among those
whose contract was about to expire, and since his service performance was
satisfactory, respondent renewed his contract of employment in April 1980, after
Petitioner agreed to the offer. Accordingly, a third contract of employment for a
definite period was executed by and between the Petitioner and the Respondent
whereby the Petitioner was again employed as Driver for 19 months, from May
1, 1980 to November 30, 1981, . . .
This third contract of employment was subsequently extended for a number of
times, the last extension being for a period of 3 months, that is, from October 1,
1985 to December 31, 1985, . . .
The last extension, from October 1, 1985 to December 31, 1985 (Annex E)
covered by an "Amendment to the Contract of Employment with a Definite
Period," was not extended any further because Petitioner had no more work to
do in the project. This last extension was confirmed by a notice on November
28, 1985 duly acknowledged by the Petitioner the very next day, . . .

Sometime in the 2nd week of December 1985, Petitioner applied for "Personnel
Clearance" with Respondent dated December 9, 1985 and acknowledged having
received the amount of P3,796.20 representing conversion to cash of unused
leave credits and financial assistance. Petitioner also released Respondent from
all obligations and/or claims, etc. in a "Release, Waiver and Quitclaim" . . . 2
Culled from the records, it appears that on May 20, 1987, petitioner filed before the NLRC,
National Capital Region, Department of Labor and Employment, a Complaint for non-payment of
separation pay and overtime pay. On June 3, 1987, Philnor filed its Position Paper alleging, inter

alia, that petitioner was not illegally terminated since the project for which he was hired was
completed; that he was hired under three distinct contracts of employment, each of which was
for a definite period, all within the estimated period of MNEE Stage 2 Project, covering different
phases or areas of the said project; that his work was strictly confined to the MNEE Stage 2
Project and that he was never assigned to any other project of Philnor; that he did not render
overtime services and that there was no demand or claim for him for such overtime pay; that he
signed a "Release, Waiver and Quitclaim" releasing Philnor from all obligations and claims; and
that Philnor's business is to provide engineering consultancy services, including supervision of
construction services, such that it hires employees according to the requirements of the project
manning schedule of a particular contract. 3
On July 2, 1987, petitioner filed an Amended Complaint alleging that he was illegally dismissed
and that he was not paid overtime pay although he was made to render three hours overtime
work form Monday to Saturday for a period of three years.
On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed since
he was a regular employee entitled to security of tenure; that he was not a project employee
since Philnor is not engaged in the construction business as to be covered by Policy Instructions
No. 20; that the contract of employment for a definite period executed between him and Philnor
is against public policy and a clear circumvention of the law designed merely to evade any
benefits or liabilities under the statute; that his position as driver was essential, necessary and
desirable to the conduct of the business of Philnor; that he rendered overtime work until 6:00
p.m. daily except Sundays and holidays and, therefore, he was entitled to overtime pay. 4
In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular employee
pursuant to Article 278(c) of the Labor Code and, thus, he cannot be terminated except for a just
cause under Article 280 of the Code; and that the public respondent's ruling in Quiwa vs. Philnor
Consultants and Planners, Inc. 5 is not applicable to his case since he was an administrative
employee working as a company driver, which position still exists and is essential to the conduct
of the business of Philnor even after the completion of his contract of employment. 6 Petitioner
likewise avers that the contract of employment for a definite period entered into between him
and Philnor was a ploy to defeat the intent of Article 280 of the Labor Code.
On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging therein
that petitioner was not a company driver since his job was to drive the employees hired to work
at the MNEE Stage 2 Project to and from the filed office at Sto. Domingo Interchange,
Pampanga; that the office hours observed in the project were from 7:00 a.m. to 4:00 p.m.
Mondays through Saturdays; that Philnor adopted the policy of allowing certain employees, not
necessarily the project driver, to bring home project vehicles to afford fast and free
transportation to and from the project field office considering the distance between the project
site and the employees' residence, to avoid project delays and inefficiency due to employee
tardiness caused by transportation problem; that petitioner was allowed to use a project vehicle
which he used to pick up and drop off some ten employees along Epifanio de los Santos Avenue
(EDSA), on his way home to Marikina, Metro Manila; that when he was absent or on leave,
another employee living in Metro Manila used the same vehicle in transporting the same
employees; that the time used by petitioner to and from his residence to the project site from
5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m., or about three hours daily, was not
overtime work as he was merely enjoying the benefit and convenience of free transportation
provided by Philnor, otherwise without such vehicle he would have used at least four hours by
using public transportation and spent P12.00 daily fare; that in the case of Quiwa vs. Philnor
Consultants and Planners, Inc., supra, the NLRC upheld Philnor's position that Quiwa was a
project employee and he was not entitled to termination pay under Policy Instructions No. 20
since his employment was coterminous with the completion of the project.
On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's Rejoinder
and Reply, submitting therewith two letters dated January 5, 1985 and February 6, 1985, signed

by MNEE Stage 2 Project employees, including herein petitioner, where they asked what
termination benefits could be given to them as the MNEE Stage 2 Project was nearing
completion, and Philnor's letter-reply dated February 22, 1985 informing them that they are not
entitled to termination benefits as they are contractual/project employees.
On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision 7 with the following
dispositive portion:
WHEREFORE, in view of all the foregoing considerations, judgment is hereby
rendered:
(1) Ordering the respondent company to reinstate the complainant to his former
position without loss of seniority rights and other privileges with full backwages
from the time of his dismissal to his actual reinstatement;
(2) Directing the respondent company to pay the complainant overtime pay for
the three excess hours of work performed during working days from January
1983 to December 1985; and
(3) Dismissing all other claims for lack of merit.
SO ORDERED.
Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19, 1990,
setting aside the labor arbiter's aforequoted decision and dismissing petitioner's complaint.
Hence this petition wherein petitioner charges respondent NLRC with grave abuse of discretion
amounting to lack of jurisdiction for the following reasons:
1. The decision of the labor arbiter, dated August 31, 1989, has already become final and
executory;
2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding nor is it applicable
to this case;
3. The petitioner is a regular employee with eight years and five months of continuous services
for his employer, private respondent Philnor;
4. The claims for overtime services, reinstatement and full backwages are valid and meritorious
and should have been sustained; and
5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts, the
law and evidence.
The petition is devoid of merit.
1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the appeal
filed by Philnor in spite of the latter's failure to file a supersedeas bond within ten days from
receipt of the labor arbiter's decision, by reason of which the appeal should be deemed to have
been filed out of time. It will be noted, however, that Philnor was able to file a bond although it
was made beyond the 10-day reglementary period.
While it is true that the payment of the supersedeas bond is an essential requirement in the
perfection of an appeal, however, where the fee had been paid although payment was delayed,
the broader interests of justice and the desired objective of resolving controversies on the merits
demands that the appeal be given due course. Besides, it was within the inherent power of the
NLRC to have allowed late payment of the bond, considering that the aforesaid decision of the
labor arbiter was received by private respondent on October 3, 1989 and its appeal was duly
filed on October 13, 1989. However, said decision did not state the amount awarded as
backwages and overtime pay, hence the amount of the supersedeas bond could not be
determined. It was only in the order of the NLRC of February 16, 1990 that the amount of the
supersedeas bond was specified and which bond, after an extension granted by the NLRC, was

timely filed by private respondent.

Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or
equity shall not be controlling and it is the spirit and intention of this Code that the Commission
and its members and the Labor Arbiters shall use every and all reasonable means to ascertain
the facts in each case speedily and objectively without regard to technicalities of law or
procedure, all in the interest of due process. 8 Finally, the issue of timeliness of the appeal being
an entirely new and unpleaded matter in the proceedings below it may not now be raised for the
first time before this Court. 9
2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence he
cannot be terminated without cause. Private respondent Philnor believes otherwise and asserts
that petitioner is merely a project employee who was terminated upon the completion of the
project for which he was employed.
In holding that petitioner is a regular employee, the labor arbiter found that:

. . . There is no question that the complainant was employed as driver in the

respondent company continuously from July 1, 1977 to December 31, 1985
under various contracts of employment. Similarly, there is no dispute that
respondent Philnor Consultant & Planner, Inc., as its business name connotes,
has been engaged in providing to its client(e)le engineering consultancy
services. The record shows that while the different labor contracts executed by
the parties stipulated definite periods of engaging the services of the
complainant, yet the latter was suffered to continue performing his job upon the
expiration of one contract and the renewal of another. Under these
circumstances, the complaint has obtained the status of regular employee, it
appearing that he has worked without fail for almost eight years, a fraction of
six months considered as one whole year, and that his assigned task as driver
was necessary and desirable in the usual trade/business of the respondent
employer. Assuming to be true, as spelled out in the employment contract, that
the Employer has no "continuing need for the services of the Employe(e) beyond
the termination date of this contract and that the Employee's services shall
automatically, and without notice, terminate upon completion of the above
specified phase of the project," still we cannot see our way clear why the
complainant was hired and his services engaged contract after contract straight
from 1977 to 1985 which, to our considered view, lends credence to the
contention that he worked as regular driver ferrying early in the morning office
personnel to the company main office in Pampanga and bringing back late in the
afternoon to Manila, and driving company executives for inspection of
construction workers to the jobsites. All told, we believe that the complainant,
under the environmental facts obtaining in the case at bar, is a regular
employee, the provisions of written agreement to the
contrary notwithstanding and regardless of the oral understanding of the parties
. . . 10
On the other hand, respondent NLRC declared that, as between the uncorroborated and
unsupported assertions of petitioners and those of private respondent which are supported by
documents, greater credence should be given the latter. It further held that:
Complainant was hired in a specific project or undertaking as driver. While such
project was still on-going he was hired several times with his employment
period fixed every time his contract was renewed. At the completion of the
specific project or undertaking his employment contract was not renewed.

We reiterate our ruling in the case of (Quiwa) vs. Philnor Consultants and

Planners, Inc., NLRC RAB III 5-1738-84, it is being applicable in this case, viz.:

. . . While it is true that the activities performed by him were

necessary or desirable in the usual business or trade of the
respondent as consultants, planners, contractor and while it is also
true that the duration of his employment was for a period of about
seven years, these circumstances did not make him a
regular employee in contemplation of Article 281 of (the) Labor
Code. . . . 11
Our ruling in Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. 12 is
applicable to the case at bar. Thus:
We hold that private respondents were project employees whose work was
coterminous with the project or which they were hired. Project employees, as
distinguished from regular or non-project employees, are mentioned in section
281 of the Labor Code as those "where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee."
Policy Instructions No. 20 of the Secretary of Labor, which was issued to
stabilize employer-employee relations in the construction industry, provides:
Project employees are those employed in connection with a
particular construction project. Non-project (regular) employees
are those employed by a construction company without reference
to any particular project.
Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any
phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a
particular construction company. Moreover, the company is not
required to obtain clearance from the Secretary of Labor in
connection with such termination.
The petitioner cited three of its own cases wherein the National Labor Relations
Commission, Deputy Minister of Labor and Employment Inciong and the Director
of the National Capital Region held that the layoff of its project employees was
lawful. Deputy Minister Inciong in TFU Case No. 1530, In Re Sandoval
Shipyards, Inc. Application for Clearance to Terminate Employees, rendered the
following ruling on February 26, 1979;

We feel that there is merit in the contention of the applicant

corporation. To our mind, the employment of the employees
concerned were fixed for a specific project or undertaking. For the
nature of the business the corporation is engaged into is one
which will not allow it to employ workers for an indefinite period.
It is significant to note that the corporation does not construct
vessels for sale or otherwise which will demand continuous
productions of ships and will need permanent or regular workers.
It merely accepts contracts for shipbuilding or for repair of vessels
form third parties and, only, on occasion when it has work contract
of this nature that it hires workers to do the job which, needless to
say, lasts only for less than a year or longer.

The completion of their work or project automatically terminates

their employment, in which case, the employer is, under the law,
only obliged to render a report on the termination of the
employment. (139-140, Rollo of G.R. No. 65689) (Emphasis
supplied)
In Cartagenas, et al. vs. Romago Electric Company, Inc., et al., 13 we likewise held that:

As an electrical contractor, the private respondent depends for its business on

the contracts it is able to obtain from real estate developers and builders of
buildings. Since its work depends on the availability of such contracts or
"projects," necessarily the duration of the employment's of this work force is not
permanent but co-terminus with the projects to which they are assigned and
from whose payrolls they are paid. It would be extremely burdensome for their
employer who, like them, depends on the availability of projects, if it would
have to carry them as permanent employees and pay them wages even if there
are no projects for them to work on. (Emphasis supplied.)
It must be stressed herein that although petitioner worked with Philnor as a driver for eight
years, the fact that his services were rendered only for a particular project which took that same
period of time to complete categorizes him as a project employee. Petitioner was employed for
one specific project.
A non-project employee is different in that the employee is hired for more than one project. A
non-project employee, vis-a-vis a project employee, is best exemplified in the case of Fegurin, et
al. vs. National Labor Relations Commission, et al. 14 wherein four of the petitioners had been
working with the company for nine years, one for eight years, another for six years, the shortest
term being three years. In holding that petitioners are regular employees, this Court therein
explained:
Considering the nature of the work of petitioners, that of carpenter, laborer or
mason, their respective jobs would actually be continuous and on-going. When a
project to which they are individually assigned is completed, they would be
assigned to the next project or a phase thereof. In other words, they belonged
to a "work pool" from which the company would draw workers for assignment to
other projects at its discretion. They are, therefore, actually "non-project
employees."
From the foregoing, it is clear that petitioner is a project employee considering that he does not
belong to a "work pool" from which the company would draw workers for assignment to other
projects at its discretion. It is likewise apparent from the facts obtaining herein that petitioner
was utilized only for one particular project, the MNEE Stage 2 Project of respondent company.
Hence, the termination of herein petitioner is valid by reason of the completion of the project
and the expiration of his employment contract.
3. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same.
The fact that he picks up employees of Philnor at certain specified points along EDSA in going to
the project site and drops them off at the same points on his way back from the field office going
home to Marikina, Metro Manila is not merely incidental to petitioner's job as a driver. On the
contrary, said transportation arrangement had been adopted, not so much for the convenience of
the employees, but primarily for the benefit of the employer, herein private respondent. This fact
is inevitably deducible from the Memorandum of respondent company:

The herein Respondent resorted to the above transport arrangement because

from its previous project construction supervision experiences, Respondent
found out that project delays and inefficiencies resulted from employees'
tardiness; and that the problem of tardiness, in turn, was aggravated by
transportation problems, which varied in degrees in proportion to the distance
between the project site and the employees' residence. In view of this lesson

from experience, and as a practical, if expensive, solution to employees'

tardiness and its concomitant problems, Respondent adopted the policy of
allowing certain employees not necessarily project drivers to bring home
project vehicles, so that employees could be afforded fast, convenient and free
transportation to and from the project field office. . . . 15
Private respondent does not hesitate to admit that it is usually the project driver who is tasked
with picking up or dropping off his fellow employees. Proof thereof is the undisputed fact that
when petitioner is absent, another driver is supposed to replace him and drive the vehicle and
likewise pick up and/or drop off the other employees at the designated points on EDSA. If driving
these employees to and from the project site is not really part of petitioner's job, then there
would have been no need to find a replacement driver to fetch these employees. But since the
assigned task of fetching and delivering employees is indispensable and consequently
mandatory, then the time required of and used by petitioner in going from his residence to the
field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00
p.m., which the labor arbiter rounded off as averaging three hours each working day, should be
paid as overtime work. Quintessentially, petitioner should be given overtime pay for the three
excess hours of work performed during working days from January, 1983 to December, 1985.
WHEREFORE, subject to the modification regarding the award of overtime pay to herein
petitioner, the decision appealed from is AFFIRMED in all other respects.
SO ORDERED.
Melencio-Herrera, Paras and Padilla, JJ., concur.
Nocon, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 173648

January 16, 2012

ABDULJUAHID R. PIGCAULAN, * Petitioner,

vs.
SECURITY and CREDIT NVESTIGATION, INC. and/or RENE AMBY REYES, Respondents.
DECISION
DEL CASTILLO, J.:
It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather,
it is on the employer that the burden of proving payment of these claims rests.

This Petition for Review on Certiorari1 assails the February 24, 2006 Decision 2 of the Court of
Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition for certiorari filed therewith,
set aside the March 23, 2004 3 and June 14, 2004 4 Resolutions of the National Labor Relations
Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner
Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit Investigation, Inc.
(SCII) and its General Manager, respondent Rene Amby Reyes. Likewise assailed is the June 28,
2006 Resolution5 denying Canoys and Pigcaulans Motion for Reconsideration. 6
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs
different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter
separate complaints 7 for underpayment of salaries and non-payment of overtime, holiday, rest
day, service incentive leave and 13th month pays. These complaints were later on consolidated
as they involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records
reflecting the number of hours served and their wages for the same. They likewise presented
itemized lists of their claims for the corresponding periods served.
Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and
other benefits under the law; that the salaries they received were above the statutory minimum
wage and the rates provided by the Philippine Association of Detective and Protective Agency
Operators (PADPAO) for security guards; that their holiday pay were already included in the
computation of their monthly salaries; that they were paid additional premium of 30% in
addition to their basic salary whenever they were required to work on Sundays and 200% of
their salary for work done on holidays; and, that Canoy and Pigcaulan were paid the
corresponding 13th month pay for the years 1998 and 1999. In support thereof, copies of payroll
listings8 and lists of employees who received their 13th month pay for the periods December
1997 to November 1998 and December 1998 to November 1999 9 were presented. In addition,
respondents contended that Canoys and Pigcaulans monetary claims should only be limited to
the past three years of employment pursuant to the rule on prescription of claims.
Ruling of the Labor Arbiter
Giving credence to the itemized computations and representative daily time records submitted
by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their monetary claims
in his Decision10 dated June 6, 2002. The Labor Arbiter held that the payroll listings presented
by the respondents did not prove that Canoy and Pigcaulan were duly paid as same were not
signed by the latter or by any SCII officer. The 13th month payroll was, however, acknowledged
as sufficient proof of payment, for it bears Canoys and Pigcaulans signatures. Thus, without
indicating any detailed computation of the judgment award, the Labor Arbiter ordered the
payment of overtime pay, holiday pay, service incentive leave pay and proportionate 13th month
pay for the year 2000 in favor of Canoy and Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary
differentials in the amount of P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid
Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive
leave pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as
proportionate 13th month pay for the year 2000. The rest of the claims are dismissed for lack of
sufficient basis to make an award.
SO ORDERED.11
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC. They alleged that there was no basis

for the awards made because aside from the self-serving itemized computations, no
representative daily time record was presented by Canoy and Pigcaulan. On the contrary,
respondents asserted that the payroll listings they submitted should have been given more
probative value. To strengthen their cause, they attached to their Memorandum on Appeal
payrolls12 bearing the individual signatures of Canoy and Pigcaulan to show that the latter have
received their salaries, as well as copies of transmittal letters 13 to the bank to show that the
salaries reflected in the payrolls were directly deposited to the ATM accounts of SCIIs
employees.
The NLRC, however, in a Resolution 14 dated March 23, 2004, dismissed the appeal and held that
the evidence show underpayment of salaries as well as non-payment of service incentive leave
benefit. Accordingly, the Labor Arbiters Decision was sustained. The motion for reconsideration
thereto was likewise dismissed by the NLRC in a Resolution 15 dated June 14, 2004.
Ruling of the Court of Appeals
In respondents petition for certiorari with prayer for the issuance of a temporary restraining
order and preliminary injunction 16 before the CA, they attributed grave abuse of discretion on
the part of the NLRC in finding that Canoy and Pigcaulan are entitled to salary differentials,
service incentive leave pay and proportionate 13th month pay and in arriving at amounts
without providing sufficient bases therefor.
The CA, in its Decision17 dated February 24, 2006, set aside the rulings of
both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases
mentioned in the questioned rulings to support the conclusions made. Consequently, it dismissed
all the monetary claims of Canoy and Pigcaulan on the following rationale:
First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at
all events, as far as practicable, the decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for
being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from 1998 to
1999 indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by
Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two are
indeed entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed
salaries and benefits despite the absence of proof that Reyes deliberately or maliciously designed
to evade SCIIs alleged financial obligation; hence the Labor Arbiter ignored that SCII has a
corporate personality separate and distinct from Reyes. To justify solidary liability, there must be
an allegation and showing that the officers of the corporation deliberately or maliciously designed
to evade the financial obligation of the corporation. 18
Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a
Resolution19 dated June 28, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I. The Honorable Court of Appeals erred when it dismissed the complaint on mere
alleged failure of the Labor Arbiter and the NLRC to observe the prescribed form of
decision, instead of remanding the case for reformation of the decision to include the
desired detailed computation.

 II. The Honorable Court of Appeals erred when it [made] complainants suffer the
consequences of the alleged non-observance by the Labor Arbiter and NLRC of the
prescribed forms of decisions considering that they have complied with all needful acts
required to support their claims.

III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly
due to absence of legal and factual [bases] despite attendance of substantial evidence
in the records.20
It is well to note that while the caption of the petition reflects both the names of Canoy and
Pigcaulan as petitioners, it appears from its body that it is being filed solely by Pigcaulan. In fact,
the Verification and Certification of Non-Forum Shopping was executed by Pigcaulan alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound by
the rules. And even so, the rules do not mandate that a detailed computation of how the amount
awarded was arrived at should be embodied in the decision. Instead, a statement of the nature
or a description of the amount awarded and the specific figure of the same will suffice. Besides,
his and Canoys claims were supported by substantial evidence in the form of the handwritten
detailed computations which the Labor Arbiter termed as "representative daily time records,"
showing that they were not properly compensated for work rendered. Thus, the CA should have
remanded the case instead of outrightly dismissing it.
In their Comment,21 respondents point out that since it was only Pigcaulan who filed the
petition, the CA Decision has already become final and binding upon Canoy. As to Pigcaulans
arguments, respondents submit that they were able to present sufficient evidence to prove
payment of just salaries and benefits, which bits of evidence were unfortunately ignored by the
Labor Arbiter and the NLRC. Fittingly, the CA reconsidered these pieces of evidence and properly
appreciated them. Hence, it was correct in dismissing the claims for failure of Canoy and
Pigcaulan to discharge their burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply 22 that his filing of the present petition
redounds likewise to Canoys benefit since their complaints were consolidated below. As such,
they maintain that any kind of disposition made in favor or against either of them would
inevitably apply to the other. Hence, the institution of the petition solely by Pigcaulan does not
render the assailed Decision final as to Canoy. Nonetheless, in said reply they appended Canoys
affidavit23 where he verified under oath the contents and allegations of the petition filed by
Pigcaulan and also attested to the authenticity of its annexes. Canoy, however, failed to certify
that he had not filed any action or claim in another court or tribunal involving the same issues.
He likewise explains in said affidavit that his absence during the preparation and filing of the
petition was caused by severe financial distress and his failure to inform anyone of his
whereabouts.
Our Ruling
The assailed CA Decision is considered final as to Canoy.
We have examined the petition and find that same was filed by Pigcaulan solely on his own
behalf. This is very clear from the petitions prefatory which is phrased as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court x x
x. (Emphasis supplied.)
Also, under the heading "Parties", only Pigcaulan is mentioned as petitioner and consistent with
this, the body of the petition refers only to a "petitioner" and never in its plural form
"petitioners". Aside from the fact that the Verification and Certification of Non-Forum Shopping
attached to the petition was executed by Pigcaulan alone, it was plainly and particularly
indicated under the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he
is the "Counsel for Petitioner Adbuljuahid Pigcaulan" only. In view of these, there is therefore, no

doubt, that the petition was brought only on behalf of Pigcaulan. Since no appeal from the CA
Decision was brought by Canoy, same has already become final and executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations
of the petition as he is not one of the petitioners therein. Suffice it to state that it would have
been different had the said petition been filed in behalf of both Canoy and Pigcaulan. In such a
case, subsequent submission of a verification may be allowed as non-compliance therewith or a
defect therein does not necessarily render the pleading, or the petition as in this case, fatally
defective.24 "The court may order its submission or correction, or act on the pleading if the
attending circumstances are such that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served thereby. Further, a verification is deemed
substantially complied with when one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification, and when matters alleged in the
petition have been made in good faith or are true and correct." 25 However, even if it were so, we
note that Canoy still failed to submit or at least incorporate in his affidavit a certificate of nonforum shopping.
The filing of a certificate of non-forum shopping is mandatory so much so that non-compliance
could only be tolerated by special circumstances and compelling reasons. 26 This Court has held
that when there are several petitioners, all of them must execute and sign the certification
against forum shopping; otherwise, those who did not sign will be dropped as parties to the
case.27 True, we held that in some cases, execution by only one of the petitioners on behalf of
the other petitioners constitutes substantial compliance with the rule on the filing of a certificate
of non-forum shopping on the ground of common interest or common cause of action or
defense.28 We, however, find that common interest is not present in the instant petition. To
recall, Canoys and Pigcaulans complaints were consolidated because they both sought the same
reliefs against the same respondents. This does not, however, mean that they share a common
interest or defense. The evidence required to substantiate their claims may not be the same. A
particular evidence which could sustain Canoys action may not effectively serve as sufficient to
support Pigcaulans claim.
Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any
reasonable cause for his failure to join Pigcaulan to personally sign the Certification of NonForum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII,
especially so, if he was indeed suffering from financial distress. However, Canoy failed to advance
any justifiable reason why he did not inform anyone of his whereabouts when he knows that he
has a pending case against his former employer. Sadly, his lack of prudence and diligence cannot
merit the courts consideration or sympathy. It must be emphasized at this point that procedural
rules should not be ignored simply because their non-observance may result in prejudice to a
partys substantial rights. The Rules of Court should be followed except only for the most
persuasive of reasons.29
Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the
subsequent pleadings, although apparently filed under his and Canoys name, as solely filed by
the former.
There was no substantial evidence to support the grant of overtime pay.
The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave
pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter
relied heavily on the itemized computations they submitted which he considered as
representative daily time records to substantiate the award of salary differentials. The NLRC then
sustained the award on the ground that there was substantial evidence of underpayment of
salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized
computations are self-serving, unreliable and unsubstantial evidence to sustain the grant of

salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is
no way of verifying the truth of the handwritten entries stated therein. Written only in pieces of
paper and solely prepared by Canoy and Pigcaulan, these representative daily time records, as
termed by the Labor Arbiter, can hardly be considered as competent evidence to be used as basis
to prove that the two were underpaid of their salaries. We find nothing in the records which
could substantially support Pigcaulans contention that he had rendered service beyond eight
hours to entitle him to overtime pay and during Sundays to entitle him to restday pay. Hence, in
the absence of any concrete proof that additional service beyond the normal working hours and
days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.
Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate 13th month
pay for year 2000.
However, with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:
ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers;
xxxx
While Article 95 of the Labor Code 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 of five days with pay.
xxxx
Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not
work.30 Likewise, express provision of the law entitles him to service incentive leave benefit for
he rendered service for more than a year already. Furthermore, under Presidential Decree No.
851,31 he should be paid his 13th month pay. As employer, SCII has the burden of proving that
it has paid these benefits to its employees. 32
SCII presented payroll listings and transmittal letters to the bank to show that Canoy and
Pigcaulan received their salaries as well as benefits which it claimed are already integrated in the
employees monthly salaries. However, the documents presented do not prove SCIIs allegation.
SCII failed to show any other concrete proof by means of records, pertinent files or similar
documents reflecting that the specific claims have been paid. With respect to 13th month pay,
SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat,
the burden of proving payment of these monetary claims rests on SCII, being the employer. It is
a rule that one who pleads payment has the burden of proving it. "Even when the plaintiff
alleges non-payment, still the general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment." 33 Since SCII failed to provide
convincing proof that it has already settled the claims, Pigcaulan should be paid his holiday pay,
service incentive leave benefits and proportionate 13th month pay for the year 2000.
The CA erred in dismissing the claims instead of remanding the case to the Labor Arbiter for a
detailed computation of the judgment award.
Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards
granted.lawphi1 Such failure, however, should not result in prejudice to the substantial rights of
the party.1avvphi1 While we disallow the grant of overtime pay and restday pay in favor of
Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service incentive
leave pay and 13th month pay for year 2000. Hence, the CA is not correct in dismissing
Pigcaulans claims in its entirety.

Consistent with the rule that all money claims arising from an employer-employee relationship
shall be filed within three years from the time the cause of action accrued, 34 Pigcaulan can only
demand the amounts due him for the period within three years preceding the filing of the
complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly
compute Pigcaulans claims, the case should be remanded to the Labor Arbiter for a detailed
computation of the monetary benefits due to him.
WHEREFORE, the petition is GRANTED

[G.R. No. 100388. December 14, 2000]

SOCIAL SECURITY SYSTEM, petitioner, vs. THE COURT OF APPEALS and CONCHITA
AYALDE, respondents.
DECISION
YNARES-SANTIAGO, J.:
In a petition before the Social Security Commission, Margarita Tana, widow of the late Ignacio
Tana, Sr., alleged that her husband was, before his demise, an employee of Conchita Ayalde as a
farmhand in the two (2) sugarcane plantations she owned (known as Hda. No. Audit B-70

located in Pontevedra, La Carlota City) and leased from the University of the Philippines (known
as Hda. Audit B-15-M situated in La Granja, La Carlota City). She further alleged that Tana
worked continuously six (6) days a week, four (4) weeks a month, and for twelve (12) months
every year between January 1961 to April 1979. For his labor, Tana allegedly received a regular
salary according to the minimum wage prevailing at the time. She further alleged that
throughout the given period, social security contributions, as well as medicare and employees
compensation premiums were deducted from Tanas wages. It was only after his death that
Margarita discovered that Tana was never reported for coverage, nor were his
contributions/premiums remitted to the Social Security System (SSS). Consequently, she was
deprived of the burial grant and pension benefits accruing to the heirs of Tana had he been
reported for coverage.
Hence, she prayed that the Commission issue an order directing:
1. respondents Conchita Ayalde and Antero Maghari as her administrator to pay the premium
contributions of the deceased Ignacio Tana, Sr. and report his name for SSS coverage; and
2. the SSS to grant petitioner Margarita Tana the funeral and pension benefits due her.[1]
The SSS, in a petition-in-intervention, revealed that neither Hda. B-70 nor respondents Ayalde
and Maghari were registered members-employers of the SSS, and consequently, Ignacio Tana,
Sr. was never registered as a member-employee. Likewise, SSS records reflected that there was
no way of verifying whether the alleged premium contributions were remitted since the
respondents were not registered members-employers. Being the agency charged with the
implementation and enforcement of the provisions of the Social Security Law, as amended, the
SSS asked the Commissions leave to intervene in the case.[2]
In his answer, respondent Antero Maghari raised the defense that he was a mere employee who
was hired as an overseer of Hda. B-70 sometime during crop years 1964-65 to 1971-72, and as
such, his job was limited to those defined for him by the employer which never involved matters
relating to the SSS. Hence, he prayed that the case against him be dismissed for lack of cause of
action.[3]
For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr. was her employee,
admitting only that he was hired intermittently as an independent contractor to plow, harrow, or
burrow Hda. No. Audit B-15-M. Tana used his own carabao and other implements, and he
followed his own schedule of work hours. Ayalde further alleged that she never exercised control
over the manner by which Tana performed his work as an independent contractor. Moreover,
Ayalde averred that way back in 1971, the University of the Philippines had already terminated
the lease over Hda. B-15-M and she had since surrendered possession thereof to the University
of the Philippines. Consequently, Ignacio Tana, Sr. was no longer hired to work thereon starting
in crop year 1971-72, while he was never contracted to work in Hda. No. Audit B-70. She also
prayed for the dismissal of the case considering that Ignacio Tana, Sr. was never her employee.
[4]
After hearing both parties, the Social Security Commission issued a Resolution on January 28,
1988, the dispositive portion of which reads:
After a careful evaluation of the testimonies of the petitioner and her witnesses, as well as the
testimony of the respondent together with her documentary evidences, this Commission finds
that the late Ignacio Tana was employed by respondent Conchita Ayalde from January 1961 to
March 1979. The testimony of the petitioner which was corroborated by Agaton Libawas and
Aurelio Tana, co-workers of the deceased Ignacio Tana, sufficienty established the latters
employment with the respondent.
As regards respondent Antero Maghari, he is absolved from liability because he is a mere
employee of Conchita Ayalde.
PREMISES CONSIDERED, this Commission finds and so holds that the late Ignacio Tana had been
employed continuously from January 1961 to March 1979 in Hda. B-70 and Hda. B-15-M which

are owned and leased, respectively, by respondent Conchita (Concepcion) Ayalde with a salary
based on the Minimum Wage prevailing during his employment.
Not having reported the petitioners husband for coverage with the SSS, respondent Conchita
(Concepcion) Ayalde is, therefore, liable for the payment of damages equivalent to the death
benefits in the amount of P7,067.40 plus the amount of P750.00 representing funeral benefit or
a total of P7,817.40.
Further, the SSS is ordered to pay to the petitioner her accrued pension covering the period after
the 5-year guaranteed period corresponding to the employers liability.
SO ORDERED.[5]
Respondent Ayalde filed a motion for reconsideration[6]which the Commission denied for lack of
merit in an Order dated November 3, 1988.[7]
Not satisfied with the Commissions ruling, Ayalde appealed to the Court of Appeals, docketed as
CA-G.R. SP No. 16427, raising the following assignment of errors:
I
The Social Security Commission erred in not finding that there is sufficient evidence to show
that:
(a) The deceased Ignacio Tana, Sr. never worked in the farmland of respondent-appellant
situated in Pontevedra, La Carlota City, otherwise known as Hacienda No. Audit B-70,
(Pontevedra B-70 Farm for short), in any capacity, whether as a daily or monthly laborer or as
independent contractor;
(b) During the time that respondent-appellant was leasing a portion of the land of the University
of the Philippines, otherwise known as Hacienda Audit No. B-15-M, (La Granja B-15 Farm for
short), the deceased Ignacio Tana, Sr. was hired thereat on a pakyaw basis, or as an independent
contractor, performing the services of an arador (Plower), for which he was proficient, using his
own carabao and farming implements on his own time and discretion within the period
demanded by the nature of the job contracted.
II
The Social Security Commission erred in holding that there is no evidence whatsoever to show
that respondent-appellant was no longer leasing La Granja B-15 Farm.
III
The Social Security Commission erred in not holding that the deceased Ignacio Tana, having
been hired as an independent contractor on pakyaw basis, did not fall within the coverage of the
Social Security Law.[8]
The Court of Appeals rendered judgment in favor of respondent-appellant Conchita Ayalde and
dismissed the claim of petitioner Margarita Tan.
The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was denied on the
ground that the arguments advanced are mere reiterations of issues and arguments already
considered and passed upon in the decision in question which are utterly insufficient to justify a
modification or reversal of said decision.[9]
Hence, this petition for review on certiorari on the following assigned errors:
1) The Court of Appeals was in error in ruling that an employee working under the pakyaw
system is considered under the law to be an independent contractor.
2) The Court of Appeals was in error in not giving due consideration to the fundamental tenet
that doubts in the interpretation and implementation of labor and social welfare laws should be
resolved in favor of labor.

3) The Court of Appeals was in error in disregarding the settled rule that the factual findings of
administrative bodies on matters within their competence shall not be disturbed by the courts.
4) The Court of Appeals was in error in ruling that even granting arguendo that Ignacio Tana was
employed by Conchita Ayalde, such employment did not entitle him to compulsory coverage
since he was not paid any regular daily wage or basic pay and he did not work for an
uninterrupted period of at least six months in a year in accordance with Section 8(j) (1) of the
SS Law.
The pivotal issue to be resolved in this petition is whether or not an agricultural laborer who was
hired on pakyaw basis can be considered an employee entitled to compulsory coverage and
corresponding benefits under the Social Security Law.
Petitioner, Social Security System (or SSS), argues that the deceased Ignacio Tana, Sr., who was
hired by Conchita Ayalde on pakyaw basis to perform specific tasks in her sugarcane plantations,
should be considered an employee; and as such, his heirs are entitled to pension and burial
benefits.
The Court of Appeals, however, ruled otherwise, reversing the ruling of the Social Security
Commission and declaring that the late Ignacio Tana, Sr. was an independent contractor, and in
the absence of an employer-employee relationship between Tana and Ayalde, the latter cannot
be compelled to pay to his heirs the burial and pension benefits under the SS Law.
At the outset, we reiterate the well-settled doctrine that the existence of an employer-employee
relationship is ultimately a question of fact.[10] And while it is the general rule that factual
issues are not within the province of the Supreme Court, said rule is not without exception. In
cases, such as this one, where there are conflicting and contradictory findings of fact, this Court
has not hesitated to scrutinize the records to determine the facts for itself.[11] Our disquisition
of the facts shall be our guide as to whose findings are supported by substantial evidence.
The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended by PD 1202
and PD 1636) is premised on the existence of an employer-employee relationship, and Section
8(d) defines an employee as any person who performs services for an employer in which either
or both mental and physical efforts are used and who receives compensation for such services
where there is an employer-employee relationship. The essential elements of an employeremployee relationship are: (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and
methods by which the work is to be accomplished, with the power of control being the most
determinative factor.[12]
There is no question that Tana was selected and his services engaged by either Ayalde herself, or
by Antero Maghari, her overseer. Corollarily, they also held the prerogative of dismissing or
terminating Tanas employment. The dispute is in the question of payment of wages. Claimant
Margarita Tana and her corroborating witnesses testified that her husband was paid daily wages
per quincena as well as on pakyaw basis. Ayalde, on the other hand, insists that Tana was paid
solely on pakyaw basis. To support her claim, she presented payrolls covering the period January
of 1974 to January of 1976;[13] and November of 1978 to May of 1979.[14]
A careful perusal of the records readily show that the exhibits offered are not complete, and are
but a mere sampling of payrolls. While the names of the supposed laborers appear therein, their
signatures are nowhere to be found. And while they cover the years 1975, 1976 and portions of
1978 and 1979, they do not cover the 18-year period during which Tana was supposed to have
worked in Ayaldes plantations. Also an admitted fact is that these exhibits only cover Hda. B70,
Ayalde having averred that all her records and payrolls for the other plantation (Hda. B-15-M)
were either destroyed or lost.[15]
To our mind, these documents are not only sadly lacking, they are also unworthy of credence.
The fact that Tanas name does not appear in the payrolls for the years 1975, 1976 and part of
1978 and 1979, is no proof that he did not work in Hda. B70 in the years 1961 to 1974, and the

rest of 1978 and 1979. The veracity of the alleged documents as payrolls are doubtful
considering that the laborers named therein never affixed their signatures to show that they
actually received the amounts indicated corresponding to their names. Moreover, no record was
shown pertaining to Hda. B-15-M, where Tana was supposed to have worked. Even Ayalde
admitted that she hired Tana as arador and sometimes as laborer during milling in Hda. B-15-M.
[16] In light of her incomplete documentary evidence, Ayaldes denial that Tana was her
employee in Hda. B-70 or Hda. B-15-M must fail.
In contrast to Ayaldes evidence, or lack thereof, is Margarita Tanas positive testimony,
corroborated by two (2) other witnesses. On the matter of wages, they testified as follows:
Margarita Tana:
Q. During the employment of your late husband, was he paid any wages?
A. Yes, he was paid.
Q. What was the manner of payment of his salary, was it on pakyaw or daily basis?
A. Daily basis.
Q. How many times did he receive his salary in a months time?
A. 2 times.
Q. You mean, payday in Hda. B-70 is every 15 days?
A. Yes, sir.
xxxxxxxxx
ATTY. GALVAN:
To prove that it is material to the main question because if ever the hacienda maintains complete
payrolls of their employees, then the burden of proof lies in the petitioner..
HEARING OFFICER:
Let the witness answer, if she knows.
WITNESS:
There was no payroll, only pad paper.
ATTY. GALVAN: (continuing)
Q. Were the names of workers of the hacienda all listed in that pad paper every payday?
A. Yes, we just sign on pad paper because we have no payroll to be signed.
xxxxxxxxx
Q. What do you understand by payroll?
A. Payroll is the list where the whole laborers are listed and receive their salaries.
Q. And how did that differ from the pad paper which you said you signed?
A. There is a difference.
Q. What is the difference?
A. In the payroll, at the end there is a column for signature but in the pad paper, we only sign
directly.
Q. Did it contain the amount that you receive?
A. Yes, sir.
Q. And the date corresponding to the payroll pad?

A. I am not sure but it only enumerates our names and then we were given our salaries.
Q. Now, did you have a copy of that?
ATTY. GALVAN:
Objection, Your Honor, it is not the petitioner who had a copy, it is usually the owner because the
preparation of the payrolls is done by the employer who..
ATTY. UNGCO:
That is why Im asking ..
HEARING OFFICER:
Let the witness answer. Objection overruled.
WITNESS:
I dont have.
xxxxxxxxx
Q. When you are receiving daily wage of P4.00 how much was your quincenal together with your
husband?
A. The highest salary I received for my own was P30.00 in one quincena.
Q. What about the salary of your husband, how much?
A. The same.
Q. Was this P30.00 per quincena later on increased?
A. There was an increase because formerly it was P4.00 now it is P8.00.
Q. In 1979 how much was your husbands salary per quincena?
A. In one quincena my husband receives P60.00 while I only receive P30.00.[17]
AGATON LIBAWAS:
Q. During your employment, do you sign payrolls everytime you draw your salary?
A. We sign on intermediate pad.
Q. You mean, the practice of the hacienda is to have the names of the laborers receiving that
salaries listed on that intermediate pad?
A. Yes, sir.[18]
AURELIO TANA:
Q. By the way, how many times did you receive your salaries in a month?
A. We receive our wages twice a month that is, every 15 days.
Q. Did you sign payrolls everytime you received your salaries?
A. In the pad paper as substitute payroll.
Q. Do you know if all the workers of the hacienda were listed in that payrolls?
A. Yes, sir.
Q. Who was in charge in giving your salaries?
A. Antero Maghari.[19]
These witnesses did not waver in their assertion that while Tana was hired by Ayalde as an
arador on pakyaw basis, he was also paid a daily wage which Ayaldes overseer disbursed every
fifteen (15) days. It is also undisputed that they were made to acknowledge receipt of their

wages by signing on sheets of ruled paper, which are different from those presented by Ayalde as
documentary evidence. In fine, we find that the testimonies of Margarita Tana, Agaton Libawas
and Aurelio Tana prevail over the incomplete and inconsistent documentary evidence of Ayalde.
In the parallel case of Opulencia Ice Plant and Storage v. NLRC, the petitioners argued that since
Manuel P. Esitas name does not appear in the payrolls of the company it necessarily means that
he was not an employee. This Court held:
Petitioners further argue that complainant miserably failed to present any documentary evidence
to prove his employment. There was no timesheet, pay slip and/or payroll/cash voucher to speak
of. Absence of these material documents are necessarily fatal to complainants cause.
We do not agree. No particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the relationship
may be admitted. For, if only documentary evidence would be required to show that relationship,
no scheming employer would ever be brought before the bar of justice, as no employer would
wish to come out with any trace of the illegality he has authored considering that it should take
much weightier proof to invalidate a written instrument. Thus, as in this case where the
employer-employee relationship between petitioners and Esita was sufficiently proved by
testimonial evidence, the absence of time sheet, time record or payroll has become
inconsequential.[20] (Underscoring ours)
Clearly, then, the testimonial evidence of the claimant and her witnesses constitute positive and
credible evidence of the existence of an employer-employee relationship between Tana and
Ayalde. As the employer, the latter is duty-bound to keep faithful and complete records of her
business affairs, not the least of which would be the salaries of the workers. And yet, the
documents presented have been selective, few and incomplete in substance and content.
Consequently, Ayalde has failed to convince us that, indeed, Tana was not her employee.
The argument is raised that Tana is an independenent contractor because he was hired and paid
wages on pakyaw basis. We find this assertion to be specious for several reasons.
First, while Tana was sometimes hired as an arador or plower for intermittent periods, he was
hired to do other tasks in Ayaldes plantations. Ayalde herself admitted as much, although she
minimized the extent of Tanas labors. On the other hand, the claimant and her witnesses were
direct and firm in their testimonies, to wit:
MARGARITA TANA:
Q. Was your late husbands work continuous or not?
A. His work was continuous except on Sundays.
Q. Mrs. Witness, in January 1961, how many days in a week did your late husband work?
A. 4 weeks in January 1961.
Q. And how many months for that year did he work?
A. 12 months.
Q. Is this working pattern of your husband, considering that you testified that he worked
continuously, the same all throughout his employment from 1961 to 1978?
A. Yes, he worked continuously from 1961 to 1978 for 6 days a week, 4 weeks a month and 12
months each year.
Q. Mrs. Witness, how many months did your husband work in 1979 considering that he died in
1979?
A. 3 months.
Q. What was the nature of the work of your late husband from 1961 until his death in 1979?
A. Cutting canes, hauling canes with the use of canecarts, plowing, hauling fertilizers, weeding

and stubble cleaning.

xxxxxxxxx
Q. Now, the other co-workers of yours, you said they were Agaton Libawas, Narciso Dueas, Juan
Dueas, and Aurelio Tana, what were their jobs?
A. Hauling canes by the use of bull carts and cutting canes. Their works are the same with that
of my husbands.
Q. But you mentioned among the duties of your husband as arador meaning plowing the fields?
A. Yes, he was also plowing because that is one of his duties.[21]
AGATON LIBAWAS:
Q. How about petitioner Margarita Tana and the late Ignacio Tana, were they regular workers, or
extra workers?
A. They were regular workers.
Q. In your case, Mr. Witness, considering that according to you, you are only a relief worker,
please inform the Commission how many months each year from 1961 to 1984 did you work in
Hda. B-70 and Hda. B-15M with Conchita Ayalde?
A. During milling season, I worked 2 months, during cultivation if they are short of plowers then
they would call me to work for at least 3 months as a plower.
Q. So, all in all, each year, from 1961 to 1984 your average working months in Hda. B-70 and B15M are 5 months each year?
A. Yes, sir.
Q. Mr. Witness, to prove that you have worked there, will you please inform at least 5 laborers of
Hda. B-70 and B-15M of Conchita Ayalde?
A. Juan Dueas, Narciso Dueas, Aurelio Tana, Ignacio and Margarita Tana.
xxxxxxxxx
Q. Will you please inform the Commission if the deceased Ignacio Tana which is according to you,
was a regular worker of the 2 haciendas, if how many months did he work during lifetime from
1961 until he died in 1979?
A. His work was continuous.
Q. And by continuous you mean he worked straight 12 months each year except in 1979?
A. He worked only for 10 months because the 2 months are already preparation for cultivation.
xxxxxxxxx
Q. And according to you, in a years time, you worked only for at least 5 months in Hda. B-70 and
B-15M, is that correct?
A. Yes.
Q. And during this time that you are working in your riceland you will agree with me that you do
not know whether the laborers of this Hda. B-70 and Had B-15M are really working because you
are devoting your time in your riceland, is that correct?
A. I knew because the place of their work is just near my house, it is along the way.
Q. How about when the canes are already tall, can you actually see the workers in Hda. B-70 and
B-15M when you are busy at your riceland?
A. Yes, because they have to pass in my house.
Q. Is there no other passage in that hacienda except that road in front of your house?

A. Yes.
Q. Are you sure about that?
A. Yes, I am sure.[22]
AURELIO TANA:
Q. Do you know what is the work of the petitioner during the time when you were together
working in the field?
A. We were working together, like cutting and loading canes, hoeing, weeding, applying
fertilizers, digging canals and plowing.
Q. During your employment in the said hacienda where were you residing?
A. There inside the hacienda.
Q. What about the petitioner?
A. The same.
Q. How far is your house from the house of the petitioner?
A. About 20 arms-length.
Q. How far is Hda. B-70 from Hda. B-15.
A. It is very near it is divided by the road.
Q. What road are you referring to?
A. Highway road from Barangay Buenavista to La Granja.
Q. During your employment will you please inform the Commission the frequency of work of the
late Ignacio Tana?
A. 4 weeks a month, 6 days a week, 12 months a year.
Q. Why is it that you are in a position to inform the Commission about the period of employment
of Ignacio Tana?
A. Because we were together working.[23]
It is indubitable, therefore, that Tana worked continuously for Ayalde, not only as arador on
pakyaw basis, but as a regular farmhand, doing backbreaking jobs for Ayaldes business. There is
no shred of evidence to show that Tana was only a seasonal worker, much less a migrant worker.
All witnesses, including Ayalde herself, testified that Tana and his family resided in the
plantation. If he was a mere pakyaw worker or independent contractor, then there would be no
reason for Ayalde to allow them to live inside her property for free. The only logical explanation
is that he was working for most part of the year exclusively for Ayalde, in return for which the
latter gratuitously allowed Tana and his family to reside in her property.
The Court of Appeals, in finding for Ayalde, relied on the claimants and her witnesses admission
that her husband was hired as an arador on pakyaw basis, but it failed to appreciate the rest of
their testimonies. Just because he was, for short periods of time, hired on pakyaw basis does not
necessarily mean that he was not employed to do other tasks for the remainder of the year. Even
Ayalde admitted that Tana did other jobs when he was not hired to plow. Consequently, the
conclusion culled from their testimonies to the effect that Tana was mainly and solely an arador
was at best a selective appreciation of portions of the entire evidence. It was the Social Security
Commission that took into consideration all the documentary and testimonial evidence on record.
Secondly, Ayalde made much ado of her claim that Tana could not be her employee because she
exercised no control over his work hours and method of performing his task as arador. It is also
an admitted fact that Tana, Jr. used his own carabao and tools. Thus, she contends that, applying
the control test, Tana was not an employee but an independent contractor.

A closer scrutiny of the records, however, reveals that while Ayalde herself may not have directly
imposed on Tana the manner and methods to follow in performing his tasks, she did exercise
control through her overseer.
Be that as it may, the power of control refers merely to the existence of the power. It is not
essential for the employer to actually supervise the performance of duties of the employee; it is
sufficient that the former has a right to wield the power.[24] Certainly, Ayalde, on her own or
through her overseer, wielded the power to hire or dismiss, to check on the work, be it in
progress or quality, of the laborers. As the owner/lessee of the plantations, she possessed the
power to control everyone working therein and everything taking place therein.
Jurisprudence provides other equally important considerations which support the conclusion that
Tana was not an independent contractor. First, Tana cannot be said to be engaged in a distinct
occupation or business. His carabao and plow may be useful in his livelihood, but he is not
independently engaged in the business of farming or plowing. Second, he had been working
exclusively for Ayalde for eighteen (18) years prior to his demise. Third, there is no dispute that
Ayalde was in the business of growing sugarcane in the two plantations for commercial purposes.
There is also no question that plowing or preparing the soil for planting is a major part of the
regular business of Ayalde.
Under the circumstances, the relationship between Ayalde and Tana has more of the attributes of
employer-employee than that of an independent contractor hired to perform a specific project. In
the case of Dy Keh Beng v. International Labor,[25] we cited our long-standing ruling in Sunripe
Coconut Products Co. v. Court of Industrial Relations, to wit:
When a worker possesses some attributes of an employee and others of an independent
contractor, which make him fall within an intermediate area, he may be classified under the
category of an employee when the economic facts of the relations make it more nearly one of
employment than one of independent business enterprise with respect to the ends sought to be
accomplished. (Underscoring Ours)[26]
We find the above-quoted ruling to be applicable in the case of Tana. There is preponderance of
evidence to support the conclusion that he was an employee rather than an independent
contractor.
The Court of Appeals also erred when it ruled, on the alternative, that if ever Tana was an
employee, he was still ineligible for compulsory coverage because he was not paid any regular
daily wage and he did not work for an uninterrupted period of at least six months in a year in
accordance with Section 8(j) (I) of the Social Security Law. There is substantial testimonial
evidence to prove that Tana was paid a daily wage, and he worked continuously for most part of
the year, even while he was also occasionally called on to plow the soil on a pakyaw basis. As a
farm laborer who has worked exclusively for Ayalde for eighteen (18) years, Tana should be
entitled to compulsory coverage under the Social Security Law, whether his service was
continuous or broken.
Margarita Tana alleged that SSS premiums were deducted from Tanas salary, testifying, thus:
Q. Were there deductions from the salaries of your husband while he was employed with the
respondent from 1961 to 1979?
A. Yes, there were deductions but I do not know because they were the ones deducting it.
Q. Why do you know that his salaries were deducted for SSS premiums?
A. Because Antero Maghari asked me and my husband to sign SSS papers and he told us that
they will take care of everything.
Q. How much were the deductions every payday?
A. I do not know how much because our daily wage was only P4.00.[27]
Agaton Libawas, also testified:

Q. Mr. Witness, in your 15-day wages do you notice any deductions from it?
A. There were deductions and we were informed that it was for SSS.
Q. Mr. Witness, since when were there deductions from your salaries?
A. Since 1961.
Q. Up to when?
A. Up to 1979.
Q. Mr. Witness, are you a member of the SSS?
A. No.
Q. How about petitioner, if you know?
A. No, also.
Q. What happened to the deductions did you not ask your employer?
A. We asked but we were answered that we were being remitted for our SSS.
Q. Did you not verify?
A. No, because I just relied on their statement.[28]
Ayalde failed to counter these positive assertions. Even on the assumption that there were no
deductions, the fact remains that Tana was and should have been covered under the Social
Security Law. The circumstances of his employment place him outside the ambit of the exception
provided in Section 8(j) of Republic Act No. 1611, as amended by Section 4 of R.A. 2658.
WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in C.A.-G.R. SP
No. 16427 and the Resolution dated June 14, 1991 are hereby REVERSED and SET ASIDE. The
Resolution of the Social Security Commission in SSC Case No. 8851 is REINSTATED.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

FIRST DIVISION
G.R. No. 161713

August 20, 2008

LEPANTO CONSOLIDATED MINING COMPANY, petitioner,

vs.
LEPANTO LOCAL STAFF UNION, respondent.

RESOLUTION
CARPIO, J.:
The Case
Before the Court is a petition for review 1 assailing the 22 July 2003 Decision 2 and 20 January
2004 Resolution3 of the Court of Appeals in CA-G.R. SP No. 60644.
The Antecedent Facts
Lepanto Consolidated Mining Company 4 (petitioner) is a domestic mining corporation. Lepanto
Local Staff Union (respondent) is the duly certified bargaining agent of petitioner's employees
occupying staff positions.
On 28 November 1998, petitioner and respondent entered into their fourth Collective Bargaining
Agreement (4th CBA) for the period from 1 July 1998 to 30 June 2000. The 4 th CBA provides:
ARTICLE VIII - NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The Company shall continue to pay nightshift
differential for work during the first and third shifts to all covered employees within the
bargaining unit as follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the
basic rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be
15% of the basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to
3:00 p.m.), there [will] be no night differential pay added before the overtime pay is
calculated.
ARTICLE XII - RIGHTS, PRIVILEGES AND OTHER BENEFITS

Section 9. Longevity pay - The company shall grant longevity pay of P30.00 per month
effective July 1, 1998 and every year thereafter.5
On 23 April 2000, respondent filed a complaint with the National Conciliation and Mediation
Board, Cordillera Administrative Region (NCMB-CAR) alleging that petitioner failed to pay the
night shift differential and longevity pay of respondent's members as provided in the 4 th CBA.
Petitioner and respondent failed to amicably settle the dispute. They agreed to submit the issues
to Voluntary Arbitrator Norma B. Advincula (Voluntary Arbitrator) for resolution.
The Ruling of the Voluntary Arbitrator
In a Decision dated 26 May 2000, 6 the Voluntary Arbitrator ruled in favor of respondent as
follows:
WHEREFORE, foregoing considered, this Office holds and so orders respondent Lepanto
Consolidated Mining Corporation (LCMC) to grant complainant Lepanto Local Staff Union
(LLSU) the following benefits:

Longevity pay of P30.00 per month which shall be reckoned form July 1, 1998 and
every year thereafter in consonance with their contract; and

Night shift differential pay of 15% of the basic rate for hours of work rendered beyond
3:00 p.m. for the following shifts: 7:00 A.M. to 4:00 P.M., 7:30 A.M. to 4:30 P.M. and
8:00 A.M. to 5:00 P.M. to be reckoned from the date of the effectivity of the 4 th CBA
which was on July 1, 1998.

 SO ORDERED.7
The Voluntary Arbitrator ruled that petitioner had the legal obligation to pay longevity pay of P30
per month effective 1 July 1998. The Voluntary Arbitrator rejected petitioner's contention that
"effective" should be understood as the reckoning period from which the employees start earning
their right to longevity pay, and that the longevity pay should be paid only on 1 July 1999. The
Voluntary Arbitrator ruled that 1 July 1998 was the reckoning date that indicated when the
amounts due were to be given.
The Voluntary Arbitrator agreed with respondent that surface workers on the second shift who
performed work after 3:00 p.m. should be given an additional night shift differential pay
equivalent to 15% of their basic rate. Interpreting paragraph 3, Section 3, Article VIII of the 4 th
CBA, the Voluntary Arbitrator ruled that it only meant that an employee who extends work
beyond the second shift shall receive overtime pay which shall be computed before the night
shift differential pay. In other words, it excludes the night shift differential in the computation of
overtime pay.
The Voluntary Arbitrator ruled that the inclusion of paragraph 3, Section 3, Article VIII of the 4 th
CBA disclosed the intent of the parties to grant night shift differential benefits to employees who
rendered work beyond the regular day shift. The Voluntary Arbitrator ruled that if the intention
were otherwise, paragraph 3 would have been deleted.
Finally, the Voluntary Arbitrator ruled that the respondent's claim for night shift differential
arising from the 1 st, 2nd, and 3rd CBAs had already prescribed.
Petitioner filed a motion for reconsideration. In her Resolution dated 5 August 2000, 8 the
Voluntary Arbitrator denied the motion for reconsideration for lack of merit.
Petitioner filed a petition for review before the Court of Appeals.
The Ruling of the Court of Appeals
In its 22 July 2003 Decision, the Court of Appeals affirmed the Voluntary Arbitrator's Decision.
The Court of Appeals ruled that paragraph 3, Section 3, Article VIII was clear and unequivocal. It
grants night shift differential pay to employees of the second shift for work rendered beyond
their regular day shift. However, the night shift differential was excluded in the computation of
the overtime pay.
The Court of Appeals further ruled that the records of the case revealed that during the
effectivity of the 4 th CBA, petitioner voluntarily complied with paragraph 3, Section 3, Article
VIII by paying night shift differential to employees for hours worked beyond 3:00 p.m.
Petitioner's act disclosed the parties' intent to include employees in the second shift in the
payment of night shift differential. The Court of Appeals rejected petitioner's claim that the
payment was due to error and mere inadvertence on the part of petitioner's accounting
employees. The Court of Appeals noted that the records revealed that petitioner still continued to
pay night shift differential for hours worked beyond 3:00 p.m. after the Voluntary Arbitrator
rendered the 26 May 2000 Decision. Thus, petitioner is estopped from claiming erroneous
payment.
Petitioner filed a motion for reconsideration. In its 20 January 2004 Resolution, the Court of
Appeals denied the motion for lack of merit.
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals erred in affirming the Voluntary
Arbitrator's interpretation of the 4 th CBA that the employees in the second shift are entitled to
night shift differential.

The Ruling of this Court

The petition has no merit.
The terms and conditions of a collective bargaining contract constitute the law between the
parties.9 If the terms of the CBA are clear and have no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall prevail. 10
The disputed provision of the 4 th CBA provides:
ARTICLE VIII - NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The Company shall continue to pay nightshift
differential for work during the first and third shifts to all covered employees within the
bargaining unit as follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the
basic rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be
15% of the basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00
p.m.), there [will] be no night differential pay added before the overtime pay is calculated.
There is no question that workers are entitled to night shift differential of 20% of the basic rate
for work performed during the first shift from 11:00 p.m. to 7:00 a.m. Workers are also entitled
to night shift differential of 15% of the basic rate for work performed during the third shift from
3:00 p.m. to 11:00 p.m. The issue is whether workers are entitled to night shift differential for
work performed beyond the regular day shift, from 7:00 a.m. to 3:00 p.m.
We sustain the interpretation of both the Voluntary Arbitrator and the Court of Appeals. The first
paragraph of Section 3 provides that petitioner shall continue to pay night shift differential to
workers of the first and third shifts. It does not provide that workers who performed work
beyond the second shift shall not be entitled to night shift differential. The inclusion of the third
paragraph is not intended to exclude the regular day shift workers from receiving night shift
differential for work performed beyond 3:00 p.m. It only provides that the night shift differential
pay shall be excluded in the computation of the overtime pay.
It is settled that in order to ascertain the intention of the contracting parties, the Voluntary
Arbitrator shall principally consider their contemporaneous and subsequent acts as well as their
negotiating and contractual history and evidence of past practices. 11 In this case, the Voluntary
Arbitrator and the Court of Appeals both found that the provision in question was contained in
the 1st, 2nd, and 3 rd CBAs between petitioner and respondent. During the effectivity of the first
three CBAs, petitioner paid night shift differentials to other workers who were members of
respondent for work performed beyond 3:00 p.m. Petitioner also paid night shift differential for
work beyond 3:00 p.m. during the effectivity of the 4 th CBA. Petitioner alleges that the payment
of night shift differential for work performed beyond 3:00 p.m. during the 4 th CBA was a mistake
on the part of its accounting department. However, the Court of Appeals correctly ruled that
petitioner failed to present any convincing evidence to prove that the payment was erroneous. In
fact, the Court of Appeals found that even after the promulgation of the Voluntary Arbitrator's
decision and while the case was pending appeal, petitioner still paid night shift differential for
work performed beyond 3:00 p.m. It affirms the intention of the parties to the CBA to grant
night shift differential for work performed beyond 3:00 p.m.
WHEREFORE, we DENY the petition. We AFFIRM the 22 July 2003 Decision and 20 January
2004 Resolution of the Court of Appeals in CA-G.R. SP No. 60644. Costs against petitioner.
SO ORDERED.