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FIRST DIVISION

[G.R. No. 159577. May 3, 2006.]


CHARLITO PEARANDA, petitioner, vs. BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA, respondents.

DECISION

PANGANIBAN, C.J p:
Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on labor standards.
Since petitioner belongs to this class of employees, he is not entitled to overtime pay and premium pay for working on rest days.
The Case
Before us is a. Petition for Review 1 under Rule 45 of the Rules of Court, assailing the January 27, 2003 2 and July 4, 2003 3 Resolutions
of the Court of Appeals (CA) in CA-G.R. SP No. 74358. The earlier Resolution disposed as follows:
"WHEREFORE, premises considered, the instant petition is hereby DISMISSED." 4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations Commission (NLRC) challenged in the CA disposed as follows:
"WHEREFORE, premises con considered, the decision of the Labor Arbiter below awarding overtime pay and
premium pay for rest day to complainant is herebyREVERSED and SET ASIDE, and the complaint in the aboveentitled case, dismissed for lack of merit. 5
The Facts
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge
of the operations and maintenance of its steam plant boiler. 6 In May 2001, Pearanda filed a Complaint for illegal dismissal with money
claims against BPC and its general manager, Hudson Chua, before the NLRC. 7
After the parties failed to settle amicably, the labor arbiter 8 directed the parties to file their position papers and submit supporting
documents. 9 Their respective allegations are summarized by the labor arbiter as follows:
"[Pearanda] through counsel in his position paper alleges that he was employed by respondent [Banganga] on
March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally
terminated on December 19, 2000. Further, [he] alleges that his services [were] terminated without the benefit of
due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium
pay for working during holidays/rest days, night shift differentials and finally claimed for payment of damages and
attorney's fees having been forced to litigate the present complaint. SITCEA
"Upon the other hand, respondent [BPC] is a domestic corporation duly organized and existing under Philippine
laws and is represented herein by its General Manager HUDSON CHUA, [the] individual respondent. Respondents
thru counsel allege that complainant's separation from service was done pursuant to Art. 283 of the Labor Code.
The respondent [BPC] was on temporary closure due to repair and general maintenance and it applied for clearance
with the Department of Labor and Employment, Regional Office No. XI to shut down and to dismiss employees
(par. 2 position paper). And due to the insistence of herein complainant he was paid his separation benefits (Annexes
C and D, ibid). Consequently, when respondent [BPC] partially reopened in January 2001, [Pearanda] failed to
reapply. Hence, he was, not terminated from employment much less illegally. He opted to severe employment when
he insisted payment of his separation benefits. Furthermore, being a managerial employee he is not entitled to
overtime pay and if ever he rendered services beyond the normal hours of work, [there] was no office order/or
authorization for him to do so. Finally, respondents allege that the claim for damages has no legal and factual basis
and that they instant complaint must necessarily fail for lack of merit.'' 10
The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature because he was still employed
by BPC. 11 The temporary closure of BPC's plant did not terminate his employment, hence, he need not reapply when the plant reopened.

According to the labor arbiter, petitioner's money claims for illegal dismissal was also weakened by his quitclaim and admission during
the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay. 12
Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest days, and attorney's fees in
the total amount of P21,257.98. 13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for working on rest days.
According to the Commission, petitioner was not entitled to these awards because he was a managerial employee. 14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Pearanda's Petition for Certiorari. The appellate court held that he failed
to: 1) attach copies of the pleading submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of the Petition
was not done by personal service. 15
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner still failed to submit the pleadings
filed before the NLRC. 16
Hence this Petition. 17
The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction when it entertained
the APPEAL of the respondent[s] despite the lapse of the mandatory period of TEN DAYS.
"The [NLRC] committed grave abuse of discretion amounting to an excess or lack of jurisdiction when it rendered
the assailed RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002 REVERSING AND SETTING ASIDE
the FACTUAL AND LEGAL FINDINGS of the [labor arbiter] with respect to the following:
"I. The finding of the [labor arbiter] that [Pearanda] is a regular, common employee entitled to monetary
benefits under Art. 82 [of the Labor Code].
"II. The finding that [Pearanda] is entitled to the payment of OVERTIME PAY and OTHER
MONETARY BENEFITS." 18
The Court's Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Pearanda's Petition on purely technical grounds particularly with regard to the failure to submit supporting
documents. CHATcE
In Atillo v. Bombay, 19 the Court held that the crucial issue is whether the documents accompanying the petition before the CA
sufficiently supported the allegations therein. Citing this case, Piglas Kamao v. NLRC 20 stayed the dismissal of an appeal in the exercise
of its equity jurisdiction to order the adjudication on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the finding that he was a
managerial employee. 21 IN his Motion for Reconsideration, petitioner also submitted the pleadings before the labor arbiter in an attempt
to comply with the CA rules. 22 Evidently, the CA could have ruled on the Petition on the basis of these attachments. Petitioner should
be deemed in substantial compliance with the procedural requirements.
Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor of petitioner and to tackle his substantive
arguments in the present case. Rules of procedure must be adopted to help promote, not frustrate, substantial justice. 23 The Court
frowns upon the practice of dismissing cases purely on procedural grounds. 24 Considering that there was substantial compliance, 25 a
liberal interpretation of procedural rules in this labor case is more in keeping with the constitutional mandate to secure social justice. 26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter should he filed within 10 days from receipt
thereof. 27
Petitioner's claim that respondents filed their appeal beyond the required period is not substantiated. In the pleadings before us, petitioner
fails to indicate when respondents received the Decision of the labor arbiter. Neither did the petitioner attach a copy of the challenged

appeal. Thus, this Court has no means to determine from the records when the 10-day period commenced and terminated. Since petitioner
utterly failed to support his claim that respondents' appeal was filed out of time, we need not belabor that point. The parties alleging
have the burden of substantiating their allegations. 28
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and therefore, entitled to the award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working
conditions of employees, including entitlement to overtime pay and premium pay for working on rest days. 29 Under this provision,
managerial employees are "those whose primary duty consists of the management of the establishment in which they are employed or
of a department or subdivision." 30
The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions:
"(1) Their primary duty consists of the management of the establishment in which they are employed or of a
department or subdivision thereof;
"(2) They customarily and regularly direct the work of two or more employees therein;
"(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations
as to the hiring and firing and as to the promotion or any other change of status of other employees are given
particular weight." 31
The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner was a member of the
managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and member of the
managerial staff are not entitled to the provisions of law on labor standards. 32 The Implementing Rules of the Labor Code define
members of a managerial staff as those with the following duties and responsibilities:

"(1) The primary duty consists of the performance of work directly related to management policies of the
employer; TSacID
"(2) Customarily and regularly exercise discretion and independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and tasks; and
"(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly
and closely related to the performance of the work described in paragraphs (1), (2), and (3) above." 33
"1. To supply the required and continuous steam to all consuming units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety white working.
"6. Recommend parts and suppliers purchases.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
"8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time." 34
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties
and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and
the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment
to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff. 35

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for
the operation of the boiler. 36The term foreman implies that he was the representative of management over the workers and the operation
of the department. 37 Petitioner's evidence also showed that he was the supervisor of the steam plant. 38 His classification as supervisors
is further evident from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees who were paid on a
monthly basis; the others were paid only on a daily basis. 39
On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to
petitioner. EHSTDA
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Chico-Nazario, J., is on official leave.

Footnotes
1.Rollo, pp. 4-11.
2.Id. at 64-65 & 298-299, Former Sixteenth Division. Penned by Justice Rodrigo V. Cosico (Division chairperson), with the
concurrence of Justices Rebecca de Guia-Salvador and Regalado E. Maambong (members).
3.Id. at 51-52.
4.Id. at 65 & 299.
5.Id. at 34.
6.Petitioner's Memorandum, p. 3; rollo, p. 266.
7.Id. at 2; id. at 265.
8.The labor arbiter assigned to the case was Arturo L. Gamolo.
9.Decision of the Labor Arbiter, p. 1; rollo, p. 21.
10.Id. at 2; id. at 22.
11.Id. at 3; id. at 23.
12.Id. at 1; id. at 21.
13.Id. at 5; id. at 25.
14.NLRC Resolution dated May 8, 2002, p. 2; rollo, p. 33.
15.Assailed CA Resolution dated January 27, 2003, pp. 1-2; rollo, pp. 298-299.
16.Assailed CA Resolution dated July 4, 2003, id. at 51.
17.This Petition was deemed submitted for decision on June 29. 2005 upon this Court's receipt of petitioner's Memorandum, which
he signed with the assistance of Atty. Angela A. Librado. Respondents' Memorandum, signed by Atty. Leo N. Caubang, was
received by this Court on May 26, 2005.
18.Petitioner's Memorandum, pp. 5-6; rollo, pp. 268-269.
19.351 SCRA 361, February 7, 2001.
20.357 SCRA 640, May 9, 2001.
21.Petitioner attached his pay slips and job designation, and the company's manpower schedule as Annexes "C," "D," and "E"
(CA rollo, pp. 20-31).
22.Petitioner submitted the parties' position papers before the labor arbiter and their respective supporting documents (CA rollo, pp.
43-64).

23.Chua v. Absolute Manpower Corporation, 412 SCRA 517, October 16, 2003; Pacific Life Assurance Corporation v. Sison, 359
Phil. 332, November 20, 1998; Gregorio v. Court of Appeals, 72 SCRA 120, July 28, 1976.
24.Pacific Life Assurance Corporation v. Sison, id.; Empire Insurance Company v. National Labor Relation Commission, 355 Phil.
694, August 14, 1998; People Security Inc. v. National Labor Relation Commission, 226 SCRA 116, September 8,
1993; Tamargo v. Court of Appeals, 209 SCRA 518, June 3, 1992.
25.Chua v. Absolute Management Corporation, supra note 23; Cusi Hernandez v. Diaz, 336 SCRA 113, July 18, 2000.
26.CONSTITUTION Art. II, Sec. 18 and Art. XIII, Sec. 3, See, Ablaza v. Court of Industrial Relation, 126 SCRA 247, December 21,
1983.
27.New Rules of Procedure of the National Labor Relations Commission, Rule VI, Sec. 1.
28.RULES OF COURT, Rule 131. Sec. 1.
29.Labor standards is ground in Book 3 of the Labor Code, entitled "Conditions of Employment." Arts. 87 and 93 provide:
"Arts. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the
overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five (25%) per cent thereof.
Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate
of the first eight hours on a holiday or rest day plus at least thirty percent thereof."
Art. 93. Compliance for rest day, Sunday or holiday work. (a) Where an employee is made or permitted to work on his scheduled
rest day, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage. An employee shall
be entitled to such additional compensation for work performed on Sunday only when it is his established rest day.
(b) When the nature of the work of the employee is such that he has not regular workdays and no regular rest days can be scheduled,
he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage for work performed on
Sundays and holidays.
(c) Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular
wage of the employee. Where Such holiday work falls on the employees scheduled rest day, he shall be entitled to an
additional compensation of at least fifty percent (50%) of his regular wage.
(d) Where the collective bargaining agreement or other applicable employment contact stipulates the payment of a higher premium
pay than that prescribed under this Article, the employer shall pay such higher rate."
30.The other definition of a managerial employee found in the Labor Code Art. 212(m) is in connection with labor relations or the
right to engage in unionization. Under this provision, a managerial employee is one "vested with powers or prerogatives to
lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees." C. AZUCENA, EVERYONE'S LABOR CODE, 58 (2001 ed).
31.Implementing Rules of the Labor Code, Book, III, Rule 1, Sec. 2(b).
32.LABOR CODE, Art. 82.
33.Implementing Rules of the Labor Code, Book III, Rule 1, Sec. 2(c).
34.Job Description, submitted as petitioner's Annex to his Memorandum; rollo, p. 312.
35.See Quebec v. National Labor Relations Commission, 361 Phil. 555, January 22, 1999; Salazar v. National Labor Relations
Commission, 326 Phil. 288, April 17, 1996; National Sugar Refineries Corporation v. National Labor Relations Commission,
220 SCRA 452, March 24, 1993.
36.Petitioner's Position Paper, p. 1; rollo, p. 14.
37.WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY, 889 (1976).
38.Servicing Schedule, submitted as petitioner's Annex to his Memorandum; rollo, p. 315.
39.Respondent's Termination Report submitted to the Department of Labor and Employment; rollo, pp. 49-61.
||| (Pearanda v. Baganga Plywood Corp., G.R. No. 159577, [May 3, 2006], 522 PHIL 640-653)

SECOND DIVISION
[G.R. No. 156367. May 16, 2005.]
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA, respondent.

DECISION

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

"Section 3. Employers covered. The Decree shall apply to all employers except to:
xxx xxx xxx
e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific
work, irrespective of the time consumed in the performance thereof. . . ."
Records show that complainant, in his position paper, admitted that he was paid on a commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of
13th month pay to the complainant.
xxx xxx xxx
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay.
The other findings are AFFIRMED. 6
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which
was subsequently denied in a Resolution by the NLRC dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of
Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which
reads:
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of
respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs. 7
Hence, the instant petition.
Issues
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as
amended, is applicable to respondent's claim of service incentive leave pay. acCETD
Ruling of the Court
The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule
V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees except:
xxx xxx xxx
(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid
in a fixed amount for performing work irrespective of the time consumed in the performance
thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by
the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of
Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification
of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with
reasonable certainty." 8
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase
should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow. 9 Hence, employees engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field
personnel.

Therefore, petitioner's contention that respondent is not entitled to the grant of service incentive leave just because he was paid on
purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial Employees Association 10 which states that:
As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days of
work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal
office of the employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be
considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further
argues that the only criterion that should be considered is the nature of work of the employee in that, if the employee's job requires that
he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel. TcDAHS
We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the
location where the employee regularly performs his duties but also with the fact that the employee's performance is unsupervised by
the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of
business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order
to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time
and performance are constantly supervised by the employer.

As observed by the Labor Arbiter and concurred in by the Court of Appeals:


It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned
at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor's reports.
There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its
mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver
and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In each and every depot, there is
always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at
specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the
complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be
considered a field personnel. 11
We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a
regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly,
respondent is entitled to the grant of service incentive leave.
The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to.
The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under
Article 291 of the Labor Code is applicable to respondent's claim of service incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3)
years from the time the cause of action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money
claims accrue in order to determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right;
and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation
of the defendant to the plaintiff. 12
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action
transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period
when the act constituting a violation of the workers' right to the benefits being claimed was committed. For if the cause of action

accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with
Article 291. 13
Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed
have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the threeyear prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall
be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint. 14
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits
granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits
or commute it to its monetary equivalent if not exhausted at the end of the year. 15 Furthermore, if the employee entitled to service
incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of
his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC: 16
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject
to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that
"[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay." Service incentive leave is a right which accrues to every employee who has served
"within 12 months, whether continuous or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be
considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the
year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he
may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly
restrict such right. 17[Italics supplied] TCSEcI
Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive
leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of
said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits
and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of
his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or
separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service
incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employee's services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the
implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's welfare
should be the primordial and paramount consideration. 18 The policy is to extend the applicability of the decree to a greater number of
employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum
aid and protection to labor. 19
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment
was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his
dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent
demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his
accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated
leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the
employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his
money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CAG.R. SP. No. 68395 is hereby AFFIRMED. No Costs. ITSCED
SO ORDERED.
Puno, Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.

Footnotes

1.CA-G.R. SP No. 68395, dated 06 May 2002, penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado
M. Vasquez, Jr. and Mario L. Guaria, III, concurring.
2.Dated 12 December 2002.
3.NLRC NCR CA No. 026584-2000 (NLRC Case No. RAB CAR 02-0088-00), dated 28 September 2001.
4.NLRC Case No. RAB-CAR-02-0088-00.
5.Rollo, pp. 46-47.
6.Rollo, pp. 52-53.
7.CA Decision, p. 10; Rollo, p. 24.
8.See Mercidar Fishing Corporation v. NLRC, G.R. No. 112574, 08 October 1998, 297 SCRA 440.
9.Cebu Institute of Technology v. Ople, G.R. No. L- 58870, 18 December 1987, 156 SCRA 629, 672, citing Vera v. Cuevas, G.R.
No. L-33693, 31 May 1979, 90 SCRA 379.
10.06 April 1989; Rollo, p. 20.
11.Rollo, pp. 45-46.
12.Baliwag Transit, Inc. v. Ople, G.R. No. 57642, 16 March 1989, 171 SCRA 250, citing Agric. Credit & Cooperative Financing
Administration v. Alpha Ins. & Surety Co., Inc., G.R. No. L-24566, 29 July 1968, 24 SCRA 151; Summit Guaranty and
Insurance Co., Inc. v. De Guzman, G.R. No. L-50997, 30 June 1987, 151 SCRA 389; Tormon v. Cutanda, G.R. No. L18785, 23 December 1963, 9 SCRA 698.
13.See De Guzman, et al. v. CA and Nasipit Lumber Co., G.R. No. 132257, 12 October 1998, 297 SCRA 743.
14.See E. Ganzon, Inc. v. NLRC, G.R. No. 123769, 22 December 1999, 321 SCRA 434.

15.Fernandez v. NLRC, G.R. No. 105892, 28 January 1998, 349 Phil 65.
16.Ibid.
17.Ibid., pp. 94-95.
18.Abella v. NLRC, G.R. No. L-71813, 20 July 1987, 152 SCRA 140, citing Volkschel Labor Union v. Bureau of Labor Relations,
G.R. No. L-45824, 19 June 1985, 137 SCRA 43.
19.Sarmiento v. Employees' Compensation Commission, G.R. No. L-68648, 24 September 1986, 144 SCRA 421, citing Cristobal v.
Employees' Compensation Commission, G.R. No. L-49280, 26 February 1981, 103 SCRA 329; Acosta v. Employees'
Compensation Commission, G.R. No. L-55464, 12 November 1981, 109 SCRA 209.
||| (Auto Bus Transport Systems Inc. v. Bautista, G.R. No. 156367, [May 16, 2005], 497 PHIL 863-878)

SECOND DIVISION
[G.R. No. 195466. July 2, 2014.]
ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER", petitioner, vs.
JOHN G. MACASIO, respondent.

DECISION

BRION, J p:
We resolve in this petition for review on certiorari 1 the challenge to the November 22, 2010 decision 2 and the January 31, 2011
resolution 3 of the Court of Appeals (CA)in CA-G.R. SP No. 116003. The CA decision annulled and set aside the May 26, 2010
decision 4 of the National Labor Relations Commission (NLRC) 5 which, in turn, affirmed the April 30, 2009 decision 6 of the Labor
Arbiter (LA). The LA's decision dismissed respondent John G. Macasio's monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint 7 against petitioner Ariel L. David, doing business under the name and style
"Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th month pay. He also claimed payment for moral and
exemplary damages and attorney's fees. Macasio also claimed payment for service incentive leave (SIL). 8
Macasio alleged 9 before the LA that he had been working as a butcher for David since January 6, 1995. Macasio claimed that David
exercised effective control and supervision over his work, pointing out that David: (1) set the work day, reporting time and hogs to be
chopped, as well as the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which was increased from
P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that David owned
the hogs delivered for chopping, as well as the work tools and implements; the latter also rented the workplace. Macasio further claimed
that David employs about twenty-five (25) butchers and delivery drivers.
In his defense, 10 David claimed that he started his hog dealer business in 2005 and that he only has ten employees. He alleged that he
hired Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th
month pay pursuant to the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code.David pointed out that
Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume of the
delivered hogs; (2) received the fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent
chopping the delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive any fee when no hogs were
delivered. TDAcCa
Macasio disputed David's allegations. 11 He argued that, first, David did not start his business only in 2005. He pointed to the Certificate
of Employment 12 that David issued in his favor which placed the date of his employment, albeit erroneously, in January 2000. Second,
he reported for work every day which the payroll or time record could have easily proved had David submitted them in evidence.
Refuting Macasio's submissions, 13 David claims that Macasio was not his employee as he hired the latter on "pakyaw" or task basis.
He also claimed that he issued the Certificate of Employment, upon Macasio's request, only for overseas employment purposes. He
pointed to the "Pinagsamang Sinumpaang Salaysay," 14 executed by Presbitero Solano and Christopher (Antonio Macasio's cobutchers), to corroborate his claims.
In the April 30, 2009 decision, 15 the LA dismissed Macasio's complaint for lack of merit. The LA gave credence to David's claim that
he engaged Macasio on "pakyaw" or task basis. The LA noted the following facts to support this finding: (1) Macasio received the fixed
amount of P700.00 for every work done, regardless of the number of hours that he spent in completing the task and of the volume or
number of hogs that he had to chop per engagement; (2) Macasio usually worked for only four hours, beginning from 10:00 p.m. up to
2:00 a.m. of the following day; and (3) the P700.00 fixed wage far exceeds the then prevailing daily minimum wage of P382.00. The
LA added that the nature of David's business as hog dealer supports this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime, holiday, SIL and 13th month
pay.
The NLRC's Ruling
In its May 26, 2010 decision, 16 the NLRC affirmed the LA ruling. 17 The NLRC observed that David did not require Macasio to
observe an eight-hour work schedule to earn the fixed P700.00 wage; and that Macasio had been performing a non-time work, pointing

out that Macasio was paid a fixed amount for the completion of the assigned task, irrespective of the time consumed in its performance.
Since Macasio was paid by result and not in terms of the time that he spent in the workplace, Macasio is not covered by the Labor
Standards laws on overtime, SIL and holiday pay, and 13th month pay under the Rules and Regulations Implementing the 13th month
pay law. 18
Macasio moved for reconsideration 19 but the NLRC denied his motion in its August 11, 2010 resolution, 20 prompting Macasio to
elevate his case to the CA via a petition for certiorari. 21
The CA's Ruling
In its November 22, 2010 decision, 22 the CA partly granted Macasio's certiorari petition and reversed the NLRC's ruling for having
been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it nevertheless found Macasio entitled to his
monetary claims following the doctrine laid down in Serrano v. Severino Santos Transit. 23 The CA explained that as a task basis
employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As
defined by the Labor Code, a "field personnel" is one who performs the work away from the office or place of work and whose regular
work hours cannot be determined with reasonable certainty. In Macasio's case, the elements that characterize a "field personnel" are
evidently lacking as he had been working as a butcher at David's "Yiels Hog Dealer" business in Sta. Mesa, Manila under David's
supervision and control, and for a fixed working schedule that starts at 10:00 p.m. aTICAc
Accordingly, the CA awarded Macasio's claim for holiday, SIL and 13th month pay for three years, with 10% attorney's fees on the total
monetary award. The CA, however, denied Macasio's claim for moral and exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for reconsideration 24 in the CA's January 31, 2011 resolution. 25
The Petition
In this petition, 26 David maintains that Macasio's engagement was on a "pakyaw" or task basis. Hence, the latter is excluded from the
coverage of holiday, SIL and 13th month pay.
David reiterates his submissions before the lower tribunals 27 and adds that he never had any control over the manner by which Macasio
performed his work and he simply looked on to the "end-result." He also contends that he never compelled Macasio to report for work
and that under their arrangement, Macasio was at liberty to choose whether to report for work or not as other butchers could carry out
his tasks. He points out that Solano and Antonio had, in fact, attested to their (David and Macasio's) established "pakyawan" arrangement
that rendered a written contract unnecessary. In as much as Macasio is a task basis employee who is paid the fixed amount of P700.00
per engagement regardless of the time consumed in the performance David argues that Macasio is not entitled to the benefits he
claims. Also, he posits that because he engaged Macasio on "pakyaw" or task basis then no employer-employee relationship exists
between them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality especially when, as in this case, they
are supported by substantial evidence. Hence, David posits that the CA erred in reversing the labor tribunals' findings and granting the
prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field personnel" as David would have this Court believe. 28 He reiterates
his arguments before the lower tribunals and adds that, contrary to David's position, the P700.00 fee that he was paid for each day that
he reported for work does not indicate a "pakyaw" or task basis employment as this amount was paid daily, regardless of the number or
pieces of hogs that he had to chop. Rather, it indicates a daily-wage method of payment and affirms his regular employment status. He
points out that David did not allege or present any evidence as regards the quota or number of hogs that he had to chop as basis for
the "pakyaw" or task basis payment; neither did David present the time record or payroll to prove that he worked for less than eight
hours each day. Moreover, David did not present any contract to prove that his employment was on task basis. As David failed to prove
the alleged task basis or "pakyawan" agreement, Macasio concludes that he was David's employee.
Procedurally, Macasio points out that David's submissions in the present petition raise purely factual issues that are not proper for a
petition for review on certiorari. These issues whether he (Macasio) was paid by result or on "pakyaw" basis; whether he was a "field
personnel"; whether an employer-employee relationship existed between him and David; and whether David exercised control and
supervision over his work are all factual in nature and are, therefore, proscribed in a Rule 45 petition. He argues that the CA's factual
findings bind this Court, absent a showing that such findings are not supported by the evidence or the CA's judgment was based on a
misapprehension of facts. He adds that the issue of whether an employer-employee relationship existed between him and David had
already been settled by the LA 29 and the NLRC 30 (as well as by the CA per Macasio's manifestation before this Court dated November
15, 2012), 31 in his favor, in the separate illegal case that he filed against David. TaDAHE
The Issue

The issue revolves around the proper application and interpretation of the labor law provisions on holiday, SIL and 13th month pay to a
worker engaged on "pakyaw" or task basis. In the context of the Rule 65 petition before the CA, the issue is whether the CA correctly
found the NLRC in grave abuse of discretion in ruling that Macasio is entitled to these labor standards benefits.
The Court's Ruling
We partially grant the petition.
Preliminary considerations: the
Montoya ruling and the factualissue-bar rule
In this Rule 45 petition for review on certiorari of the CA's decision rendered under a Rule 65 proceeding, this Court's power of review
is limited to resolving matters pertaining to any perceived legal errors that the CA may have committed in issuing the assailed decision.
This is in contrast with the review for jurisdictional errors, which we undertake in an original certiorari action. In reviewing the legal
correctness of the CA decision, we examine the CA decision based on how it determined the presence or absence of grave abuse of
discretion in the NLRC decision before it and not on the basis of whether the NLRC decision on the merits of the case was correct. 32 In
other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it. 33
Moreover, the Court's power in a Rule 45 petition limits us to a review of questions of law raised against the assailed CA decision. 34
In this petition, David essentially asks the question whether Macasio is entitled to holiday, SIL and 13th month pay. This one is a
question of law. The determination of this question of law however is intertwined with the largely factual issue of whether Macasio falls
within the rule on entitlement to these claims or within the exception. In either case, the resolution of this factual issue presupposes
another factual matter, that is, the presence of an employer-employee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues that he engaged the latter on "pakyaw" or task basis.
Very noticeably, David confuses engagement on "pakyaw" or task basis with the lack of employment relationship. Impliedly, David
asserts that their "pakyawan" or task basis arrangement negates the existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" or task basis does not characterize the relationship that
may exist between the parties,i.e., whether one of employment or independent contractorship. Article 97 (6) of the Labor Code defines
wages as ". . . the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer
to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered[.]" 35 In relation to Article 97 (6), Article 101 36 of the Labor Code speaks of workers paid by results or those whose pay is
calculated in terms of the quantity or quality of their work output which includes "pakyaw" work and other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task basis negates employer-employee
relationship, David would want the Court to engage on a factual appellate review of the entire case to determine the presence or existence
of that relationship. This approach however is not authorized under a Rule 45 petition for review of the CA decision rendered under a
Rule 65 proceeding. EcDATH
First, the LA and the NLRC denied Macasio's claim not because of the absence of an employer-employee but because of its finding that
since Macasio is paid on pakyawor task basis, then he is not entitled to SIL, holiday and 13th month pay. Second, we consider it crucial,
that in the separate illegal dismissal case Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the existence of an
employer-employee relationship. 37
In other words, aside from being factual in nature, the existence of an employer-employee relationship is in fact a non-issue in this case.
To reiterate, in deciding a Rule 45 petition for review of a labor decision rendered by the CA under 65, the narrow scope of inquiry is
whether the CA correctly determined the presence or absence of grave abuse of discretion on the part of the NLRC. In concrete question
form, "did the NLRC gravely abuse its discretion in denying Macasio's claims simply because he is paid on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim that no employer-employee relationship exists baseless. Employing the
control test, 38 we find that such a relationship exist in the present case.
Even
a
Macasio is David's employee

factual

review

shows

that

To determine the existence of an employer-employee relationship, four elements generally need to be considered, namely: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct. These elements or indicators comprise the so-called "four-fold" test of employment relationship. Macasio's
relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection and engagement of the employee." David
categorically confirmed this fact when, in his "Sinumpaang Salaysay," he stated that "nag apply po siya sa akin at kinuha ko siya na
chopper[.]" 39 Also, Solano and Antonio stated in their "Pinagsamang Sinumpaang Salaysay" 40 that "[k]ami po ay nagtratrabaho sa

Yiels . . . na pag-aari ni Ariel David bilang butcher" and "kilala namin si . . . Macasio na isa ring butcher . . . ni . . . David at kasama
namin siya sa aming trabaho."
Second, David paid Macasio's wages. Both David and Macasio categorically stated in their respective pleadings before the lower
tribunals and even before this Court that the former had been paying the latter P700.00 each day after the latter had finished the day's
task. Solano and Antonio also confirmed this fact of wage payment in their "Pinagsamang Sinumpaang Salaysay." 41 This satisfies the
element of "payment of wages."
Third, David had been setting the day and time when Macasio should report for work. This power to determine the work schedule
obviously implies power of control. By having the power to control Macasio's work schedule, David could regulate Macasio's work and
could even refuse to give him any assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasio's work as to the means and methods of performing it. In
addition to setting the day and time when Macasio should report for work, the established facts show that David rents the place where
Macasio had been performing his tasks. Moreover, Macasio would leave the workplace only after he had finished chopping all of the
hog meats given to him for the day's task. Also, David would still engage Macasio's services and have him report for work even during
the days when only few hogs were delivered for butchering. CDHAcI
Under this overall setup, all those working for David, including Macasio, could naturally be expected to observe certain rules and
requirements and David would necessarily exercise some degree of control as the chopping of the hog meats would be subject to his
specifications. Also, since Macasio performed his tasks at David's workplace, David could easily exercise control and supervision over
the former. Accordingly, whether or not David actually exercised this right or power to control is beside the point as the law simply
requires the existence of this power to control 42 43 or, as in this case, the existence of the right and opportunity to control and supervise
Macasio. 44
In sum, the totality of the surrounding circumstances of the present case sufficiently points to an employer-employee relationship existing
between David and Macasio.
Macasio is engaged on "pakyaw" or task
basis
At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was engaged or paid on "pakyaw" or
task basis. This factual finding binds the Court under the rule that factual findings of labor tribunals when supported by the established
facts and in accord with the laws, especially when affirmed by the CA, is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage payment, is the nonconsideration of the time spent in working. In a task-basis work, the emphasis is on the task itself, in the sense that payment is reckoned
in terms of completion of the work, not in terms of the number of time spent in the completion of work. 45 Once the work or task is
completed, the worker receives a fixed amount as wage, without regard to the standard measurements of time generally used in pay
computation.
In Macasio's case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, regardless of the total hours
that he spent at the workplace or of the total number of the hogs assigned to him for chopping, Macasio would receive the fixed amount
of P700.00 once he had completed his task. Clearly, these circumstances show a "pakyaw" or task basis engagement that all three
tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by applying the "four-fold" test; engagement
on "pakyaw" or task basis does not determine the parties' relationship as it is simply a method of pay computation. Accordingly, Macasio
is David's employee, albeit engaged on "pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether Macasio is entitled to holiday, 13th
month, and SIL pay.
On the issue of Macasio's
entitlement to holiday, SIL and 13th
month pay
The LA dismissed Macasio's claims pursuant to Article 94 of the Labor Code in relation to Section 1, Rule IV of the IRR of the Labor
Code, and Article 95 of the Labor Code,as well as Presidential Decree (PD) No. 851. The NLRC, on the other hand, relied on Article
82 of the Labor Code and the Rules and Regulations Implementing PD No. 851. Uniformly, these provisions exempt workers paid
on "pakyaw" or task basis from the coverage of holiday, SIL and 13th month pay.
In reversing the labor tribunals' rulings, the CA similarly relied on these provisions, as well as on Section 1, Rule V of the IRR of the
Labor Code and the Court's ruling inSerrano v. Severino Santos Transit. 46 These labor law provisions, when read together with
the Serrano ruling, exempt those engaged on "pakyaw" or task basis only if they qualify as "field personnel." ICTacD
In other words, what we have before us is largely a question of law regarding the correct interpretation of these labor code provisions
and the implementing rules; although, to conclude that the worker is exempted or covered depends on the facts and in this sense, is a

question of fact: first, whether Macasio is a "field personnel"; and second, whether those engaged on "pakyaw" or task basis, but who
are not "field personnel," are exempted from the coverage of holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for review of a CA decision rendered under Rule 65 and framed in
question form, the legal question is whether the CA correctly ruled that it was grave abuse of discretion on the part of the NLRC to deny
Macasio's monetary claims simply because he is paid on a non-time basis without determining whether he is a field personnel or not.
To resolve these issues, we need to re-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor Code provisions governing
working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field personnel,
members of the family of the employer who are dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.
xxx xxx xxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL pay (under Article 95
of the Labor Code). Under Article 82, "field personnel" on one hand and "workers who are paid by results" on the other hand, are not
covered by the Title I provisions. The wordings of Article 82 of the Labor Code additionally categorize workers "paid by results" and
"field personnel" as separate and distinct types of employees who are exempted from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR 47 reads:
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 (10) workers[.] [emphasis ours]
xxx xxx xxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer 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. [emphases
ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR 48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying
vacation leave with pay of at least five days and those employed in establishments regularly employing less than
ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment
after considering the viability or financial condition of such establishment. [emphases ours] DaCEIc
xxx xxx xxx
Section 1. Coverage. This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be excluded from their coverage,
an employee must be one of those that these provisions expressly exempt, strictly in accordance with the exemption.

Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field personnel and other employees whose time and
performance is unsupervised by the employer including those who are engaged on task or contract basis[.]" Note that unlike Article 82
of the Labor Code, the IRR on holiday and SIL pay do not exclude employees "engaged on task basis" as a separate and distinct category
from employees classified as "field personnel." Rather, these employees are altogether merged into one classification of exempted
employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those who are engaged on task basis, per
se, are excluded from the SIL and holiday payment since this is what the Labor Code provisions, in contrast with the IRR, strongly
suggest. The arguable interpretation of this rule may be conceded to be within the discretion granted to the LA and NLRC as the quasijudicial bodies with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople 49 the phrase "those who are engaged on task or contract
basis" in the rule has already been interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on ejusdem generis that general
and unlimited terms are restrained and limited by the particular terms that they follow . . . Clearly, petitioner's
teaching personnel cannot be deemed field personnel which refers "to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the
Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit
cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the coverage of SIL and holiday
pay. They are exempted from the coverage of Title I (including the holiday and SIL pay) only if they qualify as "field personnel."
The IRR therefore validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82 from the coverage
of holiday and SIL pay. This is the only reasonable interpretation since the determination of excluded workers who are paid by results
from the coverage of Title I is "determined by the Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc. v. Bautista: HDTSCc
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has
been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall
not apply to employees classified as "field personnel." The phrase "other employees whose performance is
unsupervised by the employer" must not be understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of
field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with
reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission
basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and
unlimited terms are restrained and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of granting Macasio's petition.
In Serrano, the Court, applying the rule on ejusdem generis 50 declared that "employees engaged on task or contract basis . . . are
not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field
personnel." 51 The Court explained that the phrase "including those who are engaged on task or contract basis, purely commission
basis" found in Section 1 (d), Rule V of Book III of the IRR should not be understood as a separate classification of employees to which
SIL shall not be granted. Rather, as with its preceding phrase "other employees whose performance is unsupervised by the employer"
the phrase "including those who are engaged on task or contract basis" serves to amplify the interpretation of the Labor
Code definition of "field personnel" as those "whose actual hours of work in the field cannot be determined with reasonable certainty."
In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor Code provisions and the IRR as
exempting an employee from the coverage of Title I of the Labor Code based simply and solely on the mode of payment of an
employee. The NLRC's utter disregard of this consistent jurisprudential ruling is a clear act of Grave abuse of discretion. 52 In
other words, by dismissing Macasio's complaint without considering whether Macasio was a "field personnel" or not, the NLRC
proceeded based on a significantly incomplete consideration of the case. This action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken counsel from Serrano and
earlier cases, they would have correctly reached a similar conclusion regarding the payment of holiday pay since the rule exempting
"field personnel" from the grant of holiday pay is identically worded with the rule exempting "field personnel" from the grant of SIL
pay. To be clear, the phrase "employees engaged on task or contract basis" found in the IRR on both SIL pay and holiday pay should
be read together with the exemption of "field personnel."

In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the presence (or absence)
of employer supervision as regards the worker's time and performance is the key: if the worker is simply engaged on pakyaw or task
basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions specifically provided
under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code.However, if the worker engaged on pakyaw or task basis also
falls within the meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.
Macasio
does
classification of "field personnel"

not

fall

under

the

Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall under the definition of
"field personnel." The CA's finding in this regard is supported by the established facts of this case: first, Macasio regularly performed
his duties at David's principal place of business; second, his actual hours of work could be determined with reasonable certainty;
and, third, David supervised his time and performance of duties. Since Macasio cannot be considered a "field personnel," then he is not
exempted from the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task basis.
Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRC's ruling dismissing Macasio's complaint
for holiday and SIL pay for having been rendered with grave abuse of discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find that the CA legally erred in finding that the NLRC gravely abused its
discretion in denying this benefit to Macasio.
The governing law on 13th month pay is PD No. 851. 53 As with holiday and SIL pay, 13th month pay benefits generally cover all
employees; an employee must be one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations
Implementing P.D. No. 851 54 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3 (e),
"employers of those who are paid on . . . task basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof" 55 are exempted. DSAICa
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3 (e) of the Rules and Regulations Implementing PD No.
851 exempts employees "paid on task basis" without any reference to "field personnel." This could only mean that insofar as payment
of the 13th month pay is concerned, the law did not intend to qualify the exemption from its coverage with the requirement that the task
worker be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition insofar as the payment of 13th month
pay to respondent is concerned. In all other aspects, we AFFIRM the decision dated November 22, 2010 and the resolution dated
January 31, 2011 of the Court of Appeals in CA-G.R. SP No. 116003.
SO ORDERED.
Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
Footnotes
1.Rollo, pp. 8-30.
2.Penned by Associate Justice Celia C. Librea-Leagogo, and concurred in by Associate Justices Remedios A. Salazar-Fernando and
Michael P. Elbinias; id. at 32-46.
3.Id. at 47-48.
4.Penned by Presiding Commissioner Herminio V. Suelo; id. at 150-156.
5.In NLRC LAC No. 07-002073-09 (NLRC NCR Case No. 01-00298-09).
6.Penned by Labor Arbiter Daniel J. Cajilig; id. at 119-122.
7.Id. at 61-63.
8.Filed on February 18, 2009; id. at 64-75.
9.Ibid.
10.Position Paper filed on February 18, 2009; id. at 80-86.
11.Reply by the Complainant; id. at 87-91.
12.Id. at 76.
13.Respondent's Reply; id. at 92-96.

14.Id. at 99-100.
15.Supra note 5.
16.Supra note 4.
17.Rollo, pp. 123-139.
18.Presidential Decree No. 851 "Requiring All Employers to Pay Their Employees a 13th Month Pay." Enacted on December 16,
1975.
19.Rollo, pp. 160-176.
20.Id. at 157-159.
21.Id. at 180-204.
22.Supra note 2.
23.G.R. No. 187698, August 9, 2010, 627 SCRA 483.
24.Rollo, pp. 49-56.
25.Supra note 3.
26.Supra note 1.
27.Although he now claims that he engaged Macasio's services in 2000 instead of 2005.
28.Rollo, pp. 223-243.
29.Docketed as NLRC OFW Case No. 06-09181-09. Decision dated January 27, 2010; id. at 260-266.
30.Docketed as LAC No. 03-000566-10 (3) (8) (T-7-10). Resolution dated November 12, 2010; id. at 267-272.
31.Id. at 334-338. The CA decision dated November 6, 2012 in CA-G.R. SP No. 118736 affirmed the LA and NLRC rulings in the
illegal dismissal case (rollo, pp. 340-346). On May 6, 2013, David assailed the CA's decision in CA-G.R. SP No. 118736
before this Court via a petition for certiorari. The case was docketed as G.R. No. 206735. In a Resolution dated July 15,
2013, the Court dismissed David's petition for being a wrong remedy and for failure to show any grave abuse of discretion
in the assailed CA decision.
32.Montoya v. Transmed Manila Corporation, G.R. No. 183329, August 27, 2009, 597 SCRA 334, 342-343.
33.Career Philippines Shipmanagement, Inc. v. Serna, G.R. No. 172086, December 3, 2012, 686 SCRA 676, 683-684,
citing Montoya v. Transmed Manila Corporation, supra note 30.
34.See Basay v. Hacienda Consolacion, G.R. No. 175532, April 19, 2010, 618 SCRA 422, 434. "A question of law exists when the
doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts . . . . In contrast, a
question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence[.]" (Cosmos Bottling Corp. v. Nagrama, Jr., 571 Phil. 281, 296 (2008), citing Republic v.
Sandiganbayan, G.R. No. 135789, January 31, 2002, 375 SCRA 425).
35.Emphases ours.
36.Article 101 of the Labor Code reads in full
"Art. 101. Payment by results.
The Secretary of Labor and Employment shall regulate the payment of wages by results, including pakyaw, piecework, and other
non-time work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion
studies or in consultation with representatives of workers' and employer's organizations."
37.This decision lapsed to finality upon the denial of David's petition for review filed with the Court.
38.Of these elements, the power to control is the most important criterion. Under the "control test," the important question to ask is
whether the employer controls or has reserved the right to control the employee not only as to the result of the work but
also as to the means and methods by which the result is to be accomplished. We should, however, emphasize that the
control test simply calls for the existence of the right to control and not necessarily the actual exercise of this right. To be
clear, the test does not require that the employer actually supervises the performance of duties by the employee. (Javier v.
Fly Ace Corporation, supra, at 397-398; Chavez v. NLRC, 489 Phil. 444, 456 (2005); See Basay v. Hacienda Consolacion,
G.R. No. 175532, April 19, 2010, 618 SCRA 422, 434).

39.Rollo, pp. 97-98. In paragraph 1 of David's "Sinumpaang Salaysay," he stated:


"1. . . . Ang katotohanan po ay nag apply po siya sa akin at kinuha ko siya na chopper sa kasunduan na pakyawan. P700.00 ang
binabayad ko sa kanya sa bawat apat (4) na oras na trabaho bilang chopper na mag-uumpisa ng 10:00 P.M. ng gabi at
matatapos sa 2:00 A.M. sa madaling araw o mas maaga pa dito kung kaunti lang ang delivery ng baboy." (emphasis ours)
40.Supra note 13; underscores ours.
41.Ibid.
42.Jaime N. Gapayao v. Rosario Fulo, et al., G.R. No. 193493, June 13, 2013.
43.Ibid.
44.But, in addition to the above circumstances that clearly meet the "four-fold test," three other circumstances satisfying the
"economic dependence test" strengthen the conclusion of the parties' relationship as one of employer and employee (Dr.
Sevilla v. Court of Appeals, 243 Phil. 340, 348-349 [1988]). For one, Macasio had been performing work that is usually
necessary and desirable to the usual trade and business of David. The facts show that David is a hog dealer who sells hog
meats to his customers in the wet market. He engages butchers, such as Macasio, to butcher and chop his hogs for
distribution to his customers. Clearly, Macasio's work as a butcher qualifies as necessary and desirable to David's hog
dealer business.
Another, David had been repeatedly and continuously engaging Macasio's services to perform precisely the same task of butchering
hogs or hog meats since 2000. David categorically confirmed, in his various pleadings, his continuous and repeated hiring
or engagement of Macasio, albeit, insisting that the engagement is on "pakyaw" or task basis.
Lastly, Macasio regularly reported for work to earn the P700.00 fee. He would likewise ask for cash advances from David for his
and his family's needs. David's "Sinumpaang Salaysay" 44 confirms this observation when he stated that he refused to give
Macasio another cash advance as the latter already had several unpaid cash advances. These facts clearly show that
Macasio looked on to David for the former's daily financial needs in the form of wages.
45.I C.A. Azucena, Jr., The Labor Code, 186 (Ed. 8, 2013).
46.Supra note 23.
47.Section 1, Rule IV of Book 3.
48.Section 1, Rule V of Book 3.
49.G.R. No. L-58870, 18 December 1987.
50.The general and unlimited terms are restrained and limited by the particular terms that they follow.
51.Serrano v. Severino Santos Transit, supra note 22, at 492-493; emphasis supplied, underscore ours.
52.In case the LA and the NLRC cites a contrary jurisprudential ruling that creates a real conflict in our existing case law, this is the
only time that the Court may exercise its discretion to have a wider scope of review of a Rule 65 CA decision. In this case,
the wider scope of review is necessitated by the need to create a body of harmonious and workable jurisprudence.
53.Enacted on December 16, 1975.
54.Issued on December 22, 1975.
55.Section 3 (e) of the Rules and Regulations Implementing P.D. No. 851 reads in full:
SEC. 3. Employers covered. The Decree shall apply to all employers except to:
xxx xxx xxx
e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount
for performing a 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 be covered by this issuance insofar as such workers
are concerned. [emphases ours]
||| (David v. Macasio, G.R. No. 195466, [July 2, 2014])

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.
Armando San Antonio for petitioners.
Jesus E.V. Tadique for private respondents.
SYNOPSIS
Petitioners herein were rank-and-file employees of respondent Empire Food Products. Labor Congress of the Philippines, acting as the
sole bargaining representative of the employees, filed a complaint for several causes against private respondents. However, after the
submission by the parties of their respective position papers and presentation of testimonial evidence, the Labor Arbiter absolved private
respondents of the charges but directed them to reinstate the individual complainants. On appeal, the NLRC vacated the decision and
remanded the case to the Labor Arbiter for further proceedings. Again, another Labor Arbiter favored herein private respondents. On
appeal, the NLRC this time affirmed the decision of the Labor Arbiter. Their motion for reconsideration having been denied, petitioners
filed this petition for certiorari under Rule 65. Petitioners seek the reversal of the NLRC resolution affirming the decision of
the Labor Arbiter which dismissed their complaint for utter lack of merit. ACHEaI
The invocation of the general rule that factual findings of the NLRC bind the Supreme Court is unavailing under the circumstances of
this case. The Court did not find the NLRC Resolution to have sufficiently discussed the facts to comply with the standard of substantial
evidence. The burden of proving the existence of just cause for dismissing an employee, such as abandonment, rests on the employer, a
burden private respondents failed to discharge. The resolution of the NLRC and the decision of the Labor Arbiter were set aside by the
Supreme Court. The Court declared that petitioners had been illegally dismissed by private respondents, thus entitled to full backwages
and other privileges, and separation pay in lieu of reinstatement.
SYLLABUS
1. LABOR AND OTHER SOCIAL LEGISLATION; LABOR CODE; TERMINATION OF EMPLOYMENT BY EMPLOYER;
NOTICE OF DISMISSAL, REQUIRED; EFFECT OF FAILURE; CASE AT BAR. 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. 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 worker's 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. 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, 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.
2. ID.; ID.; CONDITIONS OF EMPLOYMENT; PIECE-RATE WORKERS; WHEN CONSIDERED REGULAR EMPLOYEES;
CASE AT BAR. 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 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. CIAcSa
3. ID.; ID.; ID.; ID.; WHEN ENTITLED TO OTHER BENEFITS; CASE AT BAR. The Rules Implementing the Labor Code exclude
certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia,
"field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged
on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not
only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year
with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote
hereunder, piece workers are specifically mentioned as being entitled to holiday pay. SEC. 8. Holiday pay of certain employees. (b)
Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average
daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the
holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the
13th Month Pay Law in view of the modifications to P.D. No. 851 by Memorandum Order No. 28, clearly exclude the employer of piece
rate workers from those exempted from paying 13th month pay, to wit: 2. EXEMPTED EMPLOYERS. The following employers are
still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are
paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. 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. As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the Implementing
Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are
in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed
by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private respondents
did not allege adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners
are beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more,
the National Labor Relations Commission would be in a better position to determine the exact amounts owed petitioners, if any.

DECISION

DAVIDE, JR., J p:
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. cdasia

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 CheckOff 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 LaborCongress parties jointly move for the direct certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic],
Threats, Interferences [sic] of their respective rights under the law, no Vengeance or Revenge by each
partner nor any act of ULP which might disrupt the operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA,
this Memorandum of Agreement shall govern the parties in the exercise of their respective rights involving
the Management of the business and the terms and condition[s] of employment, and whatever problems
and grievances may arise by and between the parties shall be resolved by them, thru the most cordial and
good harmonious relationship by communicating the other party in writing indicating said grievances
before taking any action to another forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and
comply with all the terms and conditions hereof. Further agreed that violation by the parties of any
provision herein shall constitute an act of ULP. (Annex "A" of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement and
certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food
Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions
of employment" (Annex "B" of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for
collective bargaining (Annex "C" of Petition).
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private
respondents for:

a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;


b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to selforganization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated
by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages." (Annex "D" of Petition)
After the submission by the parties of their respective position papers and presentation of testimonial
evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union
busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners' prayer for
actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual
complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in
every establishment that a payroll and other papers evidencing hours of work, payments, etc. shall always
be maintained and subjected to inspection and visitation by personnel of the Department of Labor and
Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is
proper that all individual complainants except those who resigned and executed quitclaim[s] and releases
prior to the filing of this complaint should be reinstated to their former position[s] with the admonition to
respondents that any harassment, intimidation, coercion or any form of threat as a result of this
immediately executory reinstatement shall be dealt with accordingly.
SO ORDERED. (Annex "G" of Petition) cdasia
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 ". . . 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 . . ." (p. 183, Records), that ". . . complainant before
the National Labor RelationsCommission must prove with definiteness and clarity the offense
charged. . . ." (Record, p. 183); that ". . . complainant failed to specify under what provision of
the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor practice . . ."
(Record, p. 183); that 'complainants failed to present any witness who may describe in what manner
respondents have committed unfair labor practice . . .' (Record, p. 185); that '. . . complainant LCP failed
to present anyone of the so-called 99 complainants in order to testify who committed the threats and
intimidation . . .' (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 selforganization which is actually an ingredient of unfair laborpractice, 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
Kehyeng's 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 Arbiter's 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 NLRC's 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 certiorariraising 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. cdasia
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 ATTORNEY'S 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 LaborArbiter 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 Arbiter's 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 Arbiter's 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 NLRCresolution, 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 ". . . 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 . . ." (Records, p. 183), that ". . . complainant before the National Labor Relations Commission must
prove with definiteness and clarity the offense charged. . . ." (Record, p. 183; that ". . . complainant failed to specify
under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute
unfair labor practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in
what manner respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant a [sic]
LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and
intimidation . . ." (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.
"xxx xxx xxx
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 portions. 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 petitioner's 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 clue 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 worker's 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 NationalLabor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave which the labor arbiter failed
to rule on but which petitioners prayed for in their complaint, 15 we hold that petitioners are so entitled to these benefits. Three (3)
factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the
nature of petitioners' tasks, their job of repacking snack food was necessary or desirable in the usual business of private respondents,
who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout
the year, their employment not having been dependent on a specific project or season; and third, the length of time 16 that petitioners
worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their
employment was that of regular employees.

The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service
incentive leave 17 and 13th month pay, 18 inter alia, "field personnel and other employees whose time and performance is unsupervised
by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance thereof." Plainly, petitioners as piece-rate workers
do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their
employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further,
in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay.
SEC. 8. Holiday pay of certain employees.
(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay
shall not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less
than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No.
851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month
pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid
a fixed amount for performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such workers. (emphasis supplied)
The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as
those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without
regard to the time spent in producing the same. 20
As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, Book III of the Implementing Rules, workers who
are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with
the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary
of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private respondents did not allege
adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond
the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the National Labor Relations Commission would
be in a better position to determine the exact amounts owed petitioners, if any.
As to the claim that private respondents violated petitioners' right to self-organization, the evidence on record does not support this
claim. Petitioners relied almost entirely on documentary evidence which, per se, did not prove any wrongdoing on private respondents'
part. For example, petitioners presented their complaint 21 to prove the violation of labor laws committed by private respondents. The
complaint, however, is merely "the pleading alleging the plaintiff's cause or causes of action." 22Its 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 election24 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 LaborArbiter 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 month's 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. cdasia
Bellosillo, Vitug, Panganiban and Quisumbing, JJ ., concur.

Footnotes
1.Annex "J" of Petition, Per Commissioner Tanodra, J., with Presiding Commissioner Javier, L., and Commissioner Bernardo, I.,
concurring; Rollo, 98-108.
2.Annex "I" of Petition, Rollo, 91-97.
3.Rollo, 137 et seq.
4.Rollo, 138-148.
5.Supra note 1.
6.Rollo, 109-110.
7.Id., 21-22.
8.Annex "H" of Petition, Id., 85-90. Per Commissioner Rayala, R.I., with Commissioners Javier, L., and Bernardo, I., concurring.
9.Rollo, 86-90.
10.Rollo, 150-153.
11.Lim v. NLRC, 259 SCRA 485, 497 [1996]; Metro Transit Organization, Inc., 263 SCRA 313, 321 [1996]; De la Cruz v. NLRC,
268 SCRA 458, 468 [1997].
12.See Tiu v. NLRC, 215 SCRA 540, 550-552 [1992]; Radio Communications of the Phils. V. NLRC, 223 SCRA 656, 667-668 [1993].
13.Globe-Mackay Cable and Radio Corp. v. NLRC, 206 SCRA 701, 709-710 [1992]; Kathy-O Enterprises v. NLRC, G.R. No. 117610,
2 March 1998.
14.See Dy Keh Beng v. International Labor, 90 SCRA 161 [1979]; "Brotherhood" Unity Movement of the Phils. v. Zamora, 147 SCRA
49 [1987].
15.Rollo, 51.
16.RJL Mariner Fishing Corp. v. NLRC, 127 SCRA 454, 462 [1984].
17.Section 1(e), Rule II, Sec. 1(e) Rule IV and Sec. 1(d), Rule V of Book II.
18.P.D. No. 851, as modified by Memorandum No. 28.
19.Requiring All Employers To Pay Their Employees A [sic] 13TH-MONTH PAY.
20.This distinction was also used in Sec. 3(e) Rules and Regulations Implementing P.D. 851.

21.Exhibit "C", OR, 42-43.


22.Section 3, Rule 6, Revised Rules of Court.
23.Exhibit "J", OR, 56-78.
24.Exhibit "D", Id., 44-45.
25.Exhibit "F", Id., 50.
26.Exhibit "E", Id., 46-49.

||| (Labor Congress of the Philippines v. National Labor Relations Commission, G.R. No. 123938, [May 21, 1998], 352 PHIL 11181142)

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.
PAL Labor Affairs Department for petitioner.
David T. Paradero and Lamberto C. Fabros for Dr. Fabros.
SYNOPSIS
Private respondent was employed as flight surgeon at petitioner company Philippine Air Lines (PAL). He was assigned at the PAL
Medical Clinic at Nichols. 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. The nurse on duty
called private respondent at home to inform him of the emergency. When private respondent reached the clinic around 7:50 in the
evening, the nurse on duty had already left with the patient. The patient died the following day. As a result, the Chief Flight Surgeon
required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent
asserted that he is entitled to a thirty-minute meal break; that he immediately left his residence after being informed by the nurse about
the emergency; that the nurse panicked and brought the patient to the hospital without waiting for him. Finding his explanation
unacceptable, the management charged private respondent with abandonment of post while on duty. In his answer, private respondent
denied the charge. He said that he only left his clinic to have his dinner at home and he returned 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. Private respondent filed a complaint for illegal suspension against petitioner. The Labor
Arbiter rendered a decision finding the suspension illegal. Petitioner appealed to the NLRC. The NLRC 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. Hence, the present
petition. SIaHDA
The Supreme Court held that public respondent NLRC did not err in nullifying the three-month suspension of private respondent. The
NLRC, however, erred in awarding moral damages to private respondent. The Court ruled that the facts do not support petitioner's
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, only a few minutes drive away, but his whereabouts were known to the nurse on duty so that he
could easily be reached in case of emergency. Upon being informed of the patient's condition, private respondent immediately left his
home and returned to the clinic. Said facts, according to the Court, belie petitioner's claim of abandonment. The Court also held that
employees are not prohibited from going out of the premises as long as they return to their post on time and that the eight-hour work
period does not include the meal break. The Court said that nowhere in the law may it be inferred that employees must take their
meals within the company premises. The Court deleted the award of moral damages because of the absence of proof that petitioner
was moved by evil motive in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief that
private respondent's act constituted abandonment of post which warrants the penalty of suspension. cEAIHa
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; CONDITIONS OF EMPLOYMENT; HOURS OF WORK; THE EIGHT-HOUR
PERIOD DOES NOT INCLUDE THE MEAL BREAK; EMPLOYEES ARE NOT PROHIBITED FROM GOING OUT OF THE
PREMISES AS LONG AS THEY RETURN TO THEIR POST ON TIME. 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. 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 respondent's act, therefore, of going home to take his dinner does not
constitute abandonment. aAHDIc
2. ID.; TERMINATION OF EMPLOYMENT; RIGHTS OF ILLEGALLY DISMISSED EMPLOYEES; AWARD OF MORAL
DAMAGES IN CASE AT BAR DELETED BY THE COURT; THERE IS NO SHOWING THAT PETITIONER COMPANY WAS
MOVED BY SOME EVIL MOTIVE IN SUSPENDING PRIVATE RESPONDENT; THE COMPANY ACTED ON AN HONEST
BELIEF THAT PRIVATE RESPONDENT'S ACT WARRANTS THE PENALTY OF SUSPENSION. 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. 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. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for
the law always presumes good faith. In the case at bar, there is no showing that the management of petitioner company was moved by
some evil motive in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief that private
respondent's 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. aHESCT

DECISION

PUNO, J p:
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 respondent's 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 petitioner's 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 respondent's suspension. The facts do not support petitioner's 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. Acosta's condition, private respondent immediately left his home
and returned to the clinic. These facts belie petitioner's 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:
ARTICLE 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)
ARTICLE 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
SECTION 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 respondent's 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 respondent's 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, Mendoza, Quisumbing and Buena, JJ., concur.

Footnotes
1.Rollo, pp. 19-32.
2.Rollo, p. 32.
3.Rollo, p. 43.
4.Rollo, p. 46.
5.Rollo, p. 8.
6.Ford Philippines, Inc. vs. Court of Appeals, 267 SCRA 320 (1997); Equitable Banking Corporation vs. NLRC, 273 SCRA 352
(1997); Tumbiga vs. NLRC, 274 SCRA 338 (1997).
7.Ibid.; citing Far East Bank and Trust Co. vs. Court of Appeals, 241 SCRA 671 (1996).
8.Ibid.
||| (Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No. 132805, [February 2, 1999], 362 PHIL 197-204)

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.
SYLLABUS
1. LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION; NON-COMPENSABILITY OF CLAIM ALREADY
ESTABLISHED IN AN EARLIER DECISION REMAINS TO BE THE "LAW OF THE CASE"; ISSUE RAISED BARRED BY
THE RES JUDICATA. It is clear that herein petitioners are merely reiterating the very same claim which they fled through the
ALU and which records show had already long been considered terminated and closed by this Court in G.R. No. L-48510. Therefore,
the NLRC can not be faulted for ruling that petitioners' claim is already barred by res judicata. Be that as it may, petitioners' claim that
there was a change in the factual scenario which are "substantial changes in the facts" makes respondent firm now liable for the same
claim they earlier filed against respondent which was dismissed. It is thus axiomatic that the non-compensability of the claim having
been earlier established, constitute the controlling legal rule or decision between the parties and remains to be the law of the
casemaking 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."
2. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF QUASI-JUDICIAL AGENCIES GENERALLY NOT DISTURBED
ON APPEAL. 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. 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.

DECISION

PARAS, J p:
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 longstanding practice and institutionalized non-compensable assembly time. This, in effect, estopped complainants
from pursuing this case.
"The Commission cannot ignore these hard facts, and we are constrained to uphold the dismissal and closure of
the case.
"WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
"SO ORDERED." (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by private respondent (Annex "I" Rollo, pp.
90-91; Annex "J," Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued resolution denying for lack of merit petitioners' motion for reconsiderat ion
(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. prLL
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 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." (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. LLphil

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 fled through the ALU and which records show
had already long been considered terminated and closed by this Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted
for ruling that petitioners' claim is already barred by res judicata.
Be that as it may, petitioners' claim that there was a change in the factual scenario which are "substantial changes in the facts" makes
respondent firm now liable for the same claim they earlier filed against respondent which was dismissed. It is thus axiomatic that the
non-compensability of the claim having been earlier established, constitute the controlling legal rule or decision between the parties
and remains to be the law of the case making this petition without merit.
As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar principle of res judicata. There will be
no end to this controversy if the light of the Minister of Labor's decision dated May 12, 1979 that had long acquired the character of
finality and which already resolved that petitioners' thirty (30)-minute assembly time is not compensable, the same issue can be relitigated 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. prLL
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, 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-XI-76) 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 thirtyminute "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 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 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, at 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. cdrep
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.
||| (Arica v. National Labor Relations Commission, G.R. No. 78210, [February 28, 1989], 252 PHIL 803-812)

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.
Caballero, Calub, Aumentado & Associates Law Offices for petitioner.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; NATIONAL LABOR RELATIONS COMMISSION; APPEAL;
SUPERSEDEAS BOND; LATE PAYMENT THEREOF ALLOWED IN THE INTEREST OF BROADER JUSTICE. 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.
2. ID.; ID.; ID.; ID.; RULES ON EVIDENCE, NOT STRICTLY APPLIED. 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.
3. ID.; ID.; ID.; ID.; ISSUES MAY NOT BE RAISED FOR THE FIRST TIME ON APPEAL. 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.
4. ID.; ID.; EMPLOYMENT; PROJECT EMPLOYEES DIFFERENTIATED FROM NON-PROJECT WORKERS. 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. (Sandoval Shipyard, Inc. vs. NLRC, et al., 136 SCRA 674,
1985)
5. ID.; ID.; ID.; ID.; NON-PROJECT EMPLOYEES BELONG TO A WORK POOL FROM WHICH THE COMPANY DRAW
WORKERS FOR ASSIGNMENT TO OTHER PROJECTS. 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. 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 phrase 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'."
6. ID.; ID.; ID.; PROJECT EMPLOYEE MAY BE TERMINATED AT THE COMPLETION OF THE PROJECT AND AT THE
EXPIRATION OF HIS CONTRACT; CASE AT BAR. 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.
7. ID.; ID.; ID.; OVERTIME COMPENSATION; PROJECT DRIVER ENTITLED THERETO WHERE OTHER EMPLOYEES ARE
PICKED UP AND/OR DROPPED OFF AT DESIGNATED POINTS PRIMARILY FOR THE BENEFIT OF THE EMPLOYER.
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 fro m 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. 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.

DECISION

REGALADO, J p:
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 coterminous 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 nonpayment 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 from 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 field 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'
residences, to avoid project delays and inefficiency due to employee tardiness caused by transportation problems; 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 as 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 Polic y
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
right 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 Consultants & Planners, 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 complainant 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 few, 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 them back late in the afternoon to Manila,
and driving company executives for inspection of construction projects, as well as engineers and 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 provision 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 petitioner 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 5-173884, it 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 for 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. Nonproject (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 from 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 employments of its 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.

Footnotes
1.Annex F, Petition; Rollo, 40.
2.Rollo, 79-82.
3.Ibid., 61-62.
4.Ibid., 63.
5.NLRC Case No. RAB-III-5-1738-84, January 28, 1986. The petition for certiorari in G.R. No. 73962, assailing the decision in the
aforesaid case, was dismissed for lack of merit by this Court in its resolution of July 2, 1986.
6.Ibid., 64.
7.Annex A, Petition; Rollo, 28.

8.Philamlife Insurance Co. vs. Bonto-Perez, et al., 170 SCRA 508 (1989).
9.Arrastre Security Association-TUPAS, et al. vs. Ople, et al., 127 SCRA 580 (1984).
10.Rollo, 32-33.
11.Ibid., 47.
12.136 SCRA 674 (1985).
13.177 SCRA 637 (1989).

14.120 SCRA 910 (1983).


15.Rollo, 195.
||| (Rada v. National Labor Relations Commission, G.R. No. 96078, [January 9, 1992])

SECOND DIVISION
[G.R. No. 153510. February 13, 2008.]
R.B. MICHAEL PRESS and ANNALENE REYES ESCOBIA, petitioners, vs. NICASIO C.
GALIT, respondent.

DECISION

VELASCO, JR., J p:
The Case
Year in, year out, a copious number of illegal dismissal cases reach the Court of Appeals (CA) and eventually end up with this Court.
This petition for review under Rule 45 registered by petitioners R.B. Michael Press and Annalene Reyes Escobia against their former
machine operator, respondent Nicasio C. Galit, is among them. It assails the November 14, 2001 Decision of the CA in CA-G.R. SP
No. 62959, finding the dismissal of respondent illegal. Likewise challenged is the May 7, 2002 Resolution denying reconsideration.
The Facts
On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset machine operator, whose work schedule was
from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he was paid PhP230 a day. During his employment, Galit was tardy for a total
of 190 times, totaling to 6,117 minutes, and was absent without leave for a total of nine and a half days.
On February 22, 1999, respondent was ordered to render overtime service in order to comply with a job order deadline, but he refused
to do so. The following day, February 23, 1999, respondent reported for work but petitioner Escobia told him not to work, and to
return later in the afternoon for a hearing. When he returned, a copy of an Office Memorandum was served on him, as follows:
To : Mr. Nicasio Galit
From : ANNALENE REYES-ESCOBIA
Re : WARNING FOR DISMISSAL; NOTICE OF HEARING
This warning for dismissal is being issued for the following offenses:
(1) habitual and excessive tardiness
(2) committing acts of discourtesy, disrespect in addressing superiors
(3) failure to work overtime after having been instructed to do so
(4) Insubordination willfully disobeying, defying or disregarding company authority
The offenses you've committed are just causes for termination of employment as provided by the Labor Code.
You were given verbal warnings before, but there had been no improvement on your conduct.
Further investigation of this matter is required, therefore, you are summoned to a hearing at 4:00 p.m. today. The
hearing will determine your employment status with this company.
(SGD) ANNALENE REYES-ESCOBIA
Manager 1
On February 24, 1999, respondent was terminated from employment. The employer, through petitioner Escobia, gave him his two-day
salary and a termination letter, which reads:
February 24, 1999
Dear Mr. Nicasio Galit,
I am sorry to inform you that your employment with this company has been terminated effective today, February
24, 1999. This decision was not made without a thorough and complete investigation.

You were given an office memo dated February 23, 1999 warning you of a possible dismissal. You were given a
chance to defend yourself on a hearing that was held in the afternoon of the said date.
During the hearing, Mrs. Rebecca Velasquez and Mr. Dennis Reyes, were present in their capacity as Production
Manager and Supervisor, respectively.
Your admission to your offenses against the company and the testimonies from Mrs. Velasquez and Mr. Reyes
justified your dismissal from this company,
Please contact Ms. Marly Buita to discuss 13th-Month Pay disbursements.
Cordially,
(SGD) Mrs. Annalene Reyes-Escobia 2
Respondent subsequently filed a complaint for illegal dismissal and money claims before the National Labor Relations Commission
(NLRC) Regional Arbitration Branch No. IV, which was docketed as NLRC Case No. RAB IV-2-10806-99-C. On October 29, 1999,
the labor arbiter rendered a Decision,
WHEREFORE, premises considered, there being a finding that complainant was illegally dismissed, respondent
RB MICHAEL PRESS/Annalene Reyes-Escobia is hereby ordered to reinstate complainant to his former position
without loss of seniority rights and other benefits, and be paid his full backwages computed from the time he was
illegally dismissed up to the time of his actual reimbursement.
All other claims are DISMISSED for lack of evidence.
SO ORDERED. 3
On January 3, 2000, petitioners elevated the case to the NLRC and their appeal was docketed as NLRC NCR CA No. 022433-00. In
the April 28, 2000 Decision, the NLRC dismissed the appeal for lack of merit.
Not satisfied with the ruling of the NLRC, petitioners filed a Petition for Certiorari with the CA. On November 14, 2001, the CA
rendered its judgment affirming with modification the NLRC's Decision, thus:
WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of public respondent is accordingly
modified in that the basis of the computation of the backwages, 13th month pay and incentive pay should be
respondent's daily wage of P230.00; however, backwages should be computed from February 22, 1999 up to the
finality of this decision, plus the 13th month and service incentive leave pay. 4
The CA found that it was not the tardiness and absences committed by respondent, but his refusal to render overtime work on
February 22, 1999 which caused the termination of his employment. It ruled that the time frame in which respondent was afforded
procedural due process is dubitable; he could not have been afforded ample opportunity to explain his side and to adduce evidence on
his behalf. It further ruled that the basis for computing his backwages should be his daily salary at the time of his dismissal which was
PhP230, and that his backwages should be computed from the time of his dismissal up to the finality of the CA's decision.
On December 3, 2001, petitioners asked for reconsideration 5 but was denied in the CA's May 7, 2002 Resolution.
Persistent, petitioners instituted the instant petition raising numerous issues which can be summarized, as follows: first, whether there
was just cause to terminate the employment of respondent, and whether due process was observed in the dismissal process; and
second, whether respondent is entitled to backwages and other benefits despite his refusal to be reinstated.
The Court's Ruling
It is well settled that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but even finality if the
findings are supported by substantial evidence. This is especially so when such findings of the labor arbiter were affirmed by the
CA. 6 However, this is not an iron-clad rule. Though the findings of fact by the labor arbiter may have been affirmed and adopted by
the NLRC and the CA as in this case, it cannot divest the Court of its authority to review the findings of fact of the lower courts or
quasi-judicial agencies when it sees that justice has not been served, more so when the lower courts or quasi-judicial agencies' findings
are contrary to the evidence on record or fail to appreciate relevant and substantial evidence presented before it. 7
Petitioners aver that Galit was dismissed due to the following offenses: (1) habitual and excessive tardiness; (2) commission of
discourteous acts and disrespectful conduct when addressing superiors; (3) failure to render overtime work despite instruction to do so;
and (4) insubordination, that is, willful disobedience of, defiance to, or disregard of company authority. 8 The foregoing charges may
be condensed into: (1) tardiness constituting neglect of duty; (2) serious misconduct; and (3) insubordination or willful disobedience.
Respondent's tardiness cannot be considered condoned by petitioners
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on time everyday exhibit
the employee's deportment towards work. Habitual and excessive tardiness is inimical to the general productivity and business of the

employer. This is especially true when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period
of time.
In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use respondent's habitual tardiness and unauthorized
absences to justify his dismissal since they had already deducted the corresponding amounts from his salary. Furthermore, the labor
arbiter explained that since respondent was not subjected to any admonition or penalty for tardiness, petitioners then had condoned the
offense or that the infraction is not serious enough to merit any penalty. The CA then supported the labor arbiter's ruling by
ratiocinating that petitioners cannot draw on respondent's habitual tardiness in order to dismiss him since there is no evidence which
shows that he had been warned or reprimanded for his excessive and habitual tardiness.
We find the ruling incorrect.
The mere fact that the numerous infractions of respondent have not been immediately subjected to sanctions cannot be interpreted as
condonation of the offenses or waiver of the company to enforce company rules. A waiver is a voluntary and intentional
relinquishment or abandonment of a known legal right or privilege. 9 It has been ruled that "a waiver to be valid and effective must be
couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally
pertains to him." 10 Hence, the management prerogative to discipline employees and impose punishment is a legal right which cannot,
as a general rule, be impliedly waived.
In Cando v. NLRC, 11 the employee did not report for work for almost five months when he was charged for absenteeism. The
employee claimed that such absences due to his handling of union matters were condoned. The Court held that the employee did not
adduce proof to show condonation coupled with the fact that the company eventually instituted the administrative complaint relating
to his company violations.
Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation or waiver on the part of
management to forego the exercise of its right to impose sanctions for breach of company rules.

In the case at bar, respondent did not adduce any evidence to show waiver or condonation on the part of petitioners. Thus the finding
of the CA that petitioners cannot use the previous absences and tardiness because respondent was not subjected to any penalty is bereft
of legal basis. In the case of Filipio v. The Honorable Minister Blas F. Ople, 12 the Court, quoting then Labor Minister Ople, ruled
that past infractions for which the employee has suffered the corresponding penalty for each violation cannot be used as a justification
for the employee's dismissal for that would penalize him twice for the same offense. At most, it was explained, "these collective
infractions could be used as supporting justification to a subsequent similar offense." In contrast, the petitioners in the case at bar did
not impose any punishment for the numerous absences and tardiness of respondent. Thus, said infractions can be used collectively by
petitioners as a ground for dismissal.
The CA however reasoned out that for respondent's absences, deductions from his salary were made and hence to allow petitioners to
use said absences as ground for dismissal would amount to "double jeopardy."
This postulation is incorrect.
Respondent is admittedly a daily wage earner and hence is paid based on such arrangement. For said daily paid workers, the principle
of "a day's pay for a day's work" is squarely applicable. Hence it cannot be construed in any wise that such nonpayment of the daily
wage on the days he was absent constitutes a penalty.
Insubordination or willful disobedience
While the CA is correct that the charge of serious misconduct was not substantiated, the charge of insubordination however is
meritorious.
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employee's assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. 13
In the present case, there is no question that petitioners' order for respondent to render overtime service to meet a production deadline
complies with the second requisite. Art. 89 of the Labor Code empowers the employer to legally compel his employees to perform
overtime work against their will to prevent serious loss or damage:
Art. 89. EMERGENCY OVERTIME WORK
Any employee may be required by the employer to perform overtime work in any of the following cases:
xxx xxx xxx
(c) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious
loss or damage to the employer or some other cause of similar nature;

xxx xxx xxx


In the present case, petitioners' business is a printing press whose production schedule is sometimes flexible and varying. It is only
reasonable that workers are sometimes asked to render overtime work in order to meet production deadlines.
Dennis Reyes, in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999, he approached and asked
respondent to render overtime work so as to meet a production deadline on a printing job order, but respondent refused to do so for no
apparent reason. Respondent, on the other hand, claims that the reason why he refused to render overtime work was because he was
not feeling well that day.
The issue now is, whether respondent's refusal or failure to render overtime work was willful; that is, whether such refusal or failure
was characterized by a wrongful and perverse attitude. In Lakpue Drug Inc. v. Belga, willfulness was described as "characterized by a
wrongful and perverse mental attitude rendering the employee's act inconsistent with proper subordination." 14 The fact that
respondent refused to provide overtime work despite his knowledge that there is a production deadline that needs to be met, and that
without him, the offset machine operator, no further printing can be had, shows his wrongful and perverse mental attitude; thus, there
is willfulness.
Respondent's excuse that he was not feeling well that day is unbelievable and obviously an afterthought. He failed to present any
evidence other than his own assertion that he was sick. Also, if it was true that he was then not feeling well, he would have taken the
day off, or had gone home earlier, on the contrary, he stayed and continued to work all day, and even tried to go to work the next day,
thus belying his excuse, which is, at most, a self-serving statement.
After a re-examination of the facts, we rule that respondent unjustifiably refused to render overtime work despite a valid order to do
so. The totality of his offenses against petitioner R.B. Michael Press shows that he was a difficult employee. His refusal to render
overtime work was the final straw that broke the camel's back, and, with his gross and habitual tardiness and absences, would merit
dismissal from service.
Due process: twin notice and hearing requirement
On the issue of due process, petitioners claim that they had afforded respondent due process. Petitioners maintain that they had
observed due process when they gave respondent two notices and that they had even scheduled a hearing where he could have had
explained his side and defended himself. SHCaDA
We are not persuaded.
We held in Agabon v. NLRC:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee
two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based
on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of
Labor and Employment written notices 30 days prior to the effectivity of his separation. 15
Under the twin notice requirement, the employees must be given two (2) notices before his employment could be terminated: (1) a
first notice to apprise the employees of their fault, and (2) a second notice to communicate to the employees that their employment is
being terminated. Not to be taken lightly of course is the hearing or opportunity for the employee to defend himself personally or by
counsel of his choice.
In King of Kings Transport v. Mamac, 16 we had the occasion to further elucidate on the procedure relating to the twin notice and
hearing requirement, thus: aDcHIC
(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their defense.
This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general description of
the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2)
present evidence in support of their defenses; and (3) rebut the evidence presented against them by the

management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the employees
have been considered; and (2) grounds have been established to justify the severance of their employment.
In addition, if the continued employment poses a serious and imminent threat to the life or property of the employers or of other
employees like theft or physical injuries, and there is a need for preventive suspension, 17 the employers can immediately suspend the
erring employees for a period of not more than 30 days. Notwithstanding the suspension, the employers are tasked to comply with the
twin notice requirement under the law. The preventive suspension cannot replace the required notices. 18 Thus, there is still a need to
comply with the twin notice requirement and the requisite hearing or conference to ensure that the employees are afforded due process
even though they may have been caught in flagrante or when the evidence of the commission of the offense is strong.
On the surface, it would seem that petitioners observed due process (twin notice and hearing requirement): On February 23, 1999
petitioner notified respondent of the hearing to be conducted later that day. On the same day before the hearing, respondent was
furnished a copy of an office memorandum which contained a list of his offenses, and a notice of a scheduled hearing in the afternoon
of the same day. The next day, February 24, 1999, he was notified that his employment with petitioner R.B. Michael Press had been
terminated.

A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude that they only paid lip service to the due process
requirements. DaEcTC
The undue haste in effecting respondent's termination shows that the termination process was a mere simulation the required
notices were given, a hearing was even scheduled and held, but respondent was not really given a real opportunity to defend himself;
and it seems that petitioners had already decided to dismiss respondent from service, even before the first notice had been given.
Anent the written notice of charges and hearing, it is plain to see that there was merely a general description of the claimed offenses of
respondent. The hearing was immediately set in the afternoon of February 23, 1999 the day respondent received the first notice.
Therefore, he was not given any opportunity at all to consult a union official or lawyer, and, worse, to prepare for his defense.
Regarding the February 23, 1999 afternoon hearing, it can be inferred that respondent, without any lawyer or friend to counsel him,
was not given any chance at all to adduce evidence in his defense. At most, he was asked if he did not agree to render overtime work
on February 22, 1999 and if he was late for work for 197 days. He was never given any real opportunity to justify his inability to
perform work on those days. This is the only explanation why petitioners assert that respondent admittedall the charges.
In the February 24, 1999 notice of dismissal, petitioners simply justified respondent's dismissal by citing his admission of the offenses
charged. It did not specify the details surrounding the offenses and the specific company rule or Labor Code provision upon which the
dismissal was grounded.
In view of the infirmities in the proceedings, we conclude that termination of respondent was railroaded in serious breach of his right
to due process. And as a consequence of the violation of his statutory right to due process and following Agabon, petitioners are liable
jointly and solidarily to pay nominal damages to the respondent in the amount of PhP30,000. 19
WHEREFORE, premises considered, the November 14, 2001 CA Decision in CA-G.R. SP No. 62959, the April 28, 2000 Decision of
the NLRC in NLRC NCR CA No. 022433-00, and the October 29, 1999 Decision of the Labor Arbiter in NLRC Case No. RAB IV-210806-99-C are hereby REVERSED and SET ASIDE. The Court declares respondent's dismissal from employment VALID and
LEGAL. Petitioners are, however, ordered jointly and solidarily to pay respondent nominal damages in the amount of PhP30,000 for
violation of respondent's right to due process. IcHDCS
No costs.
SO ORDERED.
Quisumbing, Carpio, Carpio-Morales and Tinga, JJ., concur.

Footnotes
1.Rollo, p. 71. aDIHCT
2.Id. at 72.

3.Id. at 59-60.
4.Id. at 47. The Decision was penned by Associate Justice Eugenio S. Labitoria, and concurred in by Associate Justices Teodoro P.
Regino and Rebecca de Guia-Salvador.
5.CA rollo, pp. 130-132.
6.Nautica Canning Corp. et al. v. Roberto C. Yumul, G.R. No. 164588, October 19, 2005, 473 SCRA 415, 423-424; Agabon v.
National Labor Relations Commission, G.R. No. 158693, November 17, 2004, 442 SCRA 573, 604.
7.See Basilisa Dungaran v. Arleni Koschnicke, G.R. No. 161048, August 31, 2005, 468 SCRA 676, 685; Larena v. Mapili, G.R. No.
146341, August 7, 2003, 408 SCRA 484, 488-489.
8.Rollo, p. 71.
9.Castro v. Del Rosario, et al., No. L-17915, January 31, 1967, 19 SCRA 196, 203.
10.Thomson v. Court of Appeals, G.R. No. 116631, October 28, 1998, 298 SCRA 280, 293-294.
11.G.R. No. 91344, September 14, 1990, 189 SCRA 666, 671.
12.G.R. No. 72129, February 7, 1990, 182 SCRA 1, 3-4.
13.Micro Sales Operation Network v. NLRC, G.R. No. 155279, October 11, 2005, 472 SCRA 328, 335-336.
14.G.R. No. 166379, October 20, 2005, 473 SCRA 617, 624.
15.G.R. No. 158693, November 17, 2004, 442 SCRA 573, 608.
16.G.R. No. 166208, June 29, 2007, 526 SCRA 116, 125-126.
17.RULES IMPLEMENTING THE LABOR CODE, as amended by D.O. 09, June 21, 1997, Book V, Rule XXIII, Secs. 8 & 9.
18.Tanala v. National Labor Relations Commission, G.R. No. 116588, January 24, 1996, 252 SCRA 314, 321.
19.Supra note 15.
||| (R.B. Michael Press v. Galit, G.R. No. 153510, [February 13, 2008], 568 PHIL 585-603)

THIRD DIVISION
[G.R. No. 111359. August 15, 1995.]
CALTEX REGULAR EMPLOYEES AT MANILA OFFICE, LEGAZPI BULK DEPOT AND
MARINDUQUE BULK DEPOT - (MACLU), petitioners, vs. CALTEX (PHILIPPINES), INC. and
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), respondents.
B.C. Gonzales for petitioners.
Angara, Abello, Concepcion, Regala & Cruz for private respondent.
The Solicitor General for public respondent.
SYLLABUS
1. CIVIL LAW; CONTRACTS; INTERPRETATION THEREOF; THE CONTEMPORANEOUS AND SUBSEQUENT CONDUCT
OF THE PARTIES SHALL BE PRINCIPALLY CONSIDERED; CASE AT BAR. In all these CBAs (1973, 1976, 1979, 1982),
Article III provide that only "work on an employee's one day of rest" shall be paid on the basis of "day of rest rates." The relevant
point here is that petitioner Union had never suggested that more than 1 day of rest had been agreed upon, and certainly Caltex had
never treated Article III or any other portion of the CBAs as providing two (2) days of rest. It is well settled that the contemporaneous
and subsequent conduct of the parties may be taken into account by a court called upon to interpret and apply a contract entered into
by them.
2. LABOR AND SOCIAL LEGISLATION; LABOR STANDARDS; PROHIBITION AGAINST OFFSETTING UNDERTIME ONE
DAY WITH OVERTIME ON ANOTHER DAY; NOT APPLICABLE IN CASE AT BAR. The Court finds petitioner's contention
bereft of merit. Overtime work consists of hours worked on a given day in excess of the applicable work period, which here is eight
(8) hours. It is not enough that the hours worked fall on disagreeable or inconvenient hours. In order that work may be considered as
overtime work, the hours worked must be in excess of and in addition to the eight (8) hours worked during the prescribed daily work
period, or the forty (40) hours worked during the regular work week Monday thru Friday. In the present case, under the 1985 CBA,
hours worked on a Saturday do not, by that fact alone,necessarily constitute overtime work compensable at premium rates of pay,
contrary to petitioner's assertion. These are normal or regular work hours, compensable at regular rates of pay, as provided in the 1985
CBA; under that CBA, Saturday is not a rest day or a "day off." It is only when an employee has been required on a Saturday to render
work in excess of the forty (40) hours which constitute the regular work week that such employee may be considered as performing
overtime work on that Saturday. We consider that the statutory prohibition against offsetting undertime one day with overtime another
day has no application in the case at bar.

DECISION

FELICIANO, J p:
In this petition for certiorari, petitioner Caltex Regular Employees Association at the Manila Office, Legazpi Bulk Depot and the
Marinduque Bulk Depot (hereinafter referred to as "Union"), seeks to annul and set aside the decision of the National Labor Relations
Commission ("NLRC"), promulgated on 5 March 1993, which reversed the decision of Labor Arbiter Valentin Guanio.
On 12 December 1985, petitioner Union and private respondent Caltex (Philippines), Inc. ("Caltex") entered into a Collective
Bargaining Agreement ("1985 CBA") which was to be in effect until midnight of 31 December 1988. The CBA included, among
others, the following provision:
"ARTICLE III
HOURS OF WORK
In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as amended,
the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday through Sunday, during
which regular rates of pay shall be paid in accordance with Annex B and work on the employee's one 'Day of

Rest,' shall be considered a special work day, during which 'Day of Rest' rates of pay shall be paid as provided in
Annex B. Daily working schedules shall be established by management in accordance with the requirements of
efficient operations on the basis of eight (8) hours per day for any five (5) days. Provided, however, employees
required to work in excess of forty (40) hours in any week shall be compensated in accordance with Annex B of
this Agreement. 1 (Emphasis supplied)
Pertinent portions of Annex "B" of the 1985 CBA are also quoted here as follows:
"Annex 'B'
Computation of:
Regular Day Pay
Overtime Pay
Night Shift Differential Pay
Day Off Pay
Excess of 40 hours within a calendar week
Sunday Premium Pay
Holiday Premium Pay
Employee's Basic Hourly Wage Rate:
Monthly Base Pay

X = (21.667) (8)
A. Regular Pay
1) Hourly rate
=X
2) OT Hourly Rate 12 MN
= (X + 50% X)
3) NSD 6 PM - 12 MN
= (X + 25% X)
4) OT Hourly Rate NSD 6 PM - 12 MN
= (X + 25% X) + 50% (X + 25% X)
5) NSD 12 MN - 6 AM
= (X + 50% X)
6) OT Hourly Rate NSD 12 MN - 6 AM
= (X + 50% X) + 50% (X + 50% X)
B. Regular First Day Off
1. Hourly Rate
= (X + 50% X)
2. OT Hourly Rate
= (X + 50% X) + 50% (X + 50% X)
3. NSD 6 PM - 12 MN
= [(X + 50% X) + 25% (X + 50% X)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 50% X) + 25% (X + 50% X)] + 50% [(X + 50%
X) + 25% (X + 50%)]
5. NSD 12 MN - 6 AM
= [(X + 50% X) + 50% (X + 50% X)]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [(X + 50% X) + 50% (X + 50% X)] +
50% [(X + 50% X) + 50% (X + 50% X)]
C. Regular Second Day off

1. Hourly Rate
= (X + 100% X)
2. OT Hourly Rate
= (X + 100% X) + 50% (X + 100% X)
3. NSD 6 PM - 12 MN
= [(X + 100% X) + 25% (X + 100%)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 100% X) + 25% (X + 100% X)] + 50% [(X +
100% X) + 25% (X + 100% X)]
5. NSD 12 MN - 6 AM
= [(X + 100% X) + 50% (X + 100% X)]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [( X + 100% X ) + 50% ( X + 100% X)] + 50% [( X +
100% X ) + 50% ( X + 100% X )]
D. Excess of 40 Hours within a Calendar Week
1. Hourly Rate
= (X + 50% X)
2. OT Hourly Rate
= (X + 50% X) + 50% (X + 50% X)
3. NSD 6 PM - 12 MN
= [(X + 50% X) + 25% (X + 50% X)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 50% X) + 25% (X + 50% X)] + 50% [( X + 50%
X) + 25% (X + 50% X)]
5. NSD 12 MN - 6 AM
= [(X + 50% X) + 50% (X + 50% X)]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [(X + 50% X) + 50% (X + 50% X)] + 50% [(X + 50%
X) + 50% (X + 50% X)]
E. Sunday as a Normal Work Day
1. Hourly Rate
= (X + 100% X)
2. OT Hourly Rate
= (X + 100% X) + 50% (X + 100% X)
3. NSD 6 PM - 12 MN
= [(X + 100% X) + 25% (X + 100% X)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 100% X) + 25% (X + 100% X)] + 50% [(X +
100% X) + 25% (X + 100% X)]
5. NSD 12 MN - 6 AM
= [(X + 100% X) + 50% (X + 100% X)]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [(X + 100% X) + 50% (X + 100% X) ] + 50% [(X +
100% X) + 50% (X + 100% X)]
F. Sunday as day off
1. Hourly Rate
= (X + 100% X)

2. OT Hourly Rate
= (X + 100% X) + 50% (X + 100% X)
3. NSD 6 PM - 12 MN
= [(X + 100% X) + 25% (X + 100% X)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 100% X) + 25% (X + 100% X)] + 50% [(X +
100% X) + 25% (X + 100% X)]
5. NSD 12 MN - 6 AM
= [(X + 100% X) + 50% (X + 100% X)]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [(X + 100% X) + 50% (X + 100% X)] + 50% [(X + 100%
X) + 50% (X + 100% X)]
G. Holiday as Normal Work Day
1. Hourly Rate
= (X + 150% X)
2. OT Hourly Rate
= (X + 150% X) + 50% (X + 150%X)
3. NSD 6 PM - 12 MN
= [(X + 150% X) + 25% (X + 150% X)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 150% X) + 25% (X + 150% X) ] + 50% [(X +
150% X) + 25% (X+ 150% X)]
5. NSD 12 MN - 6 AM
= [(X + 150% X) + 50% (X + 150% X)]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [(X + 150% X) + 50% (X + 150% X)] + 50% [(X +
150% X) + 50% (X + 150% X)]
H. Holiday as Day Off
1. Hourly Rate
= (X + 150% X)
2. OT Hourly Rate
= (X + 150% X) + 50% (X + 150% X)
3. NSD 6 PM - 12 MN
= [(X + 150% X) + 25% (X + 150% X)]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [(X + 150% X) + 25% (X + 150% X)] + 50% [(X +
150% X) + 25% (X + 150% X)]
5. NSD 12 MN - 6 AM
= [(X + 150% X) + 50% (X + 150% X)]
6. OT Hourly Rate
= [(X + 150% X) + 50% (X + 150% X)] + 50% [(X +
150% X) + 50% (X + 150% X)]
7. *Hourly Rate for less than 8 hours
= (150% X)
* For work of less than 8 hours, the employee will receive his basic daily rate
(Monthly Base Pay )

21.667

plus the hourly rate multiplied by the number of hours worked." 2


Sometime in August 1986, the Union called Caltex's attention to alleged violations by Caltex of Annex "B" of the 1985
CBA, e.g. non-payment of night-shift differential, non-payment of overtime pay and non-payment at "first day-off rates" for work
performed on a Saturday.
Caltex's Industrial Relations manager immediately evaluated petitioner's claims and accordingly informed petitioner Union that
differential payments would be timely implemented. In the implementation of the re-computed claims, however, no differential
payment was made with respect to work performed on the first 2 1/2 hours on a Saturday.
On 7 July 1987, the Union instituted a complaint for unfair labor practice against Caltex alleging violation of the provisions of the
1985 CBA. Petitioner Union charged Caltex with shortchanging its employees when Caltex compensated work performed on the first
2 1/2 hours of Saturday, an employees' day of rest, at regular rates, when it should be paying at "day of rest" or "day off" rates.
Caltex denied the accusations of the Union. It averred that Saturday was never designated as a day of rest, much less a "day-off". It
maintained that the 1985 CBA provided only 1 day of rest for employees at the Manila Office, as well as employees similarly situated
at the Legazpi and Marinduque Bulk Depots. This day of rest, according to Caltex, was Sunday.
In due time, the Labor Arbiter ruled in favor of petitioner Union, while finding at the same time that private respondent Caltex was not
guilty of any unfair labor practice. Labor Arbiter Valentin C. Guanio, interpreting Article III and Annex "B" of the 1985 CBA,
concluded that Caltex's employees had been given two (2) days (instead of one [1] day) of rest, with the result that work performed on
the employee's first day of rest, viz. Saturday, should be compensated at "First day-off" rates.

On appeal by Caltex, public respondent NLRC set aside the decision of Labor Arbiter Guanio. The NLRC found that the conclusions
of the Labor Arbiter were not supported by the evidence on record. The NLRC, interpreting the provisions of the 1985 CBA,
concluded that that CBA granted only one (1) day of rest, e.g., Sunday. The Union's motion for reconsideration was denied on 9 June
1993.
The controversy we must address in this Petition for Certiorari relates to the appropriate interpretation of Article III in relation to
Annex "B" of the parties' 1985 CBA.
After carefully examining the language of Article III, in relation to Annex "B" of the 1985 CBA, quoted in limine, as well as relevant
portions of earlier CBAs between the parties, we agree with the NLRC that the intention of the parties to the 1985 CBA was to
provide the employees with only one (1) day of rest. The plain and ordinary meaning of the language of Article III is that Caltex and
the Union had agreed to pay "day of rest" rates for work performed on "an employee's one day of rest." To the Court's mind, the use of
the word "one" describing the phrase "day of rest [of an employee]" emphasizes the fact that the parties had agreed that only a single
day of rest shall be scheduled and shall be provided to the employee.
It is useful to note that the contract clauses governing hours of work in previous CBAs executed between private respondent Caltex
and petitioner Union in 1973, 1976, 1979 and 1982 contained provisions parallel if not identical to those set out in Article III of the
1985 CBA here before us.
Article III of the 1973 Collective Bargaining Agreement 3 provided as follows:
"Article III
Hours of Work
Section 1. In conformity with Presidential Decree No. 143, the regular work week shall consist of eight (8) hours
per day, seven (7) days, Monday through Sunday, during which regular rates of pay shall be paid in accordance
with Article IV, Section 1 and work on the employee's one 'Day of Rest' shall be paid as provided in Article IV,
Section 8. Daily working schedules shall be established by management in accordance with the requirements of
efficient operations on the basis of eight (8) hours per day for any five (5) days; provided, however, employees
required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV,
Section 7 of this Agreement." (Emphasis supplied)
Article III of the 1976 Collective Bargaining Agreement 4 read:
"Article III
Hours of Work
Section 1. In conformity with Presidential Decree No. 143, the regular work week shall consist of eight (8) hours
per day, seven (7) days, Monday through Sunday, during which regular rates of pay shall be paid in accordance
with Article IV, Section 1 and work on the employee's one 'Day of Rest' shall be paid as provided in Article IV,
Section 8. Daily working schedules shall be established by management in accordance with the requirements of

efficient operations on the basis of eight (8) hours per day for any five (5) days; provided, however, employees
required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV,
Section 7 of this Agreement." (Emphasis supplied)
Article III of the 1979 Collective Bargaining Agreement 5 said:
"Article III
Hours of Work
Section 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as
amended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday thru Sunday
during which regular rates of pay shall be paid in accordance with Article IV, Section 1 and work on the
employee's one 'Day of Rest' shall be paid as provided in Article IV, Section 7. Daily working schedules shall be
established by management in accordance with the requirements of efficient operations on the basis of eight hours
per day for any five (5) days; provided, however, employees required to work in excess of forty (40) hours in any
week shall be compensated in accordance with Article IV, Section 6 of this Agreement." (Emphasis supplied)
Article III of the 1982 Collective Bargaining Agreement 6 also provided as follows:
"Article III
Hours of Work
Section 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as
amended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday thru Sunday,
during which regular rates of pay shall be paid in accordance with Article IV, Section 1 and work on the
employee's one 'Day of Rest' shall be paid as provided in Article IV, Section 7. Daily working schedules shall be
established by management in accordance with the requirements of efficient operations on the basis of eight hours
per day for any five (5) days; provided, however employees required to work in excess of forty (40) hours in any
week shall be compensated in accordance with Article IV, Section 6 of this Agreement." (Emphasis supplied)
In all these CBAs (1973, 1976, 1979, 1982), Article III provides that only "work on an employee's one day of rest" shall be paid
on the basis of "day of rest rates". The relevant point here is that petitioner Union had never suggested that more than 1 day of rest
had been agreed upon, and certainly Caltex had never treated Article III or any other portion of the CBAs as providing two (2)
days of rest. It is well settled that the contemporaneous and subsequent conduct of the parties may be taken into account by a
court called upon to interpret and apply a contract entered into by them. 7
We note that Labor Arbiter Guanio surmised that the intention he implied from the contents of Annex "B" was in conflict with the
intention expressed in Article III (which, the Labor Arbiter admitted, stipulated only one day of rest). According to the Labor Arbiter,
when Annex "B" referred to "First Day-off Rates" and "Second Day-off Rates," these were meant to express an agreement that the
parties intended to provide employees two (2) days of rest. He then declared that Annex "B" should prevail over Article III because the
former was a more specific provision than the latter.
An annex expresses the idea of joining a smaller or subordinate thing with another, larger or of higher importance. 8 An annex has a
subordinate role, without any independent significance separate from that to which it is tacked on. Annex "B," in the case at bar, is one
such document. It is not a memorandum of amendments or a codicil containing additional or new terms or stipulations. Annex "B"
cannot be construed as modifying or altering the terms expressed in the body of the agreement contained in the 1985 CBA. It did not
confer any rights upon employees represented by petitioner Union; neither did it impose any obligations upon private respondent
Caltex. In fact, the contents of Annex "B" have no intelligible significance in and of themselves when considered separately from the
1985 CBA.
Moreover, we are persuaded by private respondent's argument that Annex "B" was intended to serve as a company-wide guide in
computing compensation for work performed by all its employees, including but not limited to the Manila Office employees
represented by petitioner Union. Private respondent also points out that the mathematical formulae contained in Annex "B" are
not all applicable to all classes of employees, there being some formulae applicable only to particular groups or classes of employees.
Thus, "First Day-off rates" and "Second Day-off rates" are applicable only to employees stationed at the refinery and associated
facilities like depots and terminals which must be in constant twenty-four (24) hours a day, seven (7) days a week, operation, hence
necessitating the continuous presence of operations personnel. The work of such operations personnel required them to be on duty for
six (6) consecutive days. Upon the other hand, "First Day-off rates" and "Second Day-off rates" are not applicable to personnel of the
Manila Office which consisted of other groups or categories of employees (e.g., office clerks, librarians, computer operators,
secretaries, collectors, etc.), 9 since the nature of their work did not require them to be on duty for six (6) consecutive days.
We find, under the foregoing circumstances, that the purported intention inferred from Annex "B" by the Labor Arbiter was based
merely on conjecture and speculation.

We also note that the Labor Arbiter merely suspected that the parties agreed to provide two (2) days of rest on the ground that they
had so stipulated in their 1970 CBA. 10 A principal difficulty with this view is that it disregards the fact that Article III of the 1985
CBA no longer contained a particular proviso found in the 1970 CBA. In fact, all the CBAs subsequent to 1970 (1973, 1976, 1979,
1982) had similarly deleted the proviso in the 1970 CBA providing for two (2) days-off. To the Court's mind, such deletion means
only one thing that is the parties had agreed to remove such stipulation. Accordingly, the proviso found in Article III of the 1970
CBA ceased to be a demandable obligation. Petitioner Union cannot now unilaterally re-insert such a stipulation by strained inference
from Annex "B." Upon the foregoing circumstances, we must hold that the Labor Arbiter's suspicion is without basis in the facts of
record.
Petitioner Union also contended that private respondent Caltex in the instant petition was violating the statutory prohibition against
off-setting undertime for overtime work on another day. 11 Union counsel attempted to establish this charge by asserting that the
employees had been required to render "overtime work" on a Saturday but compensated only at regular rates of pay, because they had
not completed the eight (8)-hour work period daily from Monday thru Friday.
The Court finds petitioner's contention bereft of merit. Overtime work consists of hours worked on a given day in excess of the
applicable work period, which here is eight (8) hours. 12 It is not enough that the hours worked fall on disagreeable or inconvenient
hours. In order that work may be considered as overtime work, the hours worked must be in excess of and in addition to the eight (8)
hours worked during the prescribed daily work period, or the forty (40) hours worked during the regular work week Monday thru
Friday.

In the present case, under the 1985 CBA, hours worked on a Saturday do not, by that fact alone, necessarily constitute overtime work
compensable at premium rates of pay, contrary to petitioner's assertion. These are normal or regular work hours, compensable at
regular rates of pay, as provided in the 1985 CBA; under that CBA, Saturday is not a rest day or a "day off". It is only when an
employee has been required on a Saturday to render work in excess of the forty (40) hours which constitute the regular work week that
such employee may be considered as performing overtime work on that Saturday. We consider that the statutory prohibition against
offsetting undertime one day with overtime another day has no application in the case at bar. 13
Petitioner's counsel, in his final attempt to lay a basis for compelling private respondent to pay premium rates of pay for all
hours worked on a Saturday, regardless of the number of hours actually worked earlier during the week, i.e., on Monday to Friday,
insists that private respondent cannot require its employees to complete the 40-hour regular work week on a Saturday, after it has
allowed its employees to render only 37-1/2 hours of work.
The company practice of allowing employees to leave thirty (30) minutes earlier than the scheduled off-time had been established
primarily for the convenience of the employees most of whom have had to commute from work place to home and in order that they
may avoid the heavy rush hour vehicular traffic. There is no allegation here by petitioner Union that such practice was resorted to by
Caltex in order to escape its contractual obligations. This practice, while it effectively reduced to 37-1/2 the number of hours actually
worked by employees who had opted to leave ahead of off-time, is not to be construed as modifying the other terms of the 1985 CBA.
As correctly pointed out by private respondent, the shortened work period did not result in likewise shortening the work required for
purposes of determining overtime pay, as well as for purposes of determining premium pay for work beyond forty (40) hours within
the calendar week. It follows that an employee is entitled to be paid premium rates, whether for work in excess of (8) hours on any
given day, or for work beyond the forty (40)-hour requirement for the calendar week, only when the employee had, in fact, already
rendered the requisite number of hours 8 or 40 prescribed in the 1985 CBA.
In recapitulation, the parties' 1985 CBA stipulated that employees at the Manila Office, as well as those similarly situated at the
Legazpi and Marinduque Bulk Depots, shall be provided only one (1) day of rest; Sunday, and not Saturday, was designated as this
day of rest. Work performed on a Saturday is accordingly to be paid at regular rates of pay, as a rule, unless the employee shall have
been required to render work in excess of forty (40) hours in a calendar week. The employee must, however, have in fact rendered
work in excess of forty (40) hours before hours subsequently worked become payable at premium rates. We conclude that the NLRC
correctly set aside the palpable error committed by Labor Arbiter Guanio, when the latter imposed upon one of the parties to the 1985
CBA, an obligation which it had never assumed.
WHEREFORE, petitioner Union having failed to show grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of public respondent National Labor Relations Commission in rendering its decision dated 5 March 1993, the Court Resolved to
DISMISS the Petition for lack of merit.
SO ORDERED.
Romero, Melo, and Vitug, JJ., concur.

Footnotes

1.Collective Bargaining Agreement, Rollo, p. 239.


2.Rollo, pp. 254-258.
3.Id., pp. 160-162.
4.Id., pp. 163-164.
5.Id., pp. 165-167.
6.Id., p. 168.
7.See, e.g., Universal Textile Mills vs. National Labor Relations Commission, 184 SCRA 273 (1990).
8.See Black's Law Dictionary, 6th ed. (1990), p. 88.
9.See Annex "A" of the CBA, Rollo, pp. 253-254.
10.Article III of the 1970 CBA provided as follows:
"Article III
Hours of Work

Section 1. The regular work week shall consist of eight (8) hours per day, six (6) days, Monday through Saturday, during which
regular rates of pay shall be paid in accordance with Article IV, Section 1, except for work on holidays as provided in
Article IV, Section 7, and Sunday shall be considered a special work day during which Sunday rates of pay shall be paid as
provided in Article IV, Section 6. Daily working schedules shall be established by management in accordance with the
requirements of efficient operations on the basis of eight (8) hours per day for any five (5) days; Provided however,
employees required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV,
Section 5 of this Agreement, and provided further, employees shall be scheduled two consecutive days off ." (Emphasis
supplied)
11.Article 88, Labor Code, as amended, provides:
"Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on any
other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer
from paying the additional compensation required in this Chapter." (Emphasis supplied)
12.Article 87 of the Labor Code,as amended, provides in relevant part:
"Art. 87. Overtime Work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the
overtime work and additional compensation equivalent to his regular wage plus at least twenty-five percent (25%)
thereof. . . ."
See also Bay Ridge Operating Co. vs. Aaron, 334 US 446, 92 L. ed. 1502 (1948).
13.It seems worthy of mention in the margin that the Labor Arbiter here was aware of the practice of private respondent company
that persisted for almost twenty-two (22) years. Nevertheless, the Labor Arbiter chose to disregard that twenty-two (22)year practice and insisted on what appeared to him as the correct interpretation of the CBA. The Labor Arbiter said:
"Finally, it is of no moment that it has been the respondent's practice for almost 22 years now not to pay its employees the
premium rate on Saturday unless they have completed the 40 hour requirement. This is violative of the CBA and it is the
duty of this Office to rectify the wrong application of its terms. In fine no additional burden is being imposed upon the
respondent which is not embodied in the CBA. The respondent is merely enjoined to comply with its obligations under the
CBA." (Rollo, p. 325; emphasis supplied)
The Labor Arbiter here was, of course, out on a very long legal limb, as it were. For long continued practice of the parties cannot
reasonably be disregarded by one who must construe the contractual provision before him. Long continued practice
constitutes contemporaneous and practical construction which inevitably throws light upon the parties' own understanding
of their mutual intent, which would seem a more reliable guide to the parties' intention, especially when such practice is
wholly consistent with the actual language of the provision, as in the present case.
||| (Caltex Regular Employees at Manila Office v. Caltex (Philippines), Inc., G.R. No. 111359, [August 15, 1995], 317 PHIL 477-494)

EN BANC
[G.R. No. 79256. January 20, 1992.]
UNION OF FILIPRO EMPLOYEES (UFE), petitioner, vs. BENIGNO VIVAR, JR., NATIONAL LABOR
RELATIONS COMMISSION and NESTLE PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; FIELD PERSONNEL; FIELD PERSONNEL NOT
ENTITLED TO HOLIDAY PAY; FIELD PERSONNEL, DEFINED. Under Article 82, field personnel are not entitled to holiday
pay. Said article defines field personnel as "non-agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty."
2. STATUTORY CONSTRUCTION; LABOR CODE; PHRASE "ACTUAL HOURS OF WORK IN THE FIELD CANNOT BE
ASCERTAINED WITH REASONABLE CERTAINTY," CONSTRUED. The controversy centers on the interpretation of the
clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The law requires that the actual hours
of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if
they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual
field work. The requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the Implementing Rules which provides: "Rule IV Holidays with Pay Section 1. Coverage
This rule shall apply to all employees except: . . . (e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . The aforementioned rule did not add another element to the Labor Code definition of field
personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is
still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual
working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time
and performance is constantly supervised by the employer.
3. ID.; ID.; ALL DOUBTS IN ITS IMPLEMENTATION AND INTERPRETATION, RESOLVED IN FAVOR OF LABOR.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake due to its use of 251 days as divisor must fail in light of the
Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor."
4. REMEDIAL LAW; ACTIONS; APPEAL; AN APPELLEE WHO IS NOT AN APPELLANT CANNOT SEEK A
MODIFICATION OF THE JUDGMENT UNLESS HE HAS ALSO APPEALED. An appellee who is not an appellant may assign
errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La
Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]).
5. ID.; ID.; ID.; ID.; DOCTRINE MAY BE RELAXED TO FULLY SETTLE THE ISSUES. Nevertheless, in order to fully settle
the issues so that the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court
resolved to take up the matter of effectivity of the holiday pay award raised by Nestle.
6. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; HOLIDAY PAY; SECTION 2, RULE IV, BOOK III
OF THE IMPLEMENTING RULES AND POLICY INSTRUCTION NO. 9 EXCLUDING MONTHLY PAID EMPLOYEES FROM
THE BENEFIT THEREOF, DECLARED NULL AND VOID. In Insular Bank of Asia and America Employees' Union
(IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV,
Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16, 1976 and April
23, 1976, respectively, and which excluded monthly paid employees from holiday pay benefits, are null and void.
7. ID.; ID.; ID.; ID.; ID.; PRESUMPTION OF VALIDITY BEFORE ITS DECLARATION OF NULLITY; EFFECT THEREOF IN
CASE AT BAR. However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the
presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October
23, 1984 was in compliance with these presumably valid rule and policy instruction. The "operative fact" doctrine realizes that in

declaring a law or rule null and void, undue harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To
require various companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning
period under the facts of this case. Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on
the implicit validity of the implementing rule and policy instruction before this Court nullified them, and thinking that it was not
obliged to give holiday pay benefits to its monthly paid employees, may have been moved to grant other concessions to its employees,
especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are
among the highest paid in the industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the
non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault. The Court thereby resolves that the
grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor from the date of effectivity of the
Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case.

DECISION

GUTIERREZ, JR., J p:
This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor in the
computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission
(NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees
for holiday pay in the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent
Benigno Vivar, Jr. as voluntary arbitrator. LLpr
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
"pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions
and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code." (Rollo, p.
31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales
representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of
the holiday pay; and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their sales
personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee
benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to
November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field
personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should
be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave
pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as
appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent
arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the
Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P.
Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more
jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and whether or not
the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and sick leave pay.

The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The respondent
company controverts this assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agricultural employees
who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with
reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which
can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no
way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and
come back at 4:30 p.m., really spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:.
"The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00
a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an
exercise of purely management prerogative of providing administrative control over such personnel. This does not
in any manner provide a reasonable level of determination on the actual field work of the employees which can be
reasonably ascertained. The theoretical analysis that salesmen and other similarly-situated workers regularly
report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their
field work is supervised, is surface projection. Actual field work begins after 8:00 a.m. when the sales personnel
follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office.
The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope
and result of which are subject to their individual capacity and industry and which 'cannot be determined with
reasonable certainty.' This is the reason why effective supervision over field work of salesmen and medical
representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are
excluded from the ten holidays with pay award.' (Rollo, pp. 36-37).
Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the Implementing Rules which provides:
"Rule IV Holidays with Pay.
SECTION 1. Coverage. This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . .
(Emphasis supplied).
While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to
show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel
are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984
(Annexes 2 and 3, Rollo, pp. 53-55)
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor
Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable
certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and performance are
supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the office not later than 8:00 a.m. and
are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an employee through
the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984.

The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is
proof that their actual hours of work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection
performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns and (6)
proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their
actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which
are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of
the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
"The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works
individually. There are no restrictions respecting the time he shall work and he can earn as much or as little,
within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as
extra compensation. He works away from his employer's place of business, is not subject to the personal
supervision of his employer, and his employer has no way of knowing the number of hours he works per day."
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field
personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the divisor should
be changed from 251 to 261 days to include the additional 10 holidays and the employees should reimburse the amounts overpaid by
Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
". . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or accelerates
the basis of conversion and computation by ten days. With the inclusion of ten holidays as paid days, the divisor is
no longer 251 but 261 or 262 if election day is counted. This is indeed an extremely difficult legal question of
interpretation which accounts for what is claimed as falling within the concept of 'solutio indebiti.'
When the claim of the Union for payment of ten holidays was granted, there was a consequent need to abandon
that 251 divisor. To maintain it would create an impossible situation where the employees would benefit with
additional ten days with pay but would simultaneously enjoy higher benefits by discarding the same ten days for
purposes of computing overtime and night time services and considering sick and vacation leave credits.
Therefore, reimbursement of such overpayment with the use of 251 as divisor arises concomitant with the award
of ten holidays with pay.' (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's
salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank Employees Associat ion v.
Ople (supra). In that case, We held:
"It is argued that even without the presumption found in the rules and in the policy instruction, the company
practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay
provided by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime
compensation for its employees, employs a 'divisor' of 251 days. The 251 working days divisor is the result of
subtracting all Saturdays Sundays and the ten (10) legal holidays from the total number of calendar days in a year.
If the employees are already paid for all non-working days, the divisor should be 365 and not 251."
In the petitioner's case, its computation of daily rate, since September 1, 1980, is as follows:
monthly rate x 12 months

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates that holiday
pay is not yet included in the employee's salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of
computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should
also be the same basis for computing the 10 unpaid holidays.

The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the
prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is
adjusted to 261 days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then dividing
such figure by 251 days, his daily rate is P100.00. After the payment of 10 days' holiday pay, his annual salary already includes
holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in
respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation
of which are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in light of the
Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not paid. When Filipro
shifted to a 5-day working schedule on September 1, 1980, it had the chance to rectify its error, if ever there was one, but did not do
so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This ruling was
not questioned by the petitioner union as obviously, said decision was favorable to it. Technically, therefore, respondent Nestle should
have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not
an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek
modification or reversal of the judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court,
178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394
[1986]). Nevertheless, in order to fully settle the issues so that the execution of the Court's decision in this case may not be needlessly
delayed by another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered Bank decision,
promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the Labor Code. Although the
Court does not entirely agree with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the
IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the
then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from
holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's provisions on
holiday pay, the aforementioned implementing rule and policy instruction amended them by enlarging the scope of their exclusion.
The Chartered Bank case reiterated the above ruling and added the 'divisor' test.
However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption of validity
and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in
compliance with these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a
legislative or executive act subsequently declared invalid:
xxx xxx xxx
". . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act
must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have
changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has
been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is
now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is
merely to reflect awareness that precisely because the judiciary is the government organ which has the final say on
whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise
the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality
of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.
"In the language of an American Supreme Court decision: 'The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, - with respect to particular relations, individual and
corporate, and particular conduct, private and official.' (Chicot County Drainage Dist. v. Baxter States Bank, 308
US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil.
1002 [1953]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil., 738 [1956]). An even more recent

instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095
[1967])." (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting unfairness must be
avoided. It is now almost the end of 1991. To require various companies to reach back to 1975 now and nullify acts done in good faith
is unduly harsh. 1984 is a fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of the
implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give holiday pay
benefits to its monthly paid employees, may have been moved to grant other concessions to its employees, especially in the collective
bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among the highest paid in the
industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday
benefits up to 1984 was not in any way attributed to Nestle's fault. cdrep
The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case
nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator is hereby MODIFIED. The divisor to be used in computing holiday pay shall be
251 days. The holiday pay as above directed shall be computed from October 23, 1984. In all other respects, the order of the
respondent arbitrator is hereby AFFIRMED.
SO ORDERED.
Narvasa, C .J ., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin, Medialdea, Grio-Aquino, Regalado, Davide, Jr. and Romero,
JJ ., concur.
Cruz, J ., took no part. Related to one of the counsel.
Nocon, J ., took no part. Did not participate in the deliberations.
||| (Union of Filipro Employees v. Vivar, Jr., G.R. No. 79256, [January 20, 1992])

FIRST DIVISION
[G.R. No. 118289. December 13, 1999.]
TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNEL GALVEZ, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-ASIA(PHILS.) and ERNESTO S. DE
CASTRO, respondents.
Gilbert P. Lorenzo for petitioners.
Guingona and Sedigo for private respondents.
Gilbert P. Lorenzo for petitioners.
The Solicitor General for public respondent.
Guingona & Sedigo for private respondent.
SYNOPSIS
The Trans-Asia Phils. Employees Association (TAPEA) led by its President, petitioner Arnie Galvez, filed a complaint before the
labor arbiter for the payment of their holiday pay in arrears against private respondent Trans-Asia Phils. The labor arbiter rendered its
decision dismissing the complaint. Petitioners appealed to the National Labor Relations Commission (NLRC). The NLRC dismissed
the appeal and affirmed the decision of the labor arbiter. Petitioner's motion for reconsideration was likewise denied. In this petition,
petitioners asserted that the NLRC "blatantly and unashamedly disregarded" the numerous evidence in support of their claim and
relied merely on the sole evidence presented by private respondent Trans-Asia, the "286" days divisor, in dismissing their appeal and
in so doing, was guilty of grave abuse of discretion.
The Supreme Court affirmed the decision of the NLRC. According to the Court, the decision of the labor arbiter and the NLRC were
based on substantial evidence and, as such, no ambiguity or doubt exist which could be resolved in petitioners' favor. The Court found
no confusion with regard to the divisor used by Trans-Asia in computing for petitioners' benefits and deductions. Nevertheless,
petitioner's cause is not entirely lost because there is a need to adjust the divisor used by Trans-Asiato 287 days, instead of only 286
days, in order to properly account for the entirety of regular holidays and special days in a year. The adjusted divisor of 287 days
should only be used by Trans-Asia for computations which would be advantageous to the petitioners, i.e., deductions for absences, and
not for computations which would diminish the existing benefits of the employees, i.e., overtime pay, holiday pay and leave
conversions.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; GRAVE ABUSE OF DISCRETION ON THE PART OF THE NLRC RULED OUT; PUBLIC
RESPONDENT COMMISSION ACTED ON THE BASIS OF SUBSTANTIAL EVIDENCE. It is on account of the convincing
and legally sound arguments and evidence of Trans-Asia that the labor arbiter rendered a decision adverse to petitioners.
Acknowledging that the decision of the labor arbiter was based on substantial evidence, the NLRC affirmed the former's disposition. It
is also with this acknowledgment that the Court affirms the questioned resolutions of the NLRC. As aptly put by the Solicitor General,
citing Sunset View Condominium Corporation vs. NLRC, "findings of fact of administrative bodies should not be disturbed in the
absence of grave abuse of discretion or unless the findings are not supported by substantial evidence." In this regard, the Solicitor
General observed: "As said above, public respondent acted on the basis of substantial evidence, hence, grave abuse of discretion is
ruled out." cSHATC
2. LABOR AND SOCIAL LEGISLATION; CONDITIONS OF EMPLOYMENT; THE ADJUSTED DIVISOR OF 287 DAYS
SHOULD ONLY BE USED BY PRIVATE RESPONDENT FOR COMPUTATIONS WHICH WOULD BE ADVANTAGEOUS TO
PETITIONERS, I.E., DEDUCTIONS FOR ABSENCES, AND NOT FOR COMPUTATIONS WHICH WOULD DIMINISH THE
EXISTING BENEFITS OF THE EMPLOYEES, I.E., OVERTIME PAY, HOLIDAY PAY AND LEAVE CONVERSIONS. The
Court notes that if the divisor is increased to 287 days, the resulting daily rate for purpose of overtime pay, holiday pay and
conversions of accumulated leaves would be diminished. To illustrate, if an employee receives P8,000.00 as his monthly salary, his
daily rate would be P334.49. P8,000.00 x 12 months/287 days = P334.49/day. Whereas if the divisor used is only 286 days, the
employee's daily rate would be P335.66. P8000.00 x 12 months/286 days = P335.66/day. Clearly, this muddled situation would be
violative of the proscription on the non-diminution of benefits under Section 100 of the Labor Code. On the other hand, the use of the

divisor of 278 days would be to the advantage of petitioners if it is used for purposes of computing for deductions due to the
employee's absences. In view of this situation the Court rules that the adjusted divisor of 287 days should only be used by TransAsia for computations which would be advantageous to petitioners, i.e., deductions for absences, and not for computations which
would diminish the existing benefits of the employees, i.e., overtime pay, holiday and leave conversions.
3. ID.; ID.; THE DECISION OF THE LABOR ARBITER AND THE RESOLUTIONS OF THE NLRC WERE BASED ON
SUBSTANTIAL EVIDENCE AND, AS SUCH, NO AMBIGUITY OR DOUBT EXISTS WHICH WOULD BE RESOLVED IN
PETITIONERS' FAVOR. For their second assignment of error, petitioners argue that, since they provided the NLRC with
"overwhelming proof" of their claim against Trans-Asia, the least that the NLRC could have done was to declare that there existed an
ambiguity with regard to Trans-Asia's payment of holiday pay. Petitioners then posits that if the NLRC had only done so, this
ambiguity would have been resolved in their favor because of the constitutional mandate to resolve doubts in favor of labor. We are
not persuaded. As previously stated, the decision of the labor arbiter and the resolutions of the NLRC were based on substantial
evidence and, as such, no ambiguity or doubts exists which could be resolved in petitioner's favor. AaHDSI

DECISION

KAPUNAN, J p:
This petition for certiorari under Rule 65 of the Rules of Court seeks to reverse and set aside the Resolutions, dated 23 November
1993 and 13 September 1994 of the National Labor Relations Commission ("NLRC") which dismissed petitioners' appeal from the
adverse decision of the labor arbiter and denied petitioners' motion for reconsideration, respectively.
The antecedents of this case are as follows: cdll
On 7 July 1988, Trans-Asia Philippines Employees Association (TAPEA), the duly-recognized collective bargaining agent of the
monthly-paid rank-and-file employees of Trans-Asia (Phils.), entered into a Collective Bargaining Agreement ("CBA") with their
employer. The CBA, which was to be effective from 1 April 1988 up to 31 March 1991, provided for, among others, the payment of
holiday pay with a stipulation that if an employee is permitted to work on a legal holiday, the said employee will receive a salary
equivalent to 200% of the regular daily wage plus a 60% premium pay.
Despite the conclusion of the CBA, however, an issue was still left unresolved with regard to the claim of TAPEA for payment of
holiday pay covering the period from January of 1985 up to December of 1987. Thus, the parties underwent preventive mediation
meetings with a representative from the National Mediation and Conciliation Board in order to settle their disagreement on this
particular issue. Since the parties were not able to arrive at an amicable settlement despite the conciliation meetings, TAPEA, led by
its President, petitioner Arnie Galvez, filed a complaint before the labor arbiter, on 18 August 1988, for the payment of their holiday
pay in arrears. On 18 September 1988, petitioners amended their complaint to include the payment of holiday pay for the duration of
the recently concluded CBA (from 1988 to 1991), unfair labor practice, damages and attorney's fees.
In their Position Paper, petitioners contended that their claim for holiday pay in arrears is based on the non-inclusion of the same in
their monthly pay. In this regard, petitioners cited certain circumstances which, according to them, would support their claim for past
due holiday pay. First, petitioners presented Trans-Asia's Employees' Manual which requires, as a pre-condition for the payment of
holiday pay, that the employee should have worked or was on authorized leave with pay on the day immediately preceding the legal
holiday. Petitioners argued that "if the intention [of Trans-Asia] was not to pay holiday pay in addition to the employee's monthly pay,
then there would be no need to impose or specify the pre-condition for the payment." 1 Second, petitioners proffered as evidence their
appointment papers which do not contain any stipulation on the inclusion of holiday pay in their monthly salary. According to
petitioners, the absence of such stipulation is an indication that the mandated holiday pay is not incorporated in the monthly salary.
Third, petitioners noted the inclusion of a provision in the CBA for the payment of an amount equivalent to 200% of the regular daily
wage plus 60% premium pay to employees who are permitted to work on a regular holiday. Petitioners claimed that this very generous
provision was the remedy availed of by Trans-Asia to allow its employees to recoup the holiday pay in arrears and, as such, is a tacit
admission of the non-payment of the same during the period prior to the current CBA.
Finally, petitioners cited the current CBA provision which obligates Trans-Asia to give holiday pay. Petitioners asserted that this
provision is an acknowledgment by Trans-Asia of its failure to pay the same in the past since, if it was already giving holiday pay
prior to the CBA, there was no need to stipulate on the said obligation in the current CBA.
With regard to the claim for the payment of holiday pay for the duration of the CBA, the accusation of unfair labor practice and the
claim for damages and attorney's fees, petitioners asserted that Trans-Asia is guilty of bad faith in negotiating and executing the
current CBA since, after it recognized the right of the employees to receive holiday pay, Trans-Asia allegedly refused to honor the
CBA provision on the same.

In response to petitioner's contentions, Trans-Asia refuted the same in seriatim. With regard to the pre-condition for the payment of
holiday pay stated in the Employees' Manual and the absence of a stipulation on holiday pay in the employees' appointment
papers, Trans-Asia asserted that the above circumstances are not indicative of its non-payment of holiday pay since it has always
honored the labor law provisions on holiday pay by incorporating the same in the payment of the monthly salaries of its employees. In
support of this claim, Trans-Asia pointed out that it has long been the standing practice of the company to use the divisor of "286"
days in computing for its employees' overtime pay and daily rate deductions for absences. Trans-Asia explained that this divisor is
arrived at through the following formula: LLjur

52 x 44
= 286 days
8
Where: 52 = number of weeks in a year
44 = number of work hours per week
8 = number of work hours per day
Trans-Asia further clarified that the "286" days divisor already takes into account the ten (10) regular holidays in a year since it
only subtracts from the 365 calendar days the unworked and unpaid 52 Sundays and 26 Saturdays (employees are required to
work half-day during Saturdays). Trans-Asia claimed that if the ten (10) regular holidays were not included in the computation of
their employees' monthly salary, the divisor which they would have used would only be 277 days which is arrived at by
subtracting 52 Sundays, 26 Saturdays and the 10 legal holidays from 365 calendar days. Furthermore, Trans-Asia explained that
the "286" days divisor is based on Republic Act No. 6640, 2 wherein the divisor of 262 days (composed of the 252 working days
and the 10 legal holidays) is used in computing for the monthly rate of workers who do not work and are not considered paid on
Saturdays and Sundays or rest days. According to Trans-Asia, if the additional 26 working Saturdays in a year is factored-in to the
divisor provided by Republic Act No. 6640, the resulting divisor would be "286" days.
On petitioners' contention with regard to the CBA provision on the allegedly generous holiday pay rate of 260%, Trans-Asia explained
that this holiday pay rate was included in the CBA in order to comply with Section 4, Rule IV, Book III of the Omnibus Rules
Implementing the Labor Code. The aforesaid provision reads:
Sec. 4. Compensation for holiday work. Any employee who is permitted or suffered to work on any regular
holiday, not exceeding eight (8) hours, shall be paid at least two hundred percent (200%) of his regular daily
wage. If the holiday falls on the scheduled rest day of the employee, he shall be entitled to an additional premium
pay of at least 30% of his regular holiday rate of 200% based on his regular wage rate.
On the contention that Trans-Asia's acquiescence to the inclusion of a holiday pay provision in the CBA is an admission of nonpayment of the same in the past, Trans-Asia reiterated that it is simply a recognition of the mandate of the Labor Code that employees
are entitled to holiday pay. It clarified that the company's firm belief in the payment of holiday pay to employees led it to agree to the
inclusion of the holiday pay provision in the CBA.
With regard to the accusation of unfair labor practice because of Trans-Asia's act of allegedly bargaining in bad faith and refusal to
give holiday pay in accordance with the CBA, Trans-Asia explained that what petitioners would like the company to do is to give
double holiday pay since, as previously stated, the company has already included the same in its employees monthly salary and, yet,
petitioners want it to pay a second set of holiday pay.
On 13 February 1989, the labor arbiter rendered a decision dismissing the complaint, to wit:
After considering closely the arguments of the parties in support of their respective claims and defenses, this
Branch upholds a different view from that espoused by the complainants.
Just like in the Chartered Bank Case (L-44717), August 28, 1985, 138 SCRA 273, which is cited by the
complainants in their Position Paper, there appears to be no clear agreement between the parties in the instant
case, whether verbal or in writing, that the monthly salary of the employees included the mandated holiday pay. In
the absence of such agreement, the Supreme Court in said Chartered Bank Case took into consideration existing
practices in the bank in resolving the issue, such as employment by the bank of a divisor of 251 days which is the
result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days
in a year. Further, the Court took note of the fact that the bank used conflicting or different divisors in computing
salary-related benefits as well as the employees' absence from work. In the case at bar, not only did the CBA
between the complainants and respondents herein provides (sic) that the ten (10) legal holidays are recognized by
the Company as full holiday with pay. What is more, there can be no doubt that since 1977 up to the execution of
the CBA, the Trans-Asia, unlike that obtaining in the Chartered Bank Case, never used conflicting or different
divisors but consistently employed the divisor of 286 days, which as earlier pointed out, was arrived at by

subtracting only the unworked 52 Sundays and the 26 half-day-worked Saturdays from the total number of days in
a year. The consistency in the established practice of the Trans-Asia, which incidentally is not disputed by
complainants, did not give rise to any doubt which could have been resolved in favor of complainants.
Besides, the respondents unlike the respondent bank in the Chartered Bank Employees Association vs. Hon. Blas
F. Ople, et al. (supra) citing also the case of IBAAEU vs. Hon. Amado Inciong (132 SCRA 663) which case have
(sic) invalidated Section 2, Rule IV, Book III of the Implementing Rules of the Labor Code and Policy Instruction
No. 9, have never relied on the said invalidated rule and Policy Instruction. LLpr
The complainants' arguments and juxtapositions in claiming that they were denied payment of their holiday pay
paled in the face of the prevailing company practices and circumstances abovestated.
Also, for the reasons adverted to above, the complainants charge of unfair labor practice claiming that respondents
in bad faith refused to comply with their contractual obligation under the CBA by not paying the complainants'
holiday pay, must fail. Since respondents have nothing more to pay by way of legal holiday pay as it has already
been included in their monthly salaries, the provision in the CBA relative to holiday pay is just but a recognition
of the complainants right to payment of legal holiday pay as mandated by the Labor Code.
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered dismissing the
complaint for lack of merit.
SO ORDERED. 3
Petitioners appealed to the National Labor Relations Commission. In its Resolution, dated 23 November 1993, the NLRC dismissed
the appeal and affirmed the decision of the labor arbiter, to wit:
We find no cogent reason to change or disturb the decision appealed from, the same being substantially supported
by the facts and evidence on record. "It is a well-settled rule that findings of facts of administrative bodies, if
based on substantial evidence are controlling on the reviewing authority." (Planters Products, Inc. vs. NLRC, G.R.
No. 78524 & 78739, January 20, 1989; 169 SCRA 328).
We find no abuse of discretion and/or error in the assailed decision.
WHEREFORE, the appeal are (sic) hereby DISMISSED for lack of merit and the decision appealed from is
AFFIRMED.
SO ORDERED. 4
Petitioners' motion for reconsideration was, likewise, denied by the NLRC in its Resolution, dated 13 September 1994.
Petitioners are now before us faulting the NLRC with the following assignment of errors:
I
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN UPHOLDING THE LABOR
ARBITER'S DECISION DESPITE THE LACK OF SUBSTANTIAL EVIDENCE TO SUPPORT IT
II
IN UPHOLDING THE LABOR ARBITER'S DECISION DESPITE THE LACK OF SUBSTANTIAL
EVIDENCE TO SUPPORT IT, PUBLIC RESPONDENT NLRC VIOLATED THE CONSTITUTIONAL AND
LEGAL MANDATE TO RESOLVE ALL DOUBTS IN SOCIAL LEGISLATION IN FAVOR OF LABOR. 5
Petitioners, in furtherance of their first assignment of error, assert that the NLRC "blatantly and unashamedly disregarded" the
numerous evidence in support of their claim and relied merely on the sole evidence presented by Trans-Asia, the "286" days divisor, in
dismissing their appeal and, in so doing, is guilty of grave abuse of discretion. 6
We do not agree.
Trans-Asia's inclusion of holiday pay in petitioners' monthly salary is clearly established by its consistent use of the divisor of "286"
days in the computation of its employees' benefits and deductions. The use by Trans-Asia of the "286" days divisor was never disputed
by petitioners. A simple application of mathematics would reveal that the ten (10) legal holidays in a year are already accounted for
with the use of the said divisor. As explained by Trans-Asia, if one is to deduct the unworked 52 Sundays and 26 Saturdays (derived
by dividing 52 Saturdays in half since petitioners are required to work half-day on Saturdays) from the 365 calendar days in a year, the
resulting divisor would be 286 days (should actually be 287 days). Since the ten (10) legal holidays were never included in subtracting
the unworked and unpaid days in a calendar year, the only logical conclusion would be that the payment for holiday pay is already
incorporated into the said divisor. Thus, when viewed against this very convincing piece of evidence, the arguments put forward by
petitioners to support their claim of non-payment of holiday pay, i.e., the pre-condition stated in the Employees' Manual for
entitlement to holiday pay, the absence of a stipulation in the employees' appointment papers for the inclusion of holiday pay in their

monthly salary, the stipulation in the CBA recognizing the entitlement of the petitioners to holiday pay with a concomitant provision
for the granting of an "allegedly" very generous holiday pay rate, would appear to be merely inferences and suppositions which, in
the apropos words of the labor arbiter, "paled in the face of the prevailing company practices and circumstances abovestated."
Hence, it is on account of the convincing and legally sound arguments and evidence of Trans-Asia that the labor arbiter rendered a
decision adverse to petitioners. Acknowledging that the decision of the labor arbiter was based on substantial evidence, the NLRC
affirmed the former's disposition. It is also with this acknowledgment that the Court affirms the questioned resolutions of the NLRC.
As aptly put by the Solicitor General, citing Sunset View Condominium Corporation vs. NLRC, 7 "findings of fact of administrative
bodies should not be disturbed in the absence of grave abuse of discretion or unless the findings are not supported by substantial
evidence." 8 In this regard, the Solicitor General observed: "As said above, public respondent acted on the basis of substantial
evidence, hence, grave abuse of discretion is ruled out." 9

However, petitioners insist that the agreement of Trans-Asia in the CBA to give a generous 260% holiday pay rate to employees who
work on a holiday is conclusive proof that the monthly pay of petitioners does not include holiday pay. 10 Petitioners cite as basis the
case of Chartered Bank Employees Association vs. Ople, 11 which reads:
Any remaining doubts which may arise from the conflicting or different divisors used in the computation of
overtime pay and employees' absences are resolved by the manner in which work actually rendered on holidays is
paid. Thus, whenever monthly paid employees work on a holiday, they are given an additional 100% base pay on
top of a premium pay of 50%. If the employees' monthly pay already includes their salaries for holidays, they
should be paid only premium pay but not both base pay and premium pay. 12
We are not convinced. The cited case cannot be relied upon by petitioners since the facts obtaining in the Chartered Bank case are
very different from those in the present case. In the Chartered Bank case, the bank used different divisors in computing for its
employees benefits and deductions. For computing overtime compensation, the bank used 251 days as its divisor. On the other hand,
for computing deductions due to absences, the bank used 365 days as divisor. Due to this confusing situation, the Court declared that
there existed a doubt as to whether holiday pay is already incorporated in the employees' monthly salary. Since doubts should be
resolved in favor of labor, the Court in the Chartered Bank case ruled in favor of the employees and further stated that its conclusion
is fortified by the manner in which the employees are remunerated for work rendered on holidays. In the present case, however, there
is no confusion with regard to the divisor used by Trans-Asia in computing for petitioners' benefits and deductions. TransAsia consistently used a "286" days divisor for all its computations. llcd
Nevertheless, petitioners' cause is not entirely lost. The Court notes that there is a need to adjust the divisor used by Trans-Asia to 287
days, instead of only 286 days, in order to properly account for the entirety of regular holidays and special days in a year as prescribed
by Executive Order No. 203 13 in relation to Section 6 of the Rules Implementing Republic Act 6727. 14
Section 1 of Executive Order No. 203 provides:
SECTION 1. Unless otherwise modified by law, order or proclamation, the following regular holidays and
special days shall be observed in the country:
A. Regular Holidays
New Year's Day January 1
Maundy Thursday Movable Date
Good Friday Movable Date
Araw ng Kagitingan April 9
(Bataan and Corregidor Day)
Labor Day May 1
Independence Day June 12
National Heroes Day Last Sunday of August
Bonifacio Day November 30
Christmas Day December 25
Rizal Day December 30
B. Nationwide Special Days
All Saints Day November 1

Last Day of the Year December 31


On the other hand, Section 6 of the Implementing Rules and Regulations of Republic Act No. 6727 provides:
Section 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage Rates.
Without prejudice from existing company practices, agreements or policies, the following formulas may be used
as guides in determining the equivalent monthly statutory minimum wage rates:
xxx xxx xxx
d) For those who do not work and are not considered paid on Saturdays and Sundays or rest days:
Equivalent Monthly = Average Daily Wage Rate x 262 days
Rate (EMR)
12
Where 262 days =
250 days - Ordinary working days
10 days - Regular holidays
2 days - Special days (If considered paid; if actually worked, this is equivalent to 2.6 days)

262 days - Total equivalent number of days


Based on the above, the proper divisor that should be used for a situation wherein the employees do not work and are not considered
paid on Saturdays and Sundays or rest days is 262 days. In the present case, since the employees of Trans-Asia are required to work
half-day on Saturdays, 26 days should be added to the divisor of 262 days, thus, resulting to 288 days. However, due to the fact that
the rest days of petitioners fall on a Sunday, the number of unworked but paid legal holidays should be reduced to nine (9), instead of
ten (10), since one legal holiday under E.O. No. 203 always falls on the last Sunday of August, National Heroes Day. Thus, the divisor
that should be used in the present case should be 287 days.
However, the Court notes that if the divisor is increased to 287 days, the resulting daily rate for purposes of overtime pay, holiday pay
and conversions of accumulated leaves would be diminished. To illustrate, if an employee receives P8,000.00 as his monthly salary,
his daily rate would be P334.49, computed as follows:
P8,000.00 x 12 months
= P334.49/day
287 days
Whereas if the divisor used is only 286 days, the employee's daily rate would be P335.66, computed as follows:
P8,000.00 x 12 months
= P335.66/day
286 days
Clearly, this muddled situation would be violative of the proscription on the non-diminution of benefits under Section 100 of the
Labor Code. On the other hand, the use of the divisor of 287 days would be to the advantage of petitioners if it is used for
purposes of computing for deductions due to the employee's absences. In view of this situation, the Court rules that the adjusted
divisor of 287 days should only be used by Trans-Asia for computations which would be advantageous to petitioners, i.e.,
deductions for absences, and not for computations which would diminish the existing benefits of the employees, i.e., overtime
pay, holiday pay and leave conversions.
For their second assignment of error, petitioners argue that, since they provided the NLRC with "overwhelming proof" of their claim
against Trans-Asia, the least that the NLRC could have done was to declare that there existed an ambiguity with regard to Trans-Asia's
payment of holiday pay. Petitioners then posits that if the NLRC had only done so, this ambiguity would have been resolved in their
favor because of the constitutional mandate to resolve doubts in favor of labor.
We are not persuaded. As previously stated, the decision of the labor arbiter and the resolutions of the NLRC were based on
substantial evidence and, as such, no ambiguity or doubt exists which could be resolved in petitioners' favor.

WHEREFORE, premises considered, the Resolutions of the NLRC, dated 23 November 1993 and 13 September 1994, are hereby
AFFIRMED with the MODIFICATION that Trans-Asia is hereby ordered to adjust its divisor to 287 days and pay the resulting
holiday pay in arrears brought about by this adjustment starting from 30 June 1987, the date of effectivity of E.O. No. 203.
SO ORDERED. cdll
Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.

Footnotes
1.Position Paper of Complainants, Records, p. 22.
2An Act Providing For An Increase In the Wage Of Public Or Government Sector On A Daily Wage Basis And In The Statutory
Minimum Wage And Salary Rates of Employees And Workers In The Private Sector And For Other Purposes.
3.Decision, Rollo, pp. 35-37.
4.Resolution, Id., at 29-30.
5.Petition, Id., at 12-13.
6.Id., at 17.
7.228 SCRA 466 (1993).
8.Comment of Solicitor General, Rollo, p. 79.
9.Ibid.
10.Supra, note 5 at 15.
11.138 SCRA 273 (1985).
12.Id., at 283.
13.Providing A List Of Regular Holidays And Special Days To Be Observed Throughout the Philippines And For Other Purposes.
14.Wage Rationalization Act.
||| (Trans-Asia Phils. Employees Association v. National Labor Relations Commission, G.R. No. 118289, [December 13, 1999], 378
PHIL 300-314)

THIRD DIVISION
[G.R. No. 171231. February 17, 2010.]
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS
ORGANIZATION (PSTMSDWO), represented by its President, RENE SORIANO, petitioner, vs. PNCC
SKYWAY CORPORATION, respondent.

DECISION

PERALTA, J p:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the
Decision 1 and the Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP. No. 87069, which annulled and set aside the Decision
and Order of the Voluntary Arbitrator dated July 12, 2004 and August 11, 2004, respectively.
The factual antecedents are as follows:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO)
is a labor union duly registered with the Department of Labor and Employment (DOLE). Respondent PNCC Skyway Corporation
is a corporation duly organized and operating under and by virtue of the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a Collective Bargaining Agreement (CBA) incorporating
the terms and conditions of their agreement which included vacation leave and expenses for security license provisions.
The pertinent provisions of the CBA relative to vacation leave and sick leave are as follows:
ARTICLE VIII
VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[a] Regular Employees covered by the bargaining unit who have completed at least one [1] year of continuous
service shall be entitled to vacation leave with pay depending on the length of service as follows:
1-9 years of service
10-15 years of service
16-20 years of service
21-25 years of service
26 and above years of service
[b] The company shall schedule the vacation leave of employees
request of preference of the employees. (emphasis supplied)

15 working days
16 working days
17 working days
18 working days
19 working days.
during the year taking into consideration the

[c] Any unused vacation leave shall be converted to cash and shall be paid to the employees on the first week of
December each year."
ARTICLE XXI
Section 6. Security License. All covered employees must possess a valid License [Security Guard License] issued
by the Chief, Philippine National Police or his duly authorized representative, to perform his duties as security guard.
All expenses of security guard in securing/renewing their licenses shall be for their personal account. Guards,
securing/renewing their license must apply for a leave of absence and/or a change of schedule. Any guard who fails
to renew his security guard license should be placed on forced leave until such time that he can present a renewed
security license.
In a Memorandum dated December 29, 2003, 3 respondent's Head of the Traffic Management and Security Department
(TMSD) published the scheduled vacation leave of its TMSD personnel for the year 2004. Thereafter, the Head of the TMSD issued
a Memorandum 4 dated January 9, 2004 to all TMSD personnel. In the said memorandum, it was provided that:

SCHEDULED VACATION LEAVE WITH PAY.


The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay for the year 2004 had been
published for everyone to take a vacation with pay which will be our opportunity to enjoy quality time with our
families and perform our other activities requiring our personal attention and supervision. Swapping of SVL
schedule is allowed on a one-on-one basis by submitting a written request at least 30 days before the actual schedule
of SVL duly signed by the concerned parties. However, the undersigned may consider the re-scheduling of the SVL
upon the written request of concerned TMSD personnel at least 30 days before the scheduled SVL. Re-scheduling
will be evaluated taking into consideration the TMSDs operational requirement.
Petitioner objected to the implementation of the said memorandum. It insisted that the individual members of the union
have the right to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was done to
avoid the monetization of their vacation leave in December 2004. This was allegedly apparent in the memorandum issued by the
Head HRD, 5 addressed to all department heads, which provides:
FOR

: All Dept. Heads

FROM

: Head, HRD

SUBJECT

: Leave Balances as of January 01, 2004

DATE

: January 9, 2004
We are furnishing all the departments the leave balances of their respective staff as of January 01, 2004, so as to
have them monitor and program the schedule of such leave.
Please consider the leave credit they earned each month [1-2-0], one day and two hours in anticipation of the later
schedule. As we are targeting the zero conversion comes December 2004, it is suggested that the leave balances as
of to date be given preferential scheduling.
xxx xxx xxx

Petitioner also demanded that the expenses for the required in-service training of its member security guards, as a
requirement for the renewal of their license, be shouldered by the respondent. However, the respondent did not accede to petitioner's
demands and stood firm on its decision to schedule all the vacation leave of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-NCMB for preventive mediation.
For failure to settle the issue amicably, the parties agreed to submit the issue before the voluntary arbitrator.
The voluntary arbitrator issued a Decision dated July 12, 2004, the dispositive portion of which reads:
WHEREFORE, premises all considered, declaring that:
a) The scheduling of all vacation leaves under Article VIII, Section 6, thereof, shall be under the discretion of the
union members entitled thereto, and the management to convert them into cash all the leaves which the management
compelled them to use.
b) To pay the expenses for the in-service-training of the company security guards, as a requirement for renewal of
licenses, shall not be their personal account but that of the company.
All other claims are dismissed for lack of merit.
SO ORDERED. 6
Respondent filed a motion for reconsideration, which the voluntary arbitrator denied in the Order 7 dated August 11, 2004.
Aggrieved, on October 22, 2004, respondent filed a Petition for Certiorari with Prayer for Temporary Restraining Order
and/or Writ of Preliminary Injunction with the CA, and the CA rendered a Decision dated October 4, 2005, 8 annulling and setting
aside the decision and order of the voluntary arbitrator. The CA ruled that since the provisions of the CBA were clear, the voluntary
arbitrator has no authority to interpret the same beyond what was expressly written.
Petitioner filed a motion for reconsideration, which the CA denied through a Resolution dated January 23, 2006. 9 Hence,
the instant petition assigning the following errors:
I
WITH ALL DUE RESPECT, THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS
[THIRTEENTH DIVISION] ERRED IN HOLDING THAT:

A) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE VACATION LEAVE OF
HEREIN PETITIONER.
B) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICE-TRAINING OF THE SECURITY GUARDS.
II
THE HONORABLE PUBLIC RESPONDENT ERRED IN OVERSEEING THE CONVERSION ASPECT OF
THE UNUSED LEAVE.
Before considering the merits of the petition, We shall first address the objection based on technicality raised by respondent.
Respondent alleged that the petition was fatally defective due to the lack of authority of its union president, Rene Soriano,
to sign the certification and verification against forum shopping on petitioner's behalf. It alleged that the authority of Rene Soriano
to represent the union was only conferred on June 30, 2006 by virtue of a board resolution, 10 while the Petition for Review had
long been filed on February 27, 2006. Thus, Rene Soriano did not possess the required authority at the time the petition was filed
on February 27, 2006.
The petitioner countered that the Board Resolution 11 dated June 30, 2006 merely reiterated the authority given to the
union president to represent the union, which was conferred as early as October 2005. The resolution provides in part that:
WHEREAS, in a meeting duly called for October 2005, the Union decided to file a Motion for Reconsideration and
if the said motion be denied, to file a petition before the Supreme Court. (Emphasis supplied)
Thus, the union president, representing the union, was clothed with authority to file the petition on February 27, 2006.
The purpose of requiring verification is to secure an assurance that the allegations in the petition have been made in good
faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and
non-compliance therewith does not necessarily render it fatally defective. Truly, verification is only a formal, not a jurisdictional,
requirement.
With respect to the certification of non-forum shopping, it has been held that the certification requirement is rooted in the
principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora, as this practice is detrimental
to an orderly judicial procedure. However, this Court has relaxed, under justifiable circumstances, the rule requiring the submission
of such certification considering that, although it is obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed
under the rule of substantial compliance. 12
In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, 13 We said that:
In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification
and certification against forum shopping. In Mactan-Cebu International Airport Authority v. CA, we recognized the
authority of a general manager or acting general manager to sign the verification and certificate against forum
shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an "employment specialist" who had
not even presented any proof of her authority to represent the company; in Novelty Philippines, Inc., v. CA, we ruled
that a personnel officer who signed the petition but did not attach the authority from the company is authorized to
sign the verification and non-forum shopping certificate; and in Lepanto Consolidated Mining Company v. WMC
Resources International Pty. Ltd. (Lepanto), we ruled that the Chairperson of the Board and President of the
Company can sign the verification and certificate against non-forum shopping even without the submission of the
board's authorization.
In sum, we have held that the following officials or employees of the company can sign the verification and
certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of
a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment
Specialist in a labor case.
While the above cases do not provide a complete listing of authorized signatories to the verification and certification
required by the rules, the determination of the sufficiency of the authority was done on a case to case basis. The
rationale applied in the foregoing cases is to justify the authority of corporate officers or representatives of the
corporation to sign the verification or certificate against forum shopping, being "in a position to verify the
truthfulness and correctness of the allegations in the petition."
In the case at bar, We rule that Rene Soriano has sufficient authority to sign the verification and certification against forum
shopping for the following reasons:First, the resolution dated June 30, 2006 was merely a reiteration of the authority given to the
Union President to file a case before this Court assailing the CBA violations committed by the management, which was previously
conferred during a meeting held on October 5, 2005. Thus, it can be inferred that even prior to the filing of the petition before Us
on February 27, 2006, the president of the union was duly authorized to represent the union and to file a case on its
behalf. Second,being the president of the union, Rene Soriano is in a position to verify the truthfulness and correctness of the
allegations in the petition. Third, assuming that Mr. Soriano has no authority to file the petition on February 27, 2006, the passing

on June 30, 2006 of a Board Resolution authorizing him to represent the union is deemed a ratification of his prior execution, on
February 27, 2006, of the verification and certificate of non-forum shopping, thus curing any defects thereof. Ratification in agency
is the adoption or confirmation by one person of an act performed on his behalf by another without authority. 14
We now go to the merits of the case.
Petitioner insisted that their union members have the preference in scheduling their vacation leave. On the other hand,
respondent argued that Article VIII, Section 1 (b) gives the management the final say regarding the vacation leave schedule o f its
employees. Respondent may take into consideration the employees' preferred schedule, but the same is not controlling.
Petitioner also requested the respondent to provide and/or shoulder the expenses for the in-service training of their members
as a requirement for the renewal of the security guards' license. Respondent did not accede to the union's request invoking the CBA
provision which states that all expenses of security guards in securing/renewing their license shall be for their personal account.
The petitioner further argued that any doubts or ambiguity in the interpretation of the CBA should be resolved in favor of the laborer.
As to the issue on vacation leaves, the same has no merit.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined without
reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from that language alone.
Stated differently, where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which,
on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a
different sense. 15
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA
categorically provides that the scheduling of vacation leave shall be under the option of the employer. The preference requested by
the employees is not controlling because respondent retains its power and prerogative to consider or to ignore said request.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning
of its stipulation shall prevail. 16 In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being
the law between the parties. In Faculty Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, 17 this Court
held that the CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its terms and conditions
constitute the law between the parties. The parties cannot be allowed to change the terms they agreed upon on the ground that the
same are not favorable to them.
As correctly found by the CA:
The words of the CBA were unequivocal when it provided that "The company shall schedule the vacation leave of
employees during the year taking into consideration the request of preference of the employees." The word shall in
this instance connotes an imperative command, there being nothing to show a different intention. The only
concession given under the subject clause was that the company should take into consideration the preferences of
the employees in scheduling the vacations; but certainly, the concession never diminished the positive right of
management to schedule the vacation leaves in accordance with what had been agreed and stipulated upon in the
CBA.
There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision relating to the schedule of
vacation leaves as being subject to the discretion of the union members. There is simply nothing in the CBA which
grants the union members this right.
It must be noted the grant to management of the right to schedule vacation leaves is not without good reason. Indeed,
if union members were given the unilateral discretion to schedule their vacation leaves, the same may result in
significantly crippling the number of key employees of the petitioner manning the toll ways on holidays and other
peak seasons, where union members may wittingly or unwittingly choose to have a vacation. Put another way, the
grant to management of the right to schedule vacation leaves ensures that there would always be enough people
manning and servicing the toll ways, which in turn assures the public plying the same orderly and efficient toll way
service.
Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the option of the employees, as
the public using the skyway system should be assured of its safety, security and convenience.
Although the preferred vacation leave schedule of petitioner's members should be given priority, they cannot demand, as
a matter of right, that their request be automatically granted by the respondent. If the petitioners were given the exclusive right to
schedule their vacation leave then said right should have been incorporated in the CBA. In the absence of such right and in view of
the mandatory provision in the CBA giving respondent the right to schedule the vacation leave of its employees, compliance
therewith is mandated by law.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on the
entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of
management. 18 It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee. 19 Thus,

it is well within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves,
such as having the option to schedule the same.
Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can compel its employees to
exhaust all their vacation leave credits. Of course, any vacation leave credits left unscheduled by the employer, or any scheduled
vacation leave that was not enjoyed by the employee upon the employer's directive, due to exigencies of the service, must be
converted to cash, as provided in the CBA. However, it is incorrect to award payment of the cash equivalent of vacation leaves that
were already used and enjoyed by the employees. By directing the conversion to cash of all utilized and paid vacation leaves, the
voluntary arbitrator has licensed unjust enrichment in favor of the petitioner and caused undue financial burden on the respondent.
Evidently, the Court cannot tolerate this.
It would seem that petitioner's goal in relentlessly arguing that its members preferred vacation leave schedule should be
given preference is not allowed to them to avail themselves of their respective vacation leave credits at all but, instead, to convert
these into cash.
In Cuajo v. Chua Lo Tan, 20 We said that the purpose of a vacation leave is to afford a laborer a chance to get a muchneeded rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not
merely to give him additional salary and bounty.
This purpose is manifest in the Memorandum dated January 9, 2004 21 addressed to all TMSD Personnel which provides
that:
SCHEDULED VACATION LEAVE WITH PAY
The 17 days (15 days SVL plus 2-Day-Off) scheduled vacation leave (SVL) with pay for the year 2004 had been
published for everyone to take a vacation with pay which will be our opportunity to enjoy quality time with our
families and perform our other activities requiring our personal attention and supervision. (Emphasis ours.)
Accordingly, the vacation leave privilege was not intended to serve as additional salary, but as a non-monetary benefit. To
give the employees the option not to consume it with the aim of converting it to cash at the end of the year would defeat the very
purpose of vacation leave.
Petitioner's contention that labor contracts should be construed in favor of the laborer is without basis and, therefore,
inapplicable to the present case. This rule of construction does not benefit petitioners because, as stated, there is here no room for
interpretation. Since the CBA is clear and unambiguous, its terms should be implemented as they are written.
This brings Us to the issue of who is accountable for the in-service training of the security guards. On this point, We find
the petition meritorious.
Although it is a rule that a contract freely entered into between the parties should be respected, since a contract is the law
between the parties, there are, however, certain exceptions to the rule, specifically Article 1306 of the Civil Code, which provides:
The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or public policy.
Moreover, the relations between capital and labor are not merely contractual. "They are so impressed with public interest
that labor contracts must yield to the common good . . . ." 22 The supremacy of the law over contracts is explained by the fact that
labor contracts are not ordinary contracts; they are imbued with public interest and therefore are subject to the police power of the
state. 23 However, it should not be taken to mean that provisions agreed upon in the CBA are absolutely beyond the ambit of judicial
review and nullification. If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very
well be voided.
In the present case, Article XXI, Section 6 of the CBA provides that "All expenses of security guards in securing/renewing
their licenses shall be for their personal account." A reading of the provision would reveal that it encompasses all possible expenses
a security guard would pay or incur in order to secure or renew his license. In-service training is a requirement for the renewal of a
security guard's license. 24 Hence, following the aforementioned CBA provision, the expenses for the same must be on the personal
account of the employee. However, the 1994 Revised Rules and Regulations Implementing Republic Act No. 5487 provides the
following:
Section 17. Responsibility for Training and Progressive Development. It is the primary responsibility of all
operators private security agency and company security forces to maintain and upgrade the standards of efficiency,
discipline, performance and competence of their personnel. To attain this end, each duly licensed private security
agency and company security force shall establish a staff position for training and appoint a training officer whose
primary functions are to determine the training needs of the agency/guards in relation to the needs of the
client/market/industry, and to supervise and conduct appropriate training requirements. All private security
personnel shall be re-trained at least once very two years.
Section 12. In service training. a. To maintain and/or upgrade the standard of efficiency, discipline and
competence of security guards and detectives, company security force and private security agencies upon prior

authority shall conduct-in-service training at least two (2) weeks duration for their organic members by increments
of at least two percent (2%) of their total strength. Where the quality of training is better served by centralization,
the CSFD Directors may activate a training staff from local talents to assist. The cost of training shall be prorated among the participating agencies/private companies. All security officer must undergo in-service training at
least once every two (2) years preferably two months before his or her birth month.
Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of
efficiency, discipline, performance and competence of their personnel, it follows that the expenses to be incurred therein shall be
for the personal account of the company. Further, the intent of the law to impose upon the employer the obligation to pay for the
cost of its employees' training is manifested in the aforementioned law's provision that Where the quality of training is better served
by centralization, the CFSD Directors may activate a training staff from local talents to assist. The cost of training shall be prorated among the participating agencies/private companies. It can be gleaned from the said provision that cost of training shall be
pro-rated among participating agencies and companies if the training is best served by centralization. The law mandates pro-rating
of expenses because it would be impracticable and unfair to impose the burden of expenses suffered by all participants on only one
participating agency or company. Thus, it follows that if there is no centralization, there can be no pro-rating, and the company that
has its own security forces shall shoulder the entire cost for such training. If the intent of the law were to impose upon individual
employees the cost of training, the provision on the pro-rating of expenses would not have found print in the law.
Further, petitioner alleged that prior to the inking of the CBA, it was the respondent company providing for the in-service
training of the guards. 25 Respondent never controverted the said allegation and is thus deemed to have admitted the
same. 26 Implicit from respondent's actuations was its acknowledgment of its legally mandated responsibility to shoulder the
expenses for in-service training.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals, dated
October 4, 2005 and January 23, 2006, respectively, in CA-G.R. SP. No. 87069 is MODIFIED. The cost of in-service training of
the respondent company's security guards shall be at the expense of the respondent company. This case is remanded to the voluntary
arbitrator for the computation of the expenses incurred by the security guards for their in-service training, and respondent company
is directed to reimburse its security guards for the expenses incurred.
SO ORDERED.
Corona, Velasco, Jr., Nachura and Mendoza, JJ., concur.

Footnotes
1.Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Rosmari D. Carandang and Monina Arevalo-Zenarosa,
concurring; rollo, pp. 32-43.
2.Id. at 45.
3.Records, pp. 4-9.
4.Supra note 1, at 76-77.
5.Supra note 3, at 3.
6.Supra note 1, at 113-118.
7.Supra note 1, 120-124.
8.Id. 32-43.
9.Id. 45.
10.Supra note 1, at 154-155.
11.Id. at 172-173.
12.People of the Philippines v. Joven de Grano, Armando de Grano, Domingo Landicho and Estanislao Lacaba, G.R. No. 167710,
June 5, 2009.
13.G.R. No. 151413, February 13, 2008, 545 SCRA 10, 17-19.
14.Filipinas Life Assurance Company v. Pedroso, G.R. No. 159489, February 4, 2008, 543 SCRA 542, 547.
15.Bautista v. Court of Appeals, 379 Phil. 386, 399 (2000), citing 17A Am. Jur. 2D 348-349.

16.RFM Corporation-Flour Division and SFI Feeds Division v. Kasapian ng Manggagawang Pinagkaisa-RFM (KAMPI-NAFLUKMU) and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU), G.R. No. 162324, February
4, 2009, 578 SCRA 37.
17.G.R. No. 164060, June 15, 2007, 524 SCRA 709, 716.
18.Sobrepea, Jr. v. Court of Appeals, 345 Phil. 714, 728 (1997).
19.Virginia A. Sugue and the Heirs of Renato S. Valderrama v. Triumph International (Phils.), Inc., G.R. No. 164804, January 30,
2009; Triumph International (Phils.), Inc., v. Virginia A. Sugue and the Heirs of Renato S. Valderrama, G.R. No. 164784,
January 30, 2009, 577 SCRA 339.
20.No. L-16298, September 29, 1962, 6 SCRA 136, 138.
21.Supra note 1, at 76-77.
22.Article 1700, New Civil Code.
23.Villa v. National Labor Relations Commission, G.R. No. 117043, January 14, 1998, 284 SCRA 105, 127,128.
24.Revised Rules and Regulations Implementing Republic Act No. 5487, Rule X, Section 12(b). The certificate of in-service training
issued by company security force/private security agency shall be a pre-requisite for the renewal of license to exercise
profession.
25.Petition for Review, supra note 1, at 21; Petitioner's Memorandum, id. at 220; Petitioner's Motion for Reconsideration with the
CA, CA records, pp. 181.
26.Sec. 32, Rule 130 of the Rules of Court Admission by silence. An act or declaration made in the presence and within the
hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action
or comment if not true, and when proper and possible for him to do so, may be given in evidence against him.
||| (PNCC Skyway Traffic Management and Security Division Workers Organization v. PNCC Skyway Corp. , G.R. No. 171231,
[February 17, 2010], 626 PHIL 700-718)

THIRD DIVISION
[G.R. No. 181972. August 25, 2009.]
PHILIPPINE HOTELIERS, INC., DUSIT HOTEL NIKKO-MANILA, petitioner, vs. NATIONAL UNION
OF WORKERS IN HOTEL, RESTAURANT, AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF)DUSIT HOTEL NIKKO CHAPTER, respondents.

DECISION

CHICO-NAZARIO, ** J p:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the Decision 1 dated
10 September 2007 of the Court of Appeals in CA-G.R. SP No. 92798 granting the P30.00-per-day Emergency Cost of Living
Allowance (ECOLA), under Wage Order (WO) No. NCR-09 (WO No. 9), to 144 employees of petitioner Dusit Hotel Nikko (Dusit
Hotel) 2 and imposing upon the latter the penalty of double indemnity under Republic Act No. 6727, as amended by Republic Act
No. 8188. Likewise assailed herein is the Resolution 3 dated 4 March 2008 of the appellate court in the same case denying the
Motion for Reconsideration of Dusit Hotel.
The antecedent facts of the case are as follows:
WO No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National Capital Region
(NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and workers of all private sectors,
identified as follows in Section 1 thereof:
Section 1.Upon the effectivity of this Wage Order, all private sector workers and employees in the National Capital
Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED NINETY
PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of THIRTY PESOS (P30.00)
per day payable in two tranches as follows:
Amount of ECOLA

Effectivity

P15.00

5 November 2001

P15.00

1 February 2002

On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko
Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to Director Alex Maraan (Dir. Maraan) of the
Department of Labor and Employment-National Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotel with
WO No. 9, while there was an on-going compulsory arbitration before the National Labor Relations Commission (NLRC) due to a
bargaining deadlock between the Union and Dusit Hotel; and requesting immediate assistance on this matter. On 24 May 2002,
Rasing sent Dir. Maraan another letter following-up his previous request for assistance. acIHDA
Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to conduct
an inspection of Dusit Hotel premises on 24 April 2002. LSO Natividad's Inspection Results Report 5 dated 2 May 2002 stated:
Based on interviews/affidavits of employees, they are receiving more than P290.00 average daily rate which is
exempted in the compliance of Wage Order NCR-09;
Remarks: There is an ongoing negotiation under Case # NCMB-NCR-NS-12-369-01 & NCMB-NCR-NS-01-01902 now forwarded to the NLRC office for the compulsory arbitration.
NOTE: Payrolls to follow later upon request including position paper of [Dusit Hotel].
By virtue of Rasing's request 6 for another inspection, LSO Natividad conducted a second inspection of Dusit Hotel
premises on 29 May 2002. In her Inspection Results Report 7 dated 29 May 2002, LSO Natividad noted:
* Non-presentation of records/payrolls

* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there
are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09-> ECOLA covering
the periods from Nov. 5/01 to present.
Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or
correction of the noted violations within five days from receipt of the Notice, and to submit any question on the findings of the labor
inspector within the same period, otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly
received by Dusit Hotel Assistant Personnel Manager Rogelio Santos. 8
In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No. 000215-02 the compulsory
arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union granting the hotel
employees the following wage increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month
Effective January 1, 2002 - P550.00/month
Effective January 1, 2003 - P600.00/month
On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR, through Dir.
Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to
their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, 11 as
amended by Republic Act No. 8188, 12 which provides: cACEaI
Sec. 12.Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of
the prescribed increases or adjustments in wage rates made in accordance with this Act shall be punished by a fine
not less than Twenty-five thousand pesos (P25,000) nor more than One hundred thousand pesos (P100,000) or
imprisonment of not less than two (2) years nor more than four (4) years or both such find and imprisonment at the
discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits
provided for under the Probation Law.
The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing
to the employees: Provided, That payment of indemnity shall not absolve the employer from the criminal
liability under this Act.
If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty
of imprisonment shall be imposed upon the entity's responsible officers including but not limited to the president,
vice president, chief executive officer, general manager, managing director or partner. (Emphasis ours.)
Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002, arguing that the NLRC
Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and the Union, and awarding salary
increases under the CBA to hotel employees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and
academic. With the increase in the salaries of the hotel employees ordered by the NLRC Decision of 9 October 2002, along with
the hotel employees' share in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002,
would already be receiving salaries beyond the coverage of WO No. 9.
Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27 December 2002,
setting aside its earlier Order dated 22 October 2002 for being moot and academic, in consideration of the NLRC Decision dated 9
October 2002; and dismissing the complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit.
The Union appealed 15 the 27 December 2002 Resolution before the DOLE Secretary maintaining that the wage increases
granted by the NLRC Decision of 9 October 2002 should not be deemed as compliance by Dusit Hotel with WO No. 9.
The DOLE, through Acting Secretary Manuel G. Imson, issued an Order 16 dated 22 July 2004 granting the appeal of the
Union. The DOLE Secretary reasoned that the NLRC Decision dated 9 October 2002 categorically declared that the wage increase
under the CBA finalized between Dusit Hotel and the Union shall not be credited as compliance with WOs No. 8 and No. 9.
Furthermore, Section 1 of Rule IV of the Rules Implementing WO No. 9, which provides that wage increases granted by an employer
in an organized establishment within three months prior to the effectivity of said Wage Order shall be credited as compliance with
the ECOLA prescribed therein, applies only when an agreement to this effect has been forged between the parties or a provision in
the CBA allowing such crediting exists. Hence, the DOLE Secretary held: ATCaDE
WHEREFORE, premises considered, the appeal is hereby GRANTED. The Resolution dated December 27, 2002
issued by the Regional Director is SET ASIDE and his Order dated October 22, 2002 is hereby REINSTATED.
Dusit Hotel Nikko Manila is hereby ordered to pay its One Hundred Forty Four (144) employees the aggregate
amount of One Million Two Hundred Eighteen Thousand Two Hundred Forty Pesos (Php1,218,240.00)
representing their Emergency Cost Of Living Allowance (ECOLA) under Wage Order No. NCR-09 and the penalty
of double indemnity under Republic Act. No. 8188, as amended. 17

Expectedly, Dusit Hotel sought reconsideration 18 of the 22 July 2004 Order of the DOLE Secretary. In an Order 19 dated
16 December 2004, the DOLE Secretary granted the Motion for Reconsideration of Dusit Hotel and reversed his Order dated 22
July 2004. The DOLE Secretary, in reversing his earlier Order, admitted that he had disregarded therein that the wage increase
granted by the NLRC in the latter's Decision dated 9 October 2002 retroacted to 1 January 2001. The said wage increase, taken
together with the hotel employees' share in the service charges of Dusit Hotel, already constituted compliance with the WO No. 9.
According to the DOLE Secretary:
To stress, the overriding consideration of Wage Order NCR-09 is quite simple, to provide workers with immediate
relief through the grant of Emergency Cost of Living Allowance to enable them to cope with the increases in the
cost of living. Conformably with the evident intent of the subject Wage Order as expressed in its preamble, this
Office finds that the substantial share in the service charge being received by the employees of appellee (Dusit Hotel)
more than compensates for the Emergency Cost of Living Allowance of P30.00 given under Wage Order NCR09. 20
It was then the turn of the Union to file a Motion for Reconsideration, 21 but it was denied by the DOLE Secretary in an
Order 22 dated 13 October 2005. The DOLE Secretary found that it would be unjust on the part of Dusit Hotel if the hotel employees
were to enjoy salary increases retroactive to 1 January 2001, pursuant to the NLRC Decision dated 9 October 2002, and yet said
salary increases would be disregarded in determining compliance by the hotel with WO No. 9.
The Union appealed the Orders dated 16 December 2004 and 13 October 2005 of the DOLE Secretary with the Court of
Appeals via a Petition for Review 23under Rule 43 of the Rules of Court. On 10 September 2007, the Court of Appeals promulgated
its Decision 24 ruling in favor of the Union. Referring to Section 13 of WO No. 9, the Court of Appeals declared that wage
increases/allowances granted by the employer shall not be credited as compliance with the prescribed increase in the same Wage
Order, unless so provided in the law or the CBA itself; and there was no such provision in the case at bar. The appellate court also
found that Dusit Hotel failed to substantiate its position that receipt by its employees of shares in the service charges collected by
the hotel was to be deemed substantial compliance by said hotel with the payment of ECOLA required by WO No. 9. The Court of
Appeals adjudged that Dusit Hotel should be liable for double indemnity for its failure to comply with WO No. 9 within five days
from receipt of notice. The appellate court stressed that ECOLA is among the laborers' financial gratifications under the law, and is
distinct and separate from benefits derived from negotiation or agreement with their employer. In the end, the Court of Appeals
disposed: aSIETH
WHEREFORE, finding the existence of grave abuse of discretion in the issuance of the assailed Orders dated
December 16, 2004 and October 13, 2005, the same are hereby REVERSED AND SET ASIDE and the Order dated
July 22, 2004 of the respondent DOLE Acting Secretary in OS-LS-0630-2003-0105 is REINSTATED. 25
The Motion for Reconsideration 26 of Dusit Hotel was denied for lack of merit by the Court of Appeals in its
Resolution 27 dated 4 March 2008.
Hence, Dusit Hotel sought recourse from this Court by filing the instant Petition, 28 at the crux of which is the sole issue
of whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in their salaries,
retroactive to 1 January 2001, ordered by NLRC in the latter's Decision dated 9 October 2002.
Section 1 of WO No. 9 very plainly stated that only private sector workers and employees in the NCR receiving daily
wage rates of P250.00 to P290.00 shall be entitled to ECOLA. Necessarily, private sector workers and employees receiving daily
wages of more than P290.00 were no longer entitled to ECOLA. The ECOLA was to be implemented in two tranches: P15.00/day
beginning 5 November 2001; and the full amount of P30.00/day beginning 1 February 2002.
WO No. 9 took effect on 5 November 2001. The Decision rendered by the NLRC on 9 October 2002 ordered Dusit Hotel
to grant its employees salary increasesretroactive to 1 January 2001 and 1 January 2002. In determining which of its employees
were entitled to ECOLA, Dusit Hotel used as bases the daily salaries of its employees, inclusive of the retroactive salary increases.
The Union protested and insisted that the bases for the determination of entitlement to ECOLA should be the hotel employees' daily
salaries, exclusive of the retroactive salary increases. According to the Union, Dusit Hotel cannot credit the salary increases as
compliance with WO No. 9.
Much of the confusion in this case arises from the insistence of the Union to apply Section 13 of WO No. 9, which states:
Section 13. Wage increases/allowances granted by an employer in an organized establishment with three (3) months
prior to the effectivity of this Order shall be credited as compliance with the prescribed increase set forth
herein, provided the corresponding bargaining agreement provision allowing creditability exists. In the
absence of such an agreement or provision in the CBA, any increase granted by the employer shall not be credited
as compliance with the increase prescribed in this Order.
In unorganized establishments, wage increases/allowances granted by the employer within three (3) months prior
to the effectivity of this Order shall be credited as compliance therewith. AEDCHc

In case the increases given are less than the prescribed adjustment, the employer shall pay the difference. Such
increases shall not include anniversary increases, merit wage increases and those resulting from the regularization
or promotion of employees. (Emphasis ours.)
The Union harps on the fact that its CBA with Dusit Hotel does not contain any provision on creditability, thus, Dusit
Hotel cannot credit the salary increases as compliance with the ECOLA required to be paid under WO No. 9.
The reliance of the Union on Section 13 of WO No. 9 in this case is misplaced. Dusit Hotel is not contending creditability
of the hotel employees' salary increases as compliance with the ECOLA mandated by WO No. 9. Creditability means that Dusit
Hotel would have been allowed to pay its employees the salary increases in place of the ECOLA required by WO No. 9. This,
however, is not what Dusit Hotel is after. The position of Dusit Hotel is merely that the salary increases should be taken into account
in determining the employees' entitlement to ECOLA. The retroactive increases could raise the hotel employees' daily salary rates
above P290.00, consequently, placing said employees beyond the coverage of WO No. 9. Evidently, Section 13 of WO No. 9 on
creditability is irrelevant and inapplicable herein.
The Court agrees with Dusit Hotel that the increased salaries of the employees should be used as bases for determining
whether they were entitled to ECOLA under WO No. 9. The very fact that the NLRC decreed that the salary increases of the Dusit
Hotel employees shall be retroactive to 1 January 2001 and 1 January 2002, means that said employees were already supposed to
receive the said salary increases beginning on these dates. The increased salaries were the rightful salaries of the hotel employees
by 1 January 2001, then again by 1 January 2002. Although belatedly paid, the hotel employees still received their salary increases.
It is only fair and just, therefore, that in determining entitlement of the hotel employees to ECOLA, their increased salaries
by 1 January 2001 and 1 January 2002 shall be made the bases. There is no logic in recognizing the salary increases for one purpose
(i.e., to recover the unpaid amounts thereof) but not for the other (i.e., to determine entitlement to ECOLA). For the Court to rule
otherwise would be to sanction unjust enrichment on the part of the hotel employees, who would be receiving increases in their
salaries, which would place them beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA under the very same
provision.
The NLRC, in its Decision dated 9 October 2002, directed Dusit Hotel to increase the salaries of its employees by P500.00
per month, retroactive to 1 January 2001. After applying the said salary increase, only 82 hotel employees 29 would have had
daily salary rates falling within the range of P250.00 to P290.00. Thus, upon the effectivity of WO No. 9 on 5 November 2001,
only the said 82 employees were entitled to receive the first tranch of ECOLA, equivalent to P15.00 per day. CAIHaE
The NLRC Decision dated 9 October 2002 also ordered Dusit Hotel to effect a second round of increase in its employees'
salaries, equivalent to P550.00 per month, retroactive to 1 January 2002. As a result of this increase, the daily salary rates of all
hotel employees were already above P290.00. Consequently, by 1 January 2002, no more hotel employee was qualified to receive
ECOLA.
Given that 82 hotel employees were entitled to receive the first tranch of ECOLA from 5 November 2001 to 31 December
2001, the Court must address the assertion of Dusit Hotel that the receipt by said hotel employees of their shares in the service
charges already constituted substantial compliance with the prescribed payment of ECOLA under WO No. 9.
The Court rules in the negative.
It must be noted that the hotel employees have a right to their share in the service charges collected by Dusit Hotel, pursuant
to Article 96 of the Labor Code of 1991, to wit:
Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall
be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for
management. The share of employees shall be equally distributed among them. In case the service charge is
abolished, the share of the covered employees shall be considered integrated in their wages.
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management
their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute
substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their shares in
the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one
does not result in the satisfaction of the other.
The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2 (m) of DOLE
Department Order No. 10, Series of 1998, 30 the Notice of Inspection Result "shall specify the violations discovered, if any, together
with the officer's recommendation and computation of the unpaid benefits due each worker with an advicethat the employer shall
be liable for double indemnity in case of refusal or failure to correct the violation within five calendar days from receipt of notice".
A careful review of the Notice of Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals
that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within
five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would already result in
its liability for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act accordingly within
the five-day period, as to avoid the penalty of double indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan,
already issued its Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their

unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as
amended by Republic Act No. 8188. 31 DACcIH
Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered position as against
capital, it is equally mindful of the protection that the law accords to capital. While the Constitution is committed to the policy of
social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically
decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest
of simple fair play. 32
In sum, the Court holds that the retroactive salary increases should be taken into account in the determination of which
hotel employees were entitled to ECOLA under WO No. 9. After applying the salary increases retroactive to 1 January 2001, 82
hotel employees still had daily salary rates between P250.00 and P290.00, thus, entitling them to receive the first tranch of ECOLA,
equivalent to P15.00 per day, beginning 5 November 2001, the date of effectivity of WO No. 9, until 31 December 2001. Following
the second round of salary increases retroactive to 1 January 2002, all the hotel employees were already receiving daily salary rates
above P290.00, hence, leaving no one qualified to receive ECOLA. Receipt by the 82 hotel employees of their shares from the
service charges collected by Dusit Hotel shall not be deemed payment of their ECOLA from 5 November 2001 to 31 December
2001.
WHEREFORE, premises considered, the Decision dated 10 September 2007 and the Resolution dated 4 March 2008 of
the Court of Appeals in CA-G.R. SP No. 92798 are hereby AFFIRMED WITH THE FOLLOWING MODIFICATIONS: (1)
Dusit Hotel Nikko is ORDERED to pay its 82 employees who, after applying the salary increases for 1 January 2001, had daily
salaries of P250.00 to P290.00 the first tranch * of Emergency Cost of Living Allowance, equivalent to P15.00 per day, from 5
November 2001 to 31 December 2001, within ten (10) days from finality of this Decision; and (2) the penalty for double indemnity
is DELETED. No costs.
SO ORDERED.
Carpio Morales, * Velasco, Jr., Nachura and Peralta, JJ., concur.

Footnotes
*Per Special Order No. 679, dated 3 August 2009, signed by Chief Justice Reynato S. Puno designating Associate Justice Conchita
Carpio Morales to replace Associate Justice Consuelo Ynares-Santiago, who is on official leave.
**Per Special Order No. 681, dated 3 August 2009, signed by Chief Justice Reynato S. Puno designating Associate Justice Minita
V. Chico-Nazario as Acting Chairperson to replace Associate Justice Consuelo Ynares-Santiago, who is on official leave.
1.Penned by Associate Justice Sesinando E. Villon with Associate Justices Martin S. Villarama, Jr. and Noel G. Tijam.,
concurring. Rollo, pp. 72-82.
2.Owned by petitioner Philippine Hoteliers, Inc. (PHI). Any reference in the Decision to Dusit Hotel, must also be deemed
applicable to PHI.
3.Rollo, pp. 84-90.
4.Id. at 92.
5.Rollo, p. 94.
6.CA rollo, p. 53.
7.Rollo, p. 181.
8.Id. at 94.
9.Id. at 103-149.
10.Id. at 97-102.
11.Wage Rationalization Act.
12.Double Indemnity Act.
13.Id. at 150-167.
14.Id. at 183-185.
15.Id. at 186-199.

16.Id. at 202-206.
17.Id. at 205-206.
18.Id. at 207-227.
19.Id. at 412-421.
20.Id. at 415.
21.Id. at 422-439.
22.Id. at 442-443.
23.Id. at 444-474.
24.Id. at 72-82.
25.Id. at 81.
26.CA rollo, pp. 487-516.
27.Id. at 578-584.
28.Rollo, pp. 26-67.
29.Id. at 923-925.
30.Guidelines on the Imposition of Double Indemnity for Non-Compliance with the Prescribed Increases or Adjustments in Wage
Rates.
31.Constitutes the compliance order, defined under Section 2 (n) of DOLE Department Order No. 10 as "the order issued by the
regional director, after due notice and hearing conducted by himself or a duly authorized hearing officer finding that a
violation has been committed and directing the employer to pay the amount due each worker within ten (10) calendar days
from receipt thereof."
32.Sosito v. Aguinaldo Development Corporation, 240 Phil. 373, 377 (1987); Rapid Manpower Consultants, Inc. v. National Labor
Relations Commission, G.R. No. 88683, 18 October 1990, 190 SCRA 747, 752.
||| (Philippine Hoteliers, Inc., Dusit Hotel Nikko-Manila v. NUWHRAIN-Dusit Hotel Nikko Chapter, G.R. No. 181972, [August 25,
2009], 613 PHIL 491-507)