SECOND DIVISION

INSULAR HOTEL EMPLOYEES UNION-NFL, G.R. Nos. 174040-41

Petitioner,
Present:

CARPIO, J., Chairperson,

- versus - VELASCO, JR., *
PERALTA,
BERSAMIN, ** and
ABAD, JJ.

WATERFRONT INSULAR HOTEL DAVAO,

Respondent. Promulgated:

September 22, 2010

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari,[1] under Rule 45 of the Rules of Court, seeking to set aside the Decision[2] dated
October 11, 2005, and the Resolution[3] dated July 13, 2006 of the Court of Appeals (CA) in consolidated labor cases docketed as CA-
G.R. SP No. 83831 and CA-G.R. SP No. 83657. Said Decision reversed the Decision[4] dated the April 5, 2004 of the Accredited
Voluntary Arbitrator Rosalina L. Montejo (AVA Montejo).
The facts of the case, as culled from the records, are as follows:

On November 6, 2000, respondent Waterfront Insular Hotel Davao (respondent) sent the Department of Labor and Employment
(DOLE), Region XI, Davao City, a Notice of Suspension of Operations [5] notifying the same that it will suspend its operations for a
period of six months due to severe and serious business losses. In said notice, respondent assured the DOLE that if the company could
not resume its operations within the six-month period, the company would pay the affected employees all the benefits legally due to
them.

During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free Employees Union (DIHFEU-
NFL), the recognized labor organization in Waterfront Davao, sent respondent a number of letters asking management to reconsider
its decision.

In a letter[6] dated November 8, 2000, Rojas intimated that the members of the Union were determined to keep their jobs and that they
believed they too had to help respondent, thus:

xxxx

Sir, we are determined to keep our jobs and push the Hotel up from sinking. We believe that we have to help in this
(sic) critical times. Initially, we intend to suspend the re-negotiations of our CBA. We could talk further on possible
adjustments on economic benefits, the details of which we are hoping to discuss with you or any of your emissaries.
x x x[7]

In another letter[8] dated November 10, 2000, Rojas reiterated the Union's desire to help respondent, to wit:

We would like to thank you for giving us the opportunity to meet [with] your representatives in order for us to air
our sentiments and extend our helping hands for a possible reconsideration of the company's decision.
The talks have enabled us to initially come up with a suggestion of solving the high cost on payroll.
 We propose that 25 years and above be paid their due retirement benefits and put their length of service to zero
without loss of status of employment with a minimum hiring rate.
Thru this scheme, the company would be able to save a substantial amount and reduce greatly the payroll costs
without affecting the finance of the families of the employees because they will still have a job from where they
could get their income.

Moreover, we are also open to a possible reduction of some economic benefits as our gesture of sincere desire to
help.

We are looking forward to a more fruitful round of talks in order to save the hotel. [9]

In another letter[10] dated November 20, 2000, Rojas sent respondent more proposals as a form of the Union's gesture of their intention
to help the company, thus:

1) Suspension of [the] CBA for ten years, No strike no lock-out shall be enforced.
2) Pay all the employees their benefits due, and put the length of service to zero with a minimum hiring
rate. Payment of benefits may be on a staggered basis or as available.
3) Night premium and holiday pays shall be according to law. Overtime hours rendered shall be offsetted as
practiced.
4) Reduce the sick leaves and vacation leaves to 15 days/15days.
5) Emergency leave and birthday off are hereby waived.
6) Duty meal allowance is fixed at P30.00 only. No more midnight snacks and double meal allowance. The
cook drinks be stopped as practiced.
7) We will shoulder 50% of the group health insurance and family medical allowance be reduced to
1,500.00 instead of 3,000.00.
8) The practice of bringing home our uniforms for laundry be continued.
9) Fixed manning shall be implemented, the rest of manpower requirements maybe sourced thru WAP and
casual hiring. Manpower for fixed manning shall be 145 rank-and-file union members.
10) Union will cooperate fully on strict implementation of house rules in order to attain desired productivity
and discipline. The union will not tolerate problem members.
11) The union in its desire to be of utmost service would adopt multi-tasking for the hotel to be more
competitive.

It is understood that with the suspension of the CBA renegotiations, the same existing CBA shall be adopted and
that all provisions therein shall remain enforced except for those mentioned in this proposal.

These proposals shall automatically supersede the affected provisions of the CBA. [11]

In a handwritten letter[12] dated November 25, 2000, Rojas once again appealed to respondent for it to consider their proposals and to
re-open the hotel. In said letter, Rojas stated that manpower for fixed manning shall be one hundred (100) rank-and-file Union
members instead of the one hundred forty-five (145) originally proposed.

Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to respondent a Manifesto [13] concretizing their earlier
proposals.
After series of negotiations, respondent and DIHFEU-NFL, represented by its President, Rojas, and Vice-Presidents, Exequiel J.
Varela Jr. and Avelino C. Bation, Jr., signed a Memorandum of Agreement[14] (MOA) wherein respondent agreed to re-open the hotel
subject to certain concessions offered by DIHFEU-NFL in its Manifesto.

Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth in the terms of the MOA.
Moreover, as agreed upon in the MOA, a new pay scale was also prepared by respondent.

The retained employees individually signed a Reconfirmation of Employment [15] which embodied the new terms and conditions of
their continued employment. Each employee was assisted by Rojas who also signed the document.

On June 15, 2001, respondent resumed its business operations.

On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of the National Federation of
Labor (NFL), filed a Notice of Mediation[16] before the National Conciliation and Mediation Board (NCMB), Region XI, Davao
City. In said Notice, it was stated that the Union involved was DARIUS JOVES/DEBBIE PLANAS ET. AL, National Federation of
Labor. The issue raised in said Notice was the Diminution of wages and other benefits through unlawful Memorandum of Agreement.
On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of settling the conflict. In the
said conference, respondent and petitioner Insular Hotel Employees Union-NFL (IHEU-NFL), represented by Joves, signed a
Submission Agreement[17] wherein they chose AVA Alfredo C. Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the
resolution of AVA Olvida was the determination of whether or not there was a diminution of wages and other benefits through an
unlawful MOA. In support of his authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo), presented several
Special Powers of Attorney (SPA) which were, however, undated and unnotarized.

On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion for a Second Preliminary Conference, [18] raising
the following grounds:

1) The persons who filed the instant complaint in the name of the Insular Hotel Employees Union-NFL have no
authority to represent the Union;
2) The individuals who executed the special powers of attorney in favor of the person who filed the instant
complaint have no standing to cause the filing of the instant complaint; and
3) The existence of an intra-union dispute renders the filing of the instant case premature. [19]

On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo denied any existence of an intra-
union dispute among the members of the union. Cullo, however, confirmed that the case was filed not by the IHEU-NFL but by the
NFL. When asked to present his authority from NFL, Cullo admitted that the case was, in fact, filed by individual employees named in
the SPAs. The hearing officer directed both parties to elevate the aforementioned issues to AVA Olvida.[20]

The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent again raised its objections,
specifically arguing that the persons who signed the complaint were not the authorized representatives of the Union indicated in the
Submission Agreement nor were they parties to the MOA. AVA Olvida directed respondent to file a formal motion to withdraw its
submission to voluntary arbitration.

On October 16, 2002, respondent filed its Motion to Withdraw. [21] Cullo then filed an Opposition[22] where the same was captioned:

NATIONAL FEDERATION OF LABOR

And 79 Individual Employees, Union Members,
Complainants,
-versus-
Waterfront Insular Hotel Davao,
Respondent.

In said Opposition, Cullo reiterated that the complainants were not representing IHEU-NFL, to wit:
xxxx

2. Respondent must have been lost when it said that the individuals who executed the SPA have no standing to represent
the union nor to assail the validity of Memorandum of Agreement (MOA). What is correct is that the individual
complainants are not representing the union but filing the complaint through their appointed attorneys-in-fact to
assert their individual rights as workers who are entitled to the benefits granted by law and stipulated in the collective
bargaining agreement.[23]
On November 11, 2002, AVA Olvida issued a Resolution[24] denying respondent's Motion to Withdraw. On December 16, 2002,
respondent filed a Motion for Reconsideration[25] where it stressed that the Submission Agreement was void because the Union did not
consent thereto. Respondent pointed out that the Union had not issued any resolution duly authorizing the individual employees or
NFL to file the notice of mediation with the NCMB.

Cullo filed a Comment/Opposition[26] to respondent's Motion for Reconsideration. Again, Cullo admitted that the case was not
initiated by the IHEU-NFL, to wit:

The case was initiated by complainants by filling up Revised Form No. 1 of the NCMB duly furnishing respondent,
copy of which is hereto attached as Annex A for reference and consideration of the Honorable Voluntary Arbitrator.
There is no mention there of Insular Hotel Employees Union, but only National Federation of Labor (NFL). The one
appearing at the Submission Agreement was only a matter of filling up the blanks particularly on the question there
of Union; which was filled up with Insular Hotel Employees Union-NFL. There is nothing there that indicates that it
is a complainant as the case is initiated by the individual workers and National Federation of Labor, not by the local
union. The local union was not included as party-complainant considering that it was a party to the assailed
MOA.[27]
On March 18, 2003, AVA Olvida issued a Resolution[28] denying respondent's Motion for Reconsideration. He, however, ruled that
respondent was correct when it raised its objection to NFL as proper party-complainant, thus:

Anent to the real complainant in this instant voluntary arbitration case, the respondent is correct when it raised
objection to the National Federation of Labor (NFL) and as proper party-complainants.

The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL, the recognized and incumbent
bargaining agent of the rank-and-file employees of the respondent hotel. In the submission agreement of the parties
dated August 29, 2002, the party complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not
the NATIONAL FEDERATION OF LABOR and 79 other members.

However, since the NFL is the mother federation of the local union, and signatory to the existing CBA, it can
represent the union, the officers, the members or union and officers or members, as the case may be, in all stages of
proceedings in courts or administrative bodies provided that the issue of the case will involve labor-management
relationship like in the case at bar.

The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution
dated November 11, 2002 is modified in so far as the party-complainant is concerned; thus, instead of National
Federation of Labor and 79 individual employees, union members, shall be Insular Hotel Employees Union-NFL et.
al., as stated in the joint submission agreement dated August 29, 2002. Respondent is directed to comply with the
decision of this Arbitrator dated November 11, 2002,

No further motion of the same nature shall be entertained.[29]

On May 9, 2003, respondent filed its Position Paper Ad Cautelam,[30] where it declared, among others, that the same was without
prejudice to its earlier objections against the jurisdiction of the NCMB and AVA Olvida and the standing of the persons who filed the
notice of mediation.

Cullo, now using the caption Insular Hotel Employees Union-NFL, Complainant, filed a Comment[31] dated June 5, 2003. On June 23,
2003, respondent filed its Reply.[32]
Later, respondent filed a Motion for Inhibition[33] alleging AVA Olvida's bias and prejudice towards the cause of the employees. In an
Order[34] dated July 25, 2003, AVA Olvida voluntarily inhibited himself out of delicadeza and ordered the remand of the case to the
NCMB.

On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before the conciliator for the selection of a new
voluntary arbitrator.
In a letter[35] dated August 19, 2003 addressed to the NCMB, respondent reiterated its position that the individual union members have
no standing to file the notice of mediation before the NCMB. Respondent stressed that the complaint should have been filed by the
Union.

On September 12, 2003, the NCMB sent both parties a Notice [36] asking them to appear before it for the selection of the new voluntary
arbitrator. Respondent, however, maintained its stand that the NCMB had no jurisdiction over the case. Consequently, at the instance
of Cullo, the NCMB approved ex parte the selection of AVA Montejo as the new voluntary arbitrator.

On April 5, 2004, AVA Montejo rendered a Decision[37] ruling in favor of Cullo, the dispositive portion of which reads:
WHEREOF, in view of the all the foregoing, judgment is hereby rendered:

1. Declaring the Memorandum of Agreement in question as invalid as it is contrary to law and public policy;
2. Declaring that there is a diminution of the wages and other benefits of the Union members and officers
under the said invalid MOA.
3. Ordering respondent management to immediately reinstate the workers wage rates and other benefits that
they were receiving and enjoying before the signing of the invalid MOA;
4. Ordering the management respondent to pay attorneys fees in an amount equivalent to ten percent (10%)
of whatever total amount that the workers union may receive representing individual wage differentials.
 As to the other claims of the Union regarding diminution of other benefits, this accredited voluntary arbitrator is of
the opinion that she has no authority to entertain, particularly as to the computation thereof.

SO ORDERED.[38]

Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the Decision in so far as it did not categorically
order respondent to pay the covered workers their differentials in wages reckoned from the effectivity of the MOA up to the actual
reinstatement of the reduced wages and benefits. Cullos' petition was docketed as CA-G.R. SP No. 83831. Respondent, for its part,
questioned among others the jurisdiction of the NCMB. Respondent maintained that the MOA it had entered into with the officers of
the Union was valid. Respondent's petition was docketed as CA-G.R. SP No. 83657. Both cases were consolidated by the CA.

On October 11, 2005, the CA rendered a Decision[39] ruling in favor of respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, the petition for review in CA-G.R. SP No. 83657 is hereby GRANTED, while
the petition in CA-G.R. SP No. 83831 is DENIED. Consequently, the assailed Decision dated April 5, 2004 rendered
by AVA Rosalina L. Montejo is hereby REVERSED and a new one entered declaring the Memorandum of
Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties are DIRECTED to comply with the terms and
conditions thereof.

SO ORDERED.[40]

Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution [41] dated July 13, 2006.

Hence, herein petition, with Cullo raising the following issues for this Court's resolution, to wit:

I.
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN
FINDING THAT THE ACCREDITED VOLUNTARY ARBITRATOR HAS NO JURISDICTION OVER THE
CASE SIMPLY BECAUSE THE NOTICE OF MEDIATION DOES NOT MENTION THE NAME OF THE
LOCAL UNION BUT ONLY THE AFFILIATE FEDERATION THEREBY DISREGARDING THE
SUBMISSION AGREEMENT DULY SIGNED BY THE PARTIES AND THEIR LEGAL COUNSELS THAT
MENTIONS THE NAME OF THE LOCAL UNION.

II.
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR BY
DISREGARDING THE PROVISIONS OF THE CBA SIMPLY BECAUSE IT BELIEVED THE UNPROVEN
ALLEGATIONS OF RESPONDENT HOTEL THAT IT WAS SUFFERING FROM FINANCIAL CRISIS.

III.
THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED IN CONCLUDING THAT
ARTICLE 100 OF THE LABOR CODE APPLIES ONLY TO BENEFITS ENJOYED PRIOR TO THE
ADOPTION OF THE LABOR CODE WHICH, IN EFFECT, ALLOWS THE DIMINUTION OF THE BENEFITS
ENJOYED BY EMPLOYEES FROM ITS ADOPTION HENCEFORTH. [42]

The petition is not meritorious.

Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact that before the case was submitted to voluntary
arbitration, the parties signed a Submission Agreement which mentioned the name of the local union and not only NFL. Cullo, thus,
contends that the CA committed error when it ruled that the voluntary arbitrator had no jurisdiction over the case simply because the
Notice of Mediation did not state the name of the local union thereby disregarding the Submission Agreement which states the names
of local union as Insular Hotel Employees Union-NFL.[43]

In its Memorandum,[44] respondent maintains its position that the NCMB and Voluntary Arbitrators had no jurisdiction over the
complaint. Respondent, however, now also contends that IHEU-NFL is a non-entity since it is DIHFEU-NFL which is considered by
the DOLE as the only registered union in Waterfront Davao.[45] Respondent argues that the Submission Agreement does not name the
local union DIHFEU-NFL and that it had timely withdrawn its consent to arbitrate by filing a motion to withdraw.

A review of the development of the case shows that there has been much confusion as to the identity of the party which filed the case
against respondent. In the Notice of Mediation[46] filed before the NCMB, it stated that the union involved was DARIUS
JOVES/DEBBIE PLANAS ET. AL., National Federation of Labor. In the Submission Agreement,[47] however, it stated that the union
involved was INSULAR HOTEL EMPLOYEES UNION-NFL.

Furthermore, a perusal of the records would reveal that after signing the Submission Agreement, respondent persistently questioned
the authority and standing of the individual employees to file the complaint. Cullo then clarified in subsequent documents captioned as
National Federation of Labor and 79 Individual Employees, Union Members, Complainants that the individual complainants are not
representing the union, but filing the complaint through their appointed attorneys-in-fact.[48] AVA Olvida, however, in a Resolution
dated March 18, 2003, agreed with respondent that the proper party-complainant should be INSULAR HOTEL EMPLOYEES UNION-
NFL, to wit:

x x x In the submission agreement of the parties dated August 29, 2002, the party complainant written is INSULAR
HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other
members.[49]

The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The
resolution dated November 11, 2002, is modified in so far as the party complainant is concerned, thus, instead of
National Federation of Labor and 79 individual employees, union members, shall be Insular Hotel Employees
Union-NFL et. al., as stated in the joint submission agreement dated August 29, 2002. Respondent is directed to
comply with the decision of this Arbitrator dated November 11, 2002. [50]

After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted Insular Hotel Employees Union-NFL et. al., Complainant as the
caption in all his subsequent pleadings. Respondent, however, was still adamant that neither Cullo nor the individual employees had
authority to file the case in behalf of the Union.

While it is undisputed that a submission agreement was signed by respondent and IHEU-NFL, then represented by Joves and Cullo,
this Court finds that there are two circumstances which affect its validity: first, the Notice of Mediation was filed by a party who had
no authority to do so; second, that respondent had persistently voiced out its objection questioning the authority of Joves, Cullo and
the individual members of the Union to file the complaint before the NCMB.

Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB. It is only after
this step that a submission agreement may be entered into by the parties concerned.
Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediation, to wit:

Who may file a notice or declare a strike or lockout or request preventive mediation. -
Any certified or duly recognized bargaining representative may file a notice or declare a strike or request for
preventive mediation in cases of bargaining deadlocks and unfair labor practices. The employer may file a
notice or declare a lockout or request for preventive mediation in the same cases. In the absence of a certified or duly
recognized bargaining representative, any legitimate labor organization in the establishment may file a notice, request
preventive mediation or declare a strike, but only on grounds of unfair labor practice.

From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a notice or request for preventive
mediation. It is curious that even Cullo himself admitted, in a number of pleadings, that the case was filed not by the Union but by
individual members thereof. Clearly, therefore, the NCMB had no jurisdiction to entertain the notice filed before it.

Even though respondent signed a Submission Agreement, it had, however, immediately manifested its desire to withdraw from the
proceedings after it became apparent that the Union had no part in the complaint. As a matter of fact, only four days had lapsed after
the signing of the Submission Agreement when respondent called the attention of AVA Olvida in a Manifestation with Motion for a
Second Preliminary Conference[51] that the persons who filed the instant complaint in the name of Insular Hotel Employees Union-
NFL had no authority to represent the Union. Respondent cannot be estopped in raising the jurisdictional issue, because it is basic that
the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.

In Figueroa v. People,[52] this Court explained that estoppel is the exception rather than the rule, to wit:

Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the
jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court. At that
time, no considerable period had yet elapsed for laches to attach. True, delay alone, though unreasonable, will not
sustain the defense of estoppel by laches unless it further appears that the party, knowing his rights, has not sought to
enforce them until the condition of the party pleading laches has in good faith become so changed that he cannot be
 restored to his former state, if the rights be then enforced, due to loss of evidence, change of title, intervention of
equities, and other causes. In applying the principle of estoppel by laches in the exceptional case of Sibonghanoy, the
Court therein considered the patent and revolting inequity and unfairness of having the judgment creditors go up their
Calvary once more after more or less 15 years.The same, however, does not obtain in the instant case.

We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be applied
rarelyonly from necessity, and only in extraordinary circumstances. The doctrine must be applied with great care and
the equity must be strong in its favor.When misapplied, the doctrine of estoppel may be a most effective weapon for
the accomplishment of injustice. x x x (Italics supplied.) [53]

The question to be resolved then is, do the individual members of the Union have the requisite standing to question the MOA before
the NCMB? On this note, Tabigue v. International Copra Export Corporation (INTERCO)[54] is instructive:

Respecting petitioners thesis that unsettled grievances should be referred to voluntary arbitration as called for in the
CBA, the same does not lie.The pertinent portion of the CBA reads:

In case of any dispute arising from the interpretation or implementation of this Agreement or any
matter affecting the relations of Labor and Management, the UNION and the COMPANY agree to
exhaust all possibilities of conciliation through the grievance machinery. The committee shall
resolve all problems submitted to it within fifteen (15) days after the problems ha[ve] been
discussed by the members. If the dispute or grievance cannot be settled by the Committee, or if the
committee failed to act on the matter within the period of fifteen (15) days herein stipulated,
the UNION and the COMPANY agree to submit the issue to Voluntary Arbitration. Selection of
the arbitrator shall be made within seven (7) days from the date of notification by the aggrieved
party. The Arbitrator shall be selected by lottery from four (4) qualified individuals nominated by
in equal numbers by both parties taken from the list of Arbitrators prepared by the National
Conciliation and Mediation Board (NCMB). If the Company and the Union representatives within
ten (10) days fail to agree on the Arbitrator, the NCMB shall name the Arbitrator. The decision of
the Arbitrator shall be final and binding upon the parties. However, the Arbitrator shall not have
the authority to change any provisions of the Agreement.The cost of arbitration shall be borne
equally by the parties.

Petitioners have not, however, been duly authorized to represent the union. Apropos is this Courts pronouncement
in Atlas Farms, Inc. v. National Labor Relations Commission, viz:

x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their
respective representatives to the grievance machinery and if the grievance is unsettled in that level,
it shall automatically be referred to the voluntary arbitrators designated in advance by parties to a
CBA. Consequently, only disputes involving the union and the company shall be referred to
the grievance machinery or voluntary arbitrators. (Emphasis and underscoring supplied.) [55]

If the individual members of the Union have no authority to file the case, does the federation to which the local union is affiliated have
the standing to do so? On this note, Coastal Subic Bay Terminal, Inc. v. Department of Labor and Employment [56] is enlightening,
thus:

x x x A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct
voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union
of its own personality, neither does it give the mother federation the license to act independently of the local
union. It only gives rise to a contract of agency, where the former acts in representation of the latter. Hence, local
unions are considered principals while the federation is deemed to be merely their agent. x x x [57]

Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled that NFL had no authority to file
the complaint in behalf of the individual employees, to wit:

Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the case. Waterfront contents that
the Notice of Mediation does not mention the name of the Union but merely referred to the National Federation of
Labor (NFL) with which the Union is affiliated. In the subsequent pleadings, NFL's legal counsel even confirmed that
the case was not filed by the union but by NFL and the individual employees named in the SPAs which were not even
dated nor notarized.
 Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the local union and
the labor federation or national union with which the former was affiliated is generally understood to be that of
agency, where the local is the principal and the federation the agency. Being merely an agent of the local union, NFL
should have presented its authority to file the Notice of Mediation. While We commend NFL's zealousness in
protecting the rights of lowly workers, We cannot, however, allow it to go beyond what it is empowered to do.

As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining representative
and an employer may file a notice of mediation, declare a strike or lockout or request preventive mediation. The
Collective Bargaining Agreement (CBA), on the other, recognizes that DIHFEU-NFL is the exclusive bargaining
representative of all permanent employees. The inclusion of the word NFL after the name of the local union merely
stresses that the local union is NFL's affiliate. It does not, however, mean that the local union cannot stand on its own.
The local union owes its creation and continued existence to the will of its members and not to the federation to which
it belongs. The spring cannot rise higher than its source, so to speak. [58]

In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that DIHFEU-NFL is the only recognized bargaining
unit in their establishment. While the resolution of the said argument is already moot and academic given the discussion above, this
Court shall address the same nevertheless.

While the November 16, 2006 Certification[59] of the DOLE clearly states that IHEU-NFL is not a registered labor organization, this
Court finds that respondent is estopped from questioning the same as it did not raise the said issue in the proceedings before the
NCMB and the Voluntary Arbitrators. A perusal of the records reveals that the main theory posed by respondent was whether or not
the individual employees had the authority to file the complaint notwithstanding the apparent non-participation of the union.
Respondent never put in issue the fact that DIHFEU-NFL was not the same as IHEU-NFL. Consequently, it is already too late in the
day to assert the same.
Anent the second issue raised by Cullo, the same is again without merit.

Cullo contends that respondent was not really suffering from serious losses as found by the CA. Cullo anchors his position on the
denial by the Wage Board of respondent's petition for exemption from Wage Order No. RTWPB-X1-08 on the ground that it is a
distressed establishment.[60] In said denial, the Board ruled:
A careful analysis of applicant's audited financial statements showed that during the period ending December 31,
1999, it registered retained earnings amounting to P8,661,260.00. Applicant's interim financial statements for the
quarter ending June 30, 2000 cannot be considered, as the same was not audited. Accordingly, this Board finds
that applicant is not qualified for exemption as a distressed establishment pursuant to the aforecited criteria.[61]

In its Decision, the CA held that upholding the validity of the MOA would mean the continuance of the hotel's operation and financial
viability, to wit:

x x x We cannot close Our eyes to the impending financial distress that an employer may suffer should the terms of
employment under the said CBA continue.

If indeed We are to tilt the balance of justice to labor, then We would be inclined to favor for the nonce petitioner
Waterfront. To uphold the validity of the MOA would mean the continuance of the hotel's operation and financial
viability. Otherwise, the eventual permanent closure of the hotel would only result to prejudice of the employees, as a
consequence thereof, will necessarily lose their jobs.[62]

In its petition before the CA, respondent submitted its audited financial statements[63] which show that for the years 1998, 1999, until
September 30, 2000, its total operating losses amounted to P48,409,385.00. Based on the foregoing, the CA was not without basis
when it declared that respondent was suffering from impending financial distress. While the Wage Board denied respondent's petition
for exemption, this Court notes that the denial was partly due to the fact that the June 2000 financial statements then submitted by
respondent were not audited. Cullo did not question nor discredit the accuracy and authenticity of respondent's audited financial
statements. This Court, therefore, has no reason to question the veracity of the contents thereof. Moreover, it bears to point out that
respondent's audited financial statements covering the years 2001 to 2005 show that it still continues to suffer losses. [64]

Finally, anent the last issue raised by Cullo, the same is without merit.

Cullo argues that the CA must have erred in concluding that Article 100 of the Labor Code applies only to benefits already enjoyed at
the time of the promulgation of the Labor Code.

Article 100 of the Labor Code provides:

 PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS- Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of
the promulgation of this Code.

On this note, Apex Mining Company, Inc. v. NLRC[65] is instructive, to wit:

Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is
specifically concerned with benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100
does not, in other words, purport to apply to situations arising after the promulgation date of the Labor Code x x x. [66]
Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with respondent that the same does not prohibit a
union from offering and agreeing to reduce wages and benefits of the employees. In Rivera v. Espiritu,[67] this Court ruled that the
right to free collective bargaining, after all, includes the right to suspend it, thus:

A CBA is a contract executed upon request of either the employer or the exclusive bargaining representative
incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting any grievances or questions arising under such
agreement. The primary purpose of a CBA is the stabilization of labor-management relations in order to create a
climate of a sound and stable industrial peace. In construing a CBA, the courts must be practical and realistic and
give due consideration to the context in which it is negotiated and the purpose which it is intended to serve.

The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations
undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique
intention of not merely promoting industrial peace at PAL, but preventing the latters closure. We find no
conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is
to promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at
PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign
specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A,
prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce
the same.

In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees, that voluntarily
entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the
CBA. Either case was the unions exercise of its right to collective bargaining. The right to free collective
bargaining, after all, includes the right to suspend it.[68]

Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws specifically provides that the results of
the collective bargaining negotiations shall be subject to ratification and approval by majority vote of the Union members at a meeting
convened, or by plebiscite held for such special purpose.[69] Accordingly, it is undisputed that the MOA was not subject to ratification
by the general membership of the Union. The question to be resolved then is, does the non-ratification of the MOA in accordance with
the Union's constitution prove fatal to the validity thereof?

It must be remembered that after the MOA was signed, the members of the Union individually signed contracts denominated as
Reconfirmation of Employment.[70] Cullo did not dispute the fact that of the 87 members of the Union, who signed and accepted the
Reconfirmation of Employment, 71 are the respondent employees in the case at bar. Moreover, it bears to stress that all the employees
were assisted by Rojas, DIHFEU-NFL's president, who even co-signed each contract.

Stipulated in each Reconfirmation of Employment were the new salary and benefits scheme. In addition, it bears to stress that
specific provisions of the new contract also made reference to the MOA. Thus, the individual members of the union cannot feign
knowledge of the execution of the MOA. Each contract was freely entered into and there is no indication that the same was attended
by fraud, misrepresentation or duress. To this Court's mind, the signing of the individual Reconfirmation of Employment should,
therefore, be deemed an implied ratification by the Union members of the MOA.

In Planters Products, Inc. v. NLRC,[71] this Court refrained from declaring a CBA invalid notwithstanding that the same was not
ratified in view of the fact that the employees had enjoyed benefits under it, thus:

Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties to a
collective [bargaining] agreement are required to furnish copies of the appropriate Regional Office with
accompanying proof of ratification by the majority of all the workers in a bargaining unit. This was not done in the
case at bar. But we do not declare the 1984-1987 CBA invalid or void considering that the employees have enjoyed
 benefits from it. They cannot receive benefits under provisions favorable to them and later insist that the CBA is void
simply because other provisions turn out not to the liking of certain employees. x x x. Moreover, the two CBAs prior
to the 1984-1987 CBA were not also formally ratified, yet the employees are basing their present claims on these
CBAs. It is iniquitous to receive benefits from a CBA and later on disclaim its validity.[72]

Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain benefits previously enjoyed by
the members of the Union, it cannot escape this Court's attention that it was the execution of the MOA which paved the way for the re-
opening of the hotel, notwithstanding its financial distress. More importantly, the execution of the MOA allowed respondents to keep
their jobs. It would certainly be iniquitous for the members of the Union to sign new contracts prompting the re-opening of the hotel
only to later on renege on their agreement on the fact of the non-ratification of the MOA.

In addition, it bears to point out that Rojas did not act unilaterally when he negotiated with respondent's management. The
Constitution and By-Laws of DIHFEU-NFL clearly provide that the president is authorized to represent the union on all occasions and
in all matters in which representation of the union may be agreed or required.[73] Furthermore, Rojas was properly authorized under a
Board of Directors Resolution[74] to negotiate with respondent, the pertinent portions of which read:

SECRETARY's CERTIFICATE
I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby certify that, at a meeting of the Board of Directors of the
DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly constituted, the following resolutions were unanimously
approved:

RESOLVED, as it is hereby resolved that the Manifesto dated 25 Feb. 2001 be approved ratified
and adopted;

RESOLVED, FURTHER, that Mr. Domy R. Rojas, the president of the DIHFEU-NFL, be
hereby authorized to negotiate with Waterfront Insular Hotel Davao and to work for the
latter's acceptance of the proposals contained in DIHFEU-NFL Manifesto; and

RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby authorized to sign any and all
documents to implement, and carry into effect, his foregoing authority.[75]
Withal, while the scales of justice usually tilt in favor of labor, the peculiar circumstances herein prevent this Court from applying the
same in the instant petition. Even if our laws endeavor to give life to the constitutional policy on social justice and on the protection of
labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has
rights which are also entitled to respect and enforcement in the interest of fair play. [76]

WHEREFORE, premises considered, the petition is DENIED. The Decision dated October 11, 2005, and the Resolution dated July
13, 2006 of the Court of Appeals in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657,
are AFFIRMED.

SO ORDERED.
SECOND DIVISION

G.R. No. 200114, August 24, 2015

SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBA�A, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails: 1) the July 29, 2011 Decision2 of the Court of Appeals (CA) denying the Petition
for Certiorari in CA-G.R. SP No. 110006 and affirming the March 6, 2007 Order 3 of the Regional Trial Court (RTC) of Daet,
Camarines Norte, Branch 39 in Civil Case No. 7304; and 2) the CA's January 10, 2012 Resolution 4 denying petitioner's Motion for
Reconsideration of the herein assailed Decision.

Factual Antecedents

On December 26, 2002, respondent Debbie Ubana filed a civil case for damages against the DBP Service Corporation, petitioner
Social Security System (SSS), and the SSS Retirees Association5 before the RTC of Daet, Camarines Norte. The case was docketed as
Civil Case No. 7304 and assigned to RTC Branch 39.

In her Complaint,6 respondent alleged that in July 1995, she applied for employment with the petitioner. However, after passing the
examinations and accomplishing all the requirements for employment, she was instead referred to DBP Service Corporation for
"transitory employment." She took the pre-employment examination given by DBP Service Corporation and passed the same. On May
20, 1996, she was told to report for training to SSS, Naga City branch, for immediate deployment to SSS Daet branch. On May 28,
1996, she was made to sign a six-month Service Contract Agreement7 by DBP Service Corporation, appointing her as clerk for
assignment with SSS Daet branch effective May 27, 1996, with a daily wage of only P171.00. She was assigned as "Frontliner" of the
SSS Members Assistance Section until December 15, 1999. From December 16, 1999 to May 15, 2001, she was assigned to the
Membership Section as Data Encoder. On December 16, 2001, she was transferred to the SSS Retirees Association as Processor at the
Membership Section until her resignation on August 26, 2002. As Processor, she was paid only P229.00 daily or P5,038.00 monthly,
while a regular SSS Processor receives a monthly salary of P18,622.00 or P846.45 daily wage. Her May 28, 1996 Service Contract
Agreement with DBP Service Corporation was never renewed, but she was required to work for SSS continuously under different
assignments with a maximum daily salary of only P229.00; at the same time, she was constantly assured of being absorbed into the
SSS plantilla. Respondent claimed she was qualified for her position as Processor, having completed required training and passed the
SSS qualifying examination for Computer Operations Course given by the National Computer Institute, U.P. Diliman from May 16 to
June 10, 2001, yet she was not given the proper salary. Because of the oppressive and prejudicial treatment by SSS, she was forced to
resign on August 26, 2002 as she could no longer stand being exploited, the agony of dissatisfaction, anxiety, demoralization, and
injustice. She asserted that she dedicated six years of her precious time faithfully serving SSS, foregoing more satisfying employment
elsewhere, yet she was merely exploited and given empty and false promises; that defendants conspired to exploit her and violate civil
service laws and regulations and Civil Code provisions on Human Relations, particularly Articles 19, 20, and 21. 8 As a result, she
suffered actual losses by way of unrealized income, moral and exemplary damages, attorney's fees and litigation expenses.

Respondent prayed for an award of P572,682.67 actual damages representing the difference between the legal and proper salary she
should have received and the actual salary she received during her six-year stint with petitioner; P300,000.00 moral damages;
exemplary damages at the discretion of the court; P20,000.00 attorney's fees and P1,000.00 appearance fees; and other just and
equitable relief.

Petitioner and its co-defendants SSS Retirees Association and DBP Service Corporation filed their respective motions to dismiss,
arguing that the subject matter of the case and respondent's claims arose out of employer-employee relations, which are beyond the
RTC's jurisdiction and properly cognizable by the National Labor Relations Commission (NLRC).

Respondent opposed the motions to dismiss, arguing that pursuant to civil service rules and regulations, service contracts such as her
Service Contract Agreement with DBP Service Corporation should cover only a) lump sum work or services such as janitorial,
security or consultancy services, and b) piece work or intermittent jobs of short duration not exceeding six months on a daily
basis.9 She posited that her service contract involved the performance of sensitive work, and not merely janitorial, security,
consultancy services, or work of intermittent or short duration. In fact, she was made to work continuously even after the lapse of her
6-month service contract. Citing Civil Service Commission Memorandum Circular No. 40, respondent contended that the performance
of functions outside of the nature provided in the appointment and receiving salary way below that received by regular SSS employees
amount to an abuse of rights; and that her cause of action is anchored on the provisions of the Civil Code on Human Relations.

Ruling of the Regional Trial Court

On October 1, 2003, the RTC issued an Order 10 dismissing respondent's complaint for lack of jurisdiction, stating that her claim for
damages "has a reasonable causal connection with her employer-employee relations with the defendants" 11 and "is grounded on the
alleged fraudulent and malevolent manner by which the defendants conspired with each other in exploiting [her], which is a clear case
of unfair labor practice,"12 falling under the jurisdiction of the Labor Arbiter of the NLRC. Thus, it decreed:cralawlawlibrary

WHEREFORE, premises considered, the aforementioned Motion to Dismiss the complaint of the herein plaintiff for lack of
jurisdiction is hereby GRANTED. The above-entitled complaint is hereby DISMISSED.

SO ORDERED.13

Respondent moved for reconsideration. On March 6, 2007, the RTC issued another Order 14 granting respondent's motion for
reconsideration. The trial court held:cralawlawlibrary

Section 2(1), Art. K-B, 1987 Constitution, expressly provides that "the civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including government-owned or controlled corporation[s] with original charters."
Corporations with original charters are those which have been created by special law[s] and not through the general corporation law.
In contrast, labor law claims against government-owned and controlled corporations without original charters fall within the
jurisdiction of the Department of Labor and Employment and not the Civil Service Commission. (Light Rail Transit Authority vs.
Perfecto Venus, March 24, 2006.)

Having been created under an original charter, RA No. 1161 as amended by R.A. 8282, otherwise known as the Social Security Act of
1997, the SSS is governed by the provision[s] of the Civil Service Commission. However, since the SSS denied the existence of an
employer-employee relationship, and the case is one for Damages, it is not the Civil Service Commission that has jurisdiction to try
the case, but the regular courts.

A perusal of the Complaint filed by the plaintiff against the defendant SSS clearly shows that the case is one for Damages.

Paragraph 15 of her complaint states, thus:ChanRoblesvirtualLawlibrary

xxx. Likewise, they are contrary to the Civil Code provisions on human relations which [state], among others, that Every person, must
in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good
faith (Article 19) and that Every person who, contrary to law, willfully or negligently [causes] damages to another, shall indemnify the
latter for the same. (Art. 20)

"Article 19 provides a rule of conduct that is consistent with an orderly and harmonious relationship between and among men and
women It codifies the concept of what is justice and fair play so that abuse of right by a person will be prevented. Art. 20 speaks of
general sanction for all other provisions of law which do not especially provide their own sanction. Thus, anyone, who, whether
willfully or negligently, in the exercise of his legal right or duty, causes damage to another, shall indemnify his or her victim for
injuries suffered thereby." (Persons and Family Relations, Sta. Maria, Melencio, Jr. (2004) pp. 31-32.)

Wherefore, all premises considered, the Motion for Reconsideration is hereby GRANTED. The case against defendant Social Security
System represented by its President is hereby reinstated in the docket of active civil cases of this court.

SO ORDERED.15 [Italics in the original]

Petitioner moved for reconsideration, but the RTC stood its ground in its June 24, 2009 Order 16cralawrednad

Ruling of the Court of Appeals

In a Petition for Certiorari17 filed with the CA and docketed as CA-G.R. SP No. 110006, petitioner sought a reversal of the RTC's
June 24, 2009 and March 6, 2007 Orders and the reinstatement of its original October 1, 2003 Order dismissing Civil Case No. 7304,
insisting that the trial court did not have jurisdiction over respondent's claims for "unrealized salary income" and other damages,
which constitute a labor dispute cognizable only by the labor tribunals. Moreover, it claimed that the assailed Orders of the trial court
were issued with grave abuse of discretion. It argued that the trial court gravely erred in dismissing the case only as against its co-
defendants DBP Service Corporation and SSS Retirees Association and maintaining the charge against it, considering that its grounds
for seeking dismissal are similar to those raised by the two. It maintained that DBP Service Corporation and SSS Retirees Association
are legitimate independent job contractors engaged by it to provide manpower services since 2001, which thus makes respondent an
employee of these two entities and not of SSS; and that since it is not the respondent's employer, then there is no cause of action
against it.

On July 29, 2011, the CA issued the assailed Decision containing the following pronouncement:cralawlawlibrary
Hence, petitioner seeks recourse before this Court via this Petition for Certiorarichallenging the RTC Orders. For the resolution of this
Court is the sole issue of:cralawlawlibrary

WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO. 7304.

The petition is devoid of merits.

The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency of the government has
jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and the character
of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs. A prayer or demand for relief
is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or change the legal effect of what is
alleged. In determining which body has jurisdiction over a case, the better policy is to consider not only the status or relationship of
the parties but also the nature of the action that is the subject of their controversy.

A careful perusal of Ubana's Complaint in Civil Case No. 7304 unveils that Ubana's claim is rooted on the principle of abuse of right
laid in the New Civil Code. She was claiming damages based on the alleged exploitation [perpetrated] by the defendants depriving her
of her rightful income. In asserting that she is entitled to the damages claimed, [she] invoked not the provisions of the Labor Code or
any other labor laws but the provisions on human relations under the New Civil Code. Evidently, the determination of the respective
rights of the parties herein, and the ascertainment whether there were abuses of such rights, do not call for the application of the labor
laws but of the New Civil Code. Aproposthereto, the resolution of the issues raised in the instant complaint does not require the
expertise acquired by labor officials. It is the courts of general jurisdiction, which is the RTC in this case, which has the authority to
hear and decide Civil Case No. 7304.

Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. Where the claim to the principal relief sought is to be resolved not by reference
to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction
over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, [resolution] of
the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of
employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise
ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies
disappears.

It is the character of the principal relief sought that appears essential in this connection. Where such principal relief is to be granted
under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the
NLRC, even though a claim for damages might be asserted as an incident to such claim.

The pivotal question is whether the Labor Code has any relevance to the principal relief sought in the complaint. As pointed out
earlier, Ubana did not seek refuge from the Labor Code in asking for the award of damages. It was the transgression of Article[s] 19
and 20 of the New Civil Code that she was insisting in wagering this case. The primary relief sought herein is for moral and
exemplary damages for the abuse of rights. The claims for actual damages for unrealized income are the natural consequence for
abuse of such rights.

While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages
governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection with the Labor Code,
other labor statutes, or collective bargaining agreements. Claims for damages under paragraph 4 of Article 217 must have a reasonable
causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such
a connection with the other claims can the claim for damages be considered as arising from employer-employee relations. In the
present case, Ubana's claim for damages is not related to any other claim under Article 217, other labor statutes, or collective
bargaining agreements.

All told, it is ineluctable that it is the regular courts that has [sic] jurisdiction to hear and decide Civil Case No. 7304. In Tolosa v.
NLRC,18 the Supreme Court held that, "[i]t is not the NLRC but the regular courts that have jurisdiction over action for damages, in
which the employer-employee relations is merely incidental, and in which the cause of action proceeds from a different source of
obligation such as tort. Since petitioner's claim for damages is predicated on a quasi-delict or tort that has no reasonable causal
connection with any of the claims provided for in Article 217, other labor statutes or collective bargaining agreements, jurisdiction
over the action lies with the regular courts not with the NLRC or the labor arbiters." The same rule applies in this case.

WHEREFORE, premises considered, the instant petition is DENIED and the Order dated March 6, 2007 of the Regional Trial Court,
Branch 39 of Daet, Camarines Norte in Civil Case No. 7304 is hereby AFFIRMED.

SO ORDERED.19
Petitioner filed a Motion for Reconsideration,20 but the CA denied the same in its January 10, 2012 Resolution. 21 Hence, the present
Petition.

Issue

Petitioner simply submits that the assailed CA dispositions are contrary to law and jurisprudence.

Petitioner's Arguments

Praying that the assailed CA dispositions be set aside and that the RTC's October 1, 2003 Order dismissing Civil Case No. 7304 be
reinstated, petitioner essentially maintains in its Petition and Reply22that respondent's claims arose from and are in fact centered on her
previous employment. It maintains that there is a direct causal connection between respondent's claims and her employment, which
brings the subject matter within the jurisdiction of the NLRC. Petitioner contends that respondent's other claims are intimately
intertwined with her claim of actual damages which are cognizable by the NLRC. Moreover, petitioner alleges that its existing
manpower services agreements with DBP Service Corporation and SSS Retirees Association are legitimate; and that some of
respondent's claims may not be entertained since these pertain to benefits enjoyed by government employees, not by employees
contracted via legitimate manpower service providers. Finally, petitioner avers that the nature and character of the reliefs prayed for
by the respondent are directly within the jurisdiction not of the courts, but of the labor tribunals.

Respondent's Arguments

In her Comment,23 respondent maintains that her case is predicated not on labor laws but on Articles 19 and 20 of the Civil Code for
petitioner's act of exploiting her and enriching itself at her expense by not paying her the correct salary commensurate to the position
she held within SSS. Also, since there is no employer-employee relationship between her and petitioner, as the latter itself admits, then
her case is not cognizable by the Civil Service Commission (CSC) either; that since the NLRC and the CSC have no jurisdiction over
her case, then it is only the regular courts which can have jurisdiction over her claims. She argues that the CA is correct in ruling that
her case is rooted in the principle of abuse of rights under the Civil Code; and that the Petition did not properly raise issues of law.

Our Ruling

The Court denies the Petition.

In Home Development Mutual Fund v. Commission on Audit,24 it was held that while they performed the work of regular government
employees, DBP Service Corporation personnel are not government personnel, but employees of DBP Service Corporation acting as
an independent contractor. Applying the foregoing pronouncement to the present case, it can be said that during respondent's stint with
petitioner, she never became an SSS employee, as she remained an employee of DBP Service Corporation and SSS Retirees
Association - the two being independent contractors with legitimate service contracts with SSS.

Indeed, "[i]n legitimate job contracting, no employer-employee relation exists between the principal and the job contractor's
employees. The principal is responsible to the job contractor's employees only for the proper payment of
wages."25cralawredcralawrednad

In her Complaint, respondent acknowledges that she is not petitioner's employee, but that precisely she was promised that she would
be absorbed into the SSS plantilla after all her years of service with SSS; and that as SSS Processor, she was paid only P229.00 daily
or P5,038.00 monthly, while a regular SSS Processor receives a monthly salary of P18,622.00, or P846.45 daily wage. In its pleadings,
petitioner denied the existence of an employer-employee relationship between it and respondent; in fact, it insists on the validity of its
service agreements with DBP Service Corporation and SSS Retirees Association - meaning that the latter, and not SSS, are
respondent's true employers. Since both parties admit that there is no employment relation between them, then there is no dispute
cognizable by the NLRC. Thus, respondent's case is premised on the claim that in paying her only P229.00 daily - or P5,038.00
monthly - as against a monthly salary of P18,622.00, or P846.45 daily wage, paid to a regular SSS Processor at the time, petitioner
exploited her, treated her unfairly, and unjustly enriched itself at her expense.

For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire jurisdiction over a dispute, there must be an
employer-employee relation between the parties thereto.chanrobleslaw

x x x It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue
is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is
the Regional Trial Court that has jurisdiction, x x x The action is within the realm of civil law hence jurisdiction over the case belongs
to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for
the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. Article 217
of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over the
following:ChanRoblesvirtualLawlibrary

1. Unfair labor practices;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from
employer- employee relations, including those of persons in domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite x x x. 26

Since there is no employer-employee relationship between the parties herein, then there is no labor dispute cognizable by the Labor
Arbiters or the NLRC.

There being no employer-employee relation or any other definite or direct contract between respondent and petitioner, the latter being
responsible to the former only for the proper payment of wages, respondent is thus justified in filing a case against petitioner, based on
Articles 19 and 20 of the Civil Code, to recover the proper salary due her as SSS Processor. At first glance, it is indeed unfair and
unjust that as, Processor who has worked with petitioner for six long years, she was paid only P5,038.00 monthly, or P229.00 daily,
while a regular SSS employee with the same designation and who performs identical functions is paid a monthly salary of P18,622.00,
or P846.45 daily wage. Petitioner may not hide under its service contracts to deprive respondent of what is justly due her. As a vital
government entity charged with ensuring social security, it should lead in setting the example by treating everyone with justice and
fairness. If it cannot guarantee the security of those who work for it, it is doubtful that it can even discharge its directive to promote
the social security of its members in line with the fundamental mandate to promote social justice and to insure the well-being and
economic security of the Filipino people.

In this jurisdiction, the "long honored legal truism of 'equal pay for equal work'" has been "impregnably institutionalized;" "[p]ersons
who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar
salaries."27 "That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy
against these evils. The Constitution in the Article on Social Justice and Human Rights exhorts Congress to 'give highest priority to
the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political
inequalities.' The very broad Article 19 of the Civil Code requires every person, 'in the exercise of his rights and in the performance of
his duties, [to] act with justice, give everyone his due, and observe honesty and good faith'." 28cralawrednad

WHEREFORE, the Petition is DENIED. The assailed July 29, 2011 Decision and January 10, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 110006 are AFFIRMED. The case is ordered remanded with dispatch to the Regional Trial Court of
Daet, Camarines Norte, Branch 39, for continuation of proceedings.

SO ORDERED.chanrobles virtuallawlibrary
SECOND DIVISION

G.R. No. 208163, April 20, 2015

ROQUE B. BENITEZ AND SANTA FE LABOR UNION-FEDERATION OF FREE WORKERS, Petitioners, v. SANTA FE
MOVING AND RELOCATION SERVICES/VEDIT KURANGIL, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 which seeks to annul the November 7, 2012 decision2 and July 10, 2013
resolution3 of the Court of Appeals in CA-G.R. SP No. 126213.

The Antecedents

On February 8, 2011, petitioners Roque V. Benitez (Benitez) and Santa Fe Labor Union (union) filed a complaint for unfair labor
practice and illegal dismissal, with money claims,4 against respondents Santa Fe Moving and Relocation Services (company) and its
Managing Director, Vedit Kurangil (Kurangil), an Australian citizen. The company is engaged in providing relocation and moving
services, including visa, immigration and real estate services. Benitez (the union's Vice-President at the time), was its former packing
and moving operator (crew leader) since June 2001.5

Benitez alleged that on December 20, 2010, the company served him a memorandum 6 advising him not to report for work effective
immediately, thereby terminating his employment, supposedly on grounds of serious misconduct or willful disobedience. He allegedly
uttered abusive words against Kurangil during the company's Christmas Party on December 18, 2010. He bewailed that he was not
given the opportunity to defend himself.

Benitez claimed that during the party, he noticed that the raffle committee members were putting back the names of those who were
already drawn, giving them more chances of winning. He appealed to the committee to put a stop to what they were doing, but they
replied they would not "in the spirit of Christmas." He denied having verbally abused Kurangil. He presented the affidavits of co-
employees Jhun Bulan, Romualdo Elib, Carlos Morata and Raul Ramirez,7 attesting that Benitez, who was with them at one table,
did not commit the offense which led to his dismissal.

Benitez argued that his dismissal constituted an unfair labor practice as he was a union officer and that it was undertaken to derail the
conclusion of a collective bargaining agreement with the company. He further argued that the penalty of dismissal is disproportionate
to his alleged offense, considering that it was committed during a casual gathering and had no connection to his work.

The company and Kurangil denied liability. They maintained that the company has developed a world-renowned reputation for
unsurpassed customer service and quality in its line of business. They averred that during the Christmas Party on December 18, 2010,
Benitez berated and maligned Kurangil by throwing foul and offensive words at him, such as "putang ina mo ka VK, gago ka!"
Benitez's tirade, they added, included the company and it officers. Moreover, the incident happened in front of the company's
employees, their families, as well as company clients and guests.

The company confirmed Benitez's claim that the incident involved the conduct of the Christmas raffle. However, they differed on
what triggered his unruly behavior. It alleged that while the raffle was going on, Benitez climbed up the stage and questioned the
management's decision to allow contractual employees to join the raffle. This resulted in only 80% of the employees winning raffle
prizes. Benitez then started hurling invectives and foul language while still on stage, mostly directed at Kurangil.

The company further alleged that even when Benitez stormed out of the stage, he kept on berating Kurangil, such that people he
passed by overheard him cursing Kurangil and the company and that he even attempted to a throw a beer bottle at Kurangil, but he
was restrained by other employees.

The respondents presented in evidence the affidavits of Kurangil,8 Reynaldo Delavin (Delavin),9 a company driver, and Diana Claros
Urmeneta10(Urmeneta),11 a guest at the party. Their statements were corroborated by the depositions 12 of company employees Jim
Robert Afos (Afos) and Marciano Atienza, Jr. (Atienza). The two disputed the statements13 of Bulan, Elib, Morata and Ramirez —
witnesses for Benitez — that they were seated together with Benitez at one table and that he caused no disturbance during the
Christmas Party. Afos and Atienza stated that they were the ones who were seated with Benitez, not Bulan, Elib, Morata and Ramirez
who were at a separate table with another group of employees.

Afos and Atienza added that Benitez's tirade started when the raffle for the grand prize was being conducted. All of a sudden, Benitez,
who had not yet won a prize at that time, stood up and proceeded to the stage, fuming mad and complaining about the conduct of the
raffle.14

The company required Benitez to explain in writing why he should not be disciplined for serious misconduct and willful disobedience
of its lawful orders in connection with the incident. Benitez failed to comply and neither did he show remorse for what he did.

In view of Benitez's failure to explain his side, the company issued a memorandum15 dated December 20, 2010 to Benitez (signed by
Kurangil), terminating his employment effective on the same day, for clear violation of "Santa Fe Policy and Procedure under Conduct
and Behavior as well as Labor Code of the Philippines under Art. 282 - Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer x x x."

The Compulsory Arbitration Rulings

In her decision16 of September 14, 2011, Labor Arbiter Fatima Jambaro-Franco (LA Franco) dismissed the complaint for lack of merit.
LA Franco found that Benitez, who was holding a position of trust and confidence as packing and moving operator, committed a
serious misconduct at the company's Christmas Party on December 18, 2010 by "hurling obscene, insulting or offensive language
against a superior,"17 thereby losing the trust and confidence of his employer.

Benitez and the union appealed, reiterating that his dismissal is illegal. Moreover, they claimed, he was denied due process as he was
not given the opportunity to explain his side.

The National Labor Relations Commission (NLRC) dismissed the appeal, likewise for lack of merit, in its decision 18 of March 15,
2012. It sustained LA Franco's finding that Benitez was validly dismissed for serious misconduct. However, it noted "that the
respondents failed to comply with the two-notice requirement as mandated by the Labor Code in validly dismissing an
employee."19 Accordingly, it affirmed LA Franco's ruling with modification by awarding Benitez nominal damages of P50,000.00 for
the violation of his right to procedural due process.

Benitez and the union moved for reconsideration, to no avail. The NLRC denied the motion, 20 prompting them to file a petition
for certiorari21 with the CA.

The CA Decision

In its decision22 under review, the CA found no grave abuse of discretion in the NLRC's affirmation of LA Franco's ruling that Benitez
was validly dismissed. It stressed that "the findings of the NLRC which adopted those of the Labor Arbiter were in accord with the
evidence on record."23 It dismissed the petition and denied Benitez's subsequent motion for reconsideration.

The Petition

Benitez and the union now ask the Court to reverse his dismissal and order his reinstatement with full backwages, grant his money
claims, award him moral and exemplary damages, attorney's fees, as well as litigation expenses. They submit in the main that the CA
committed grave and palpable error in misappreciating the facts and applicable jurisprudence in this case, especially the Samson v.
NLRC24 ruling.

They contend that contrary to the appellate court's opinion, Benitez was not liable for serious misconduct. They insist that Benitez did
not malign Kurangil, during the Christmas Party and that if he indeed became unruly on that day, the company guards should have
restrained him and made a report about it, but there was no such intervention from the guards.

At any rate, they argue, Benitez should not have been dismissed for the serious misconduct he allegedly committed since it was not in
connection with his work as moving and relocation operator. Moreover, for misconduct to be serious, it must be of such a grave and
aggravated character and not merely trivial and unimportant as the Court declared in Samson which, they claim, has factual
similarities with the present case.

The Respondents' Case

In their Comment (on the Petition),25 the respondents pray that the petition be dismissed and the assailed CA rulings modified through
a deletion of the award of nominal damages to Benitez and the reinstatement of LA Franco's September 14, 2011 decision. In the
alternative, they ask that the nominal damages award be tempered.

They argue that the petitioners have not made out a case showing that there are special and compelling reasons requiring the exercise
by this Court of its discretionary power of judicial review. They submit that the petition virtually raises the same arguments that had
already been duly resolved, based on evidence supporting Benitez's dismissal for cause. Thus, the petition should be rejected outright
for it raises only questions of facts and not of law.

The Court's Ruling

The procedural question

Are the questions raised by the petitioners factual in nature, or are they of law? The respondents contend that they are questions of fact
and are therefore not allowed in a petition for review on certiorari under Rule 45, Section 1 of the Rules of Court. Thus, they ask for
an outright dismissal of the petition as the Court is not a trier of facts. 26

The respondents' arguments failed to persuade us. The labor arbiter, the NLRC and the CA uniformly ruled that there is substantial
evidence to warrant Benitez's dismissal for serious misconduct. Although up to this stage of the proceedings Benitez insists that he did
not commit a serious misconduct, he argues lengthily that the penalty of dismissal is not commensurate to the offense as defined by
law.

As we see matters, the question before us is what the law is on the offense Benitez committed based on the facts of the case, which we
find to be clearly a question of law.27 It does not involve the probative value of the evidence adduced, which is a question of fact. 28 We
thus find no procedural infirmity in the petition.

The substantive aspect of the case

Serious misconduct is a just cause for termination of employment under the law. 29 Article 282 of the Labor Code provides: "An
employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his work, x x x."

Benitez and his union stand firm on their position that he was not liable for serious misconduct on account of his display of unruly
behavior during the company's Christmas Party on December 18, 2010 for reasons earlier discussed. On the other hand, the
respondents maintain that he committed a serious misconduct that warranted his dismissal.

We find the petition unmeritorious.

Despite his denial, there is substantial evidence that Benitez maligned the company's managing director and the company itself during
their Christmas Party on December 18, 2010. Substantial evidence is such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise. 30

Benitez presented the affidavits31 of four company employees — Bulan, Elib, Morata and Ramirez — who stated under oath that
Benitez was seated with them at one table and that he did not cause any disturbance during the party. The testimony of these four
employees were belied by their co-employees Afos and Atienza who executed a joint affidavit,32 stating that Benitez was seated with
them at a different table and that they witnessed him going to the stage where he lost his temper and verbally abused Kurangil in
connection with the conduct of the Christmas raffle.

Delavin,33 a company employee and guest Urmeneta34 corroborated Kurangil's statement35 regarding Benitez's outburst on the stage,
particularly the invectives he threw at him "Putang ina mo ka VK, gago ka." Urmeneta, for instance, deposed that when Benitez left
the stage angrily and walked past her and others sitting at the table, she heard him say "Putang-ina mo ka VK, gago ka.36

Benitez further contends that the company guards could have noticed the incident and therefore could have stepped in to maintain
order, but nothing of this sort took place as there was even no report from the guards regarding the incident.

Again, we find this argument unpersuasive. There was no need for the guards to intervene because Benitez was restrained by people
near the stage and who escorted him outside the premises where the party was going on as attested to by Kurangil himself, 37 as well as
by Afos and Atienza.38

Under the circumstances, we believe that Benitez's tirade against Kurangil, the company and other company officers indeed happened.
Significantly, the Christmas Party was attended not only by company officers and employees and their families, but also by company
clients and guests. With such a big audience in front of him, we cannot imagine how Benitez could get away with his claim that he did
not malign and disrespect Kurangil and the others.

The petitioners assert that even if Benitez committed the offense for which he was charged, it was not a serious misconduct that would
warrant his dismissal under the law. They cite Samson v. NLRC39 as authority for their submission that "misconduct, however serious,
must nevertheless be in connection with the employee's work to constitute just cause for his separation.40

They further cite the following excerpt in the Samson case:

xxxx

1. On or about 17 December 1993, during the Sales and Marketing Christmas gathering, you made utterances of obscene,
insulting, and offensive words, referring to or directed against SPC's Management Committee, in the presence of several co-
employees.

2. On that same occasion, and again in the presence of several co-employees, you uttered obscene, insulting and offensive words,
and made malicious and lewd gestures, all of which referred to or were directed against Mr. Epitacio D. Titong, Jr., President
and General Manager of SPC.

3. Also on that occasion, you repeated your malicious utterances and threatened to disrupt or otherwise create violence during
SPC's forthcoming National Sales Conference, and enjoined your co- employees not to prepare for the said conference.

4. Subsequently, on or about 3 January 1994, you repeated your threats to some co-employees, advising them to watch out for
some disruptive actions to happen during the National Sales Conference. (Emphasis ours.)

xxxx

The petitioners submit that the C A misappreciated the facts of Samson and the present case when it ruled that "[In the case of Samson
v. NLRC] x x x the alleged offensive words were not uttered by petitioner in the presence of respondent company's president and
general manager. In contrast, petitioner was with Mr. Kurangil when he uttered the foul words in the presence of the employees, their
families and guests."41

We disagree. The CA committed no reversible error in not applying the Samson ruling in this case. Samson's outburst occurred during
an informal Christmas gathering of company sales officials and staff and his maligned superior was not present during the gathering.

On the other hand, Benitez went up the stage and confronted his superior with a verbal abuse. Also, the petitioners
cited Samson selectively and concealed its real thrust, thus:

The instant case should be distinguished from the previous cases where we held that the use of insulting and offensive
language constituted gross misconduct justifying an employee's dismissal. In De la Cruz vs. NLRC, the dismissed employee
shouted "saying ang pagka-professional mo!" and "putang ina mo" at the company physician when the latter refused to give
him a referral slip. In Autobus Workers' Union (AWU) v. NLRC, the dismissed employee called his supervisor "gago ka" and
taunted the latter by saying "bakit anong gusto mo tang ina mo." In these cases, the dismissed employees personally subjected
their respective superiors to the foregoing verbal abuses. The utter lack of respect for their superiors was patent. In contrast,
when petitioner was heard to have uttered the alleged offensive words against respondent company's president and general
manager, the latter was not around. (Emphases and underscoring ours.)42

Further, it appears that in Samson, the company was ambivalent for a while on what to do with Samson's offense as it took several
weeks after the last incident on January 3, 1994 before it asked him to explain. Moreover, the company official maligned merely
admonished Samson during a meeting on January 4, 1994.

In contrast, the company acted swiftly and decisively in Benitez's case, obviously and understandably, because of the gravity and high
visibility of his offense, which not only constituted a frontal verbal, and nearly physical (the attempted beer bottle throwing), assault
against Kurangil. Needless to say, Benitez's outburst also caused grave embarrassment for the audience who witnessed the incident,
including company officials whom he likewise maligned, as well as company clients and guests.

Under the foregoing circumstances, we are convinced - as the Labor Arbiter, the NLRC and the CA had been - that Benitez's
offense constituted a serious misconduct as defined by law. His display of insolent and disrespectful behavior, in utter disregard of the
time and place of its occurrence, had very much to do with his work. He set a bad example as a union officer and as a crew leader of a
vital division of the company. His actuations during the company's Christmas Party on December 18, 2010, to our mind, could have
had negative repercussions for his employer had he been allowed to stay on the job. His standing before those clients who witnessed
the incident and those who would hear of it would surely be diminished, to the detriment of the company.
Finally, we agree with the NLRC ruling that the company failed to observe the two-notice requirement in employee dismissals as
Benitez was dismissed on the same day that the memorandum was served on him. The verbal directive for him to explain why he
should not be dismissed, assuming that there was indeed such a directive, clearly was not in compliance with the law. Nonetheless,
considering the gravity of Benitez's offense, we deem it reasonable to award him P30,000.00 in nominal damages for violation of his
right to procedural due process.

WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. The assailed decision and resolution of the Court
of Appeals are AFFIRMED, with modification. The award of nominal damages to Benitez is reduced from P50,000.00 to P30,000.00.
The complaint is DISMISSED.

SO ORDERED.

SECOND DIVISION

G.R. No. 211145, October 14, 2015

SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP. BY ITS PRESIDENT, ALFIE

ALIPIO, Petitioner, v. BUREAU OF LABOR RELATIONS, HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO.,
LTD. (HHIC-PHIL.), Respondents.

DECISION

MENDOZA, J.:

The right to self-organization is not limited to unionism. Workers may also form or join an association for mutual aid and protection
and for other legitimate purposes.

This is a petition for review on certiorari seeking to reverse and set aside the July 4, 2013 Decision1 and the January 28, 2014
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 123397, which reversed the November 28, 2011 Resolution 3 of the
Bureau of Labor Relations (BLR) and reinstated the April 20, 2010 Decision4 of the Department of Labor and Employment (DOLE)
Regional Director, cancelling the registration of Samahan ng Manggagawa sa Hanjin Shipyard (Samahan) as a worker's association
under Article 243 (now Article 249) of the Labor Code.

The Facts

On February 16, 2010, Samahan, through its authorized representative, Alfie F. Alipio, filed an application for registration 5 of its
name "Samahan ng Mga Manggagawa sa Hanjin Shipyard" with the DOLE. Attached to the application were the list of names of the
association's officers and members, signatures of the attendees of the February 7, 2010 meeting, copies of their Constitution and By-
laws. The application stated that the association had a total of 120 members.

On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando, Pampanga (DOLE-Pampanga), issued the
corresponding certificate of registration6 in favor of Samahan.

On March 15, 2010, respondent Hanjin Heavy Industries and Construction Co., Ltd. Philippines (Hanjin), with offices at Greenbeach
1, Renondo Peninsula, Sitio Agustin, Barangay Cawag, Subic Bay Freeport Zone, filed a petition 7 with DOLE-Pampanga praying for
the cancellation of registration of Samahan's association on the ground that its members did not fall under any of the types of workers
enumerated in the second sentence of Article 243 (now 249).

Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-employed, and those without definite employers may
form a workers' association. It further posited that one third (1/3) of the members of the association had definite employers and the
continued existence and registration of the association would prejudice the company's goodwill.

On March 18, 2010, Hanjin filed a supplemental petition, 8 adding the alternative ground that Samahan committed a misrepresentation
in connection with the list of members and/or voters who took part in the ratification of their constitution and by-laws in its application
for registration. Hanjin claimed that Samahan made it appear that its members were all qualified to become members of the workers'
association.

On March 26, 2010, DOLE-Pampanga called for a conference, wherein Samahan requested for a 10-day period to file a responsive
pleading. No pleading, however, was submitted. Instead, Samahan filed a motion to dismiss on April 14, 2010. 9
The Ruling of the DOLE Regional Director

On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of Hanjin. He found that the preamble, as stated in the
Constitution and By-Laws of Samahan, was an admission on its part that all of its members were employees of Hanjin, to wit:

KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay naglalayong na isulong ang pagpapabuti ng kondisyon sa
paggawa at katiyakan sa hanapbuhay sa pamamagitan ng patuloy na pagpapaunlad ng kasanayan ng para sa mga kasapi nito.
Naniniwala na sa pamamagitan ng aming mga angking lakas, kaalaman at kasanayan ay anting maitataguyod at makapag-aambag sa
kaunlaran ng isang lipunan. Na mararating at makakamit ang antas ng pagkilala, pagdakila at pagpapahalaga sa mga tulad naming
mga manggagawa.

x x x10

The same claim was made by Samahan in its motion to dismiss, but it failed to adduce evidence that the remaining 63 members were
also employees of Hanjin. Its admission bolstered Hanjin's claim that Samahan committed misrepresentation in its application for
registration as it made an express representation that all of its members were employees of the former. Having a definite employer,
these 57 members should have formed a labor union for collective bargaining.11 The dispositive portion of the decision of the Dole
Regional Director, reads:

WHEREFORE, premises considered, the petition is hereby GRANTED. Consequently, the Certificate of Registration as Legitimate
Workers Association (LWA) issued to the SAMAHAN NG MGA MANGGAGAWA SA HANJIN SHIPYARD (SAMAHAN) with
Registration Numbers R0300-1002-WA-009 dated February 26, 2010 is hereby CANCELLED, and said association is dropped from
the roster of labor organizations of this Office.

SO DECIDED.12

The Ruling of the Bureau of Labor Relations

Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin had no right to petition for the cancellation of its
registration. Samahan pointed out that the words "Hanjin Shipyard," as used in its application for registration, referred to a workplace
and not as employer or company. It explained that when a shipyard was put up in Subic, Zambales, it became known as Hanjin
Shipyard. Further, the remaining 63 members signed the Sama-Samang Pagpapatunay which stated that they were either working or
had worked at Hanjin. Thus, the alleged misrepresentation committed by Samahan had no leg to stand on. 14

In its Comment to the Appeal,15 Hanjin averred that it was a party-in-interest. It reiterated that Samahan committed misrepresentation
in its application for registration before DOLE Pampanga. While Samahan insisted that the remaining 63 members were either
working, or had at least worked in Hanjin, only 10 attested to such fact, thus, leaving its 53 members without any workplace to claim.

On September 6, 2010, the BLR granted Samahan's appeal and reversed the ruling of the Regional Director. It stated that the law
clearly afforded the right to self-organization to all workers including those without definite employers.16 As an expression of the right
to self-organization, industrial, commercial and self-employed workers could form a workers' association if they so desired but subject
to the limitation that it was only for mutual aid and protection.17 Nowhere could it be found that to form a workers' association was
prohibited or that the exercise of a workers' right to self-organization was limited to collective bargaining.18

The BLR was of the opinion that there was no misrepresentation on the part of Samahan. The phrase, "KAMI, ang mga Manggagawa
sa Hanjin Shipyard" if translated, would be: "We, the workers at Hanjin Shipyard." The use of the preposition "at" instead of "of "
would indicate that "Hanjin Shipyard" was intended to describe a place.19 Should Hanjin feel that the use of its name had affected the
goodwill of the company, the remedy was not to seek the cancellation of the association's registration. At most, the use by Samahan of
the name "Hanjin Shipyard" would only warrant a change in the name of the association.20 Thus, the dispositive portion of the BLR
decision reads:

WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III Director Ernesto C. Bihis dated 20 April 2010 is
REVERSED and SET ASIDE.

Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain in the roster of legitimate workers' association. 21

On October 14, 2010, Hanjin filed its motion for reconsideration. 22

In its Resolution,23 dated November 28, 2011, the BLR affirmed its September 6, 2010 Decision, but directed Samahan to remove the
words "Hanjin Shipyard" from its name. The BLR explained that the Labor Code had no provision on the use of trade or business
name in the naming of a worker's association, such matters being governed by the Corporation Code. According to the BLR, the most
equitable relief that would strike a balance between the contending interests of Samahan and Hanjin was to direct Samahan to drop the
name "Hanjin Shipyard" without delisting it from the roster of legitimate labor organizations. The fallo reads:

WHEREFORE, premises considered, our Decision dated 6 September 2010 is hereby AFFIRMED with a DIRECTIVE for
SAMAHAN to remove "HANJIN SHIPYARD" from its name.

SO RESOLVED.24

Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before the CA, docketed as CA-G.R. SP No. 123397.

In its March 21, 2012 Resolution,26 the CA dismissed the petition because of Samahan's failure to file a motion for reconsideration of
the assailed November 28, 2011 Resolution.

On April 17, 2012, Samahan filed its motion for reconsideration 27 and on July 18, 2012, Hanjin filed its comment 28 to oppose the
same. On October 22, 2012, the CA issued a resolution granting Samahan's motion for reconsideration and reinstating the petition.
Hanjin was directed to file a comment five (5) days from receipt of notice. 29

On December 12, 2012, Hanjin filed its comment on the petition, 30 arguing that to require Samahan to change its name was not
tantamount to interfering with the workers' right to self-organization.31 Thus, it prayed, among others, for the dismissal of the petition
for Samahan's failure to file the required motion for reconsideration. 32

On January 17, 2013, Samahan filed its reply. 33

On March 22, 2013, Hanjin filed its memorandum.34

The Ruling of the Court of Appeals

On July 4, 2013, the CA rendered its decision, holding that the registration of Samahan as a legitimate workers' association was
contrary to the provisions of Article 243 of the Labor Code. 35 It stressed that only 57 out of the 120 members were actually working in
Hanjin while the phrase in the preamble of Samahan's Constitution and By-laws, "KAMI, ang mga Manggagawa sa Hanjin Shipyard"
created an impression that all its members were employees of HHIC. Such unqualified manifestation which was used in its application
for registration, was a clear proof of misrepresentation which warranted the cancellation of Samahan's registration.

It also stated that the members of Samahan could not register it as a legitimate worker's association because the place where Hanjin's
industry was located was not a rural area. Neither was there any evidence to show that the members of the association were ambulant,
intermittent or itinerant workers.36

At any rate, the CA was of the view that dropping the words "Hanjin Shipyard" from the association name would not prejudice or
impair its right to self-organization because it could adopt other appropriate names. The dispositive portion reads:

WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering that the words "Hanjin Shipyard" be removed from
petitioner association's name, is AFFIRMED. The Decision dated April 20, 2010 of the DOLE Regional Director in Case No. R0300-
1003-CP-001, which ordered the cancellation of petitioner association's registration is REINSTATED.

SO ORDERED.37

Hence, this petition, raising the following

ISSUES

I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT SAMAHAN CANNOT FORM A WORKERS'
ASSOCIATION OF EMPLOYEES IN HANJIN AND INSTEAD SHOULD HAVE FORMED A UNION, HENCE THEIR
REGISTRATION AS A WORKERS' ASSOCIATION SHOULD BE CANCELLED.

II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE REMOVAL/DELETION OF THE WORD
"HANJIN" IN THE NAME OF THE UNION BY REASON OF THE COMPANY'S PROPERTY RIGHT OVER THE
COMPANY NAME "HANJIN."38

Samahan argues that the right to form a workers' association is not exclusive to intermittent, ambulant and itinerant workers. While the
Labor Code allows the workers "to form, join or assist labor organizations of their own choosing" for the purpose of collective
bargaining, it does not prohibit them from forming a labor organization simply for purposes of mutual aid and protection. All members
of Samahan have one common place of work, Hanjin Shipyard. Thus, there is no reason why they cannot use "Hanjin Shipyard" in
their name.39

Hanjin counters that Samahan failed to adduce sufficient basis that all its members were employees of Hanjin or its legitimate
contractors, and that the use of the name "Hanjin Shipyard" would create an impression that all its members were employess of
HHIC.40

Samahan reiterates its stand that workers with a definite employer can organize any association for purposes of mutual aid and
protection. Inherent in the workers' right to self-organization is its right to name its own organization. Samahan referred "Hanjin
Shipyard" as their common place of work. Therefore, they may adopt the same in their association's name. 41

The Court's Ruling

The petition is partly meritorious.

Right to self-organization includes right to form a union, workers' association and labor management councils

More often than not, the right to self-organization connotes unionism. Workers, however, can also form and join a workers'
association as well as labor-management councils (LMC). Expressed in the highest law of the land is the right of all workers to self-
organization. Section 3, Article XIII of the 1987 Constitution states:

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization,

collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. xxx

[Emphasis Supplied]

And Section 8, Article III of the 1987 Constitution also states:

Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or
societies for purposes not contrary to law shall not be abridged.

In relation thereto, Article 3 of the Labor Code provides:

Article 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the
rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.

[Emphasis Supplied]

As Article 246 (now 252) of the Labor Code provides, the right to self-organization includes the right to form, join or assist labor
organizations for the purpose of collective bargaining through representatives of their own choosing and to engage in lawful concerted
activities for the same purpose for their mutual aid and protection. This is in line with the policy of the State to foster the free and
voluntary organization of a strong and united labor movement as well as to make sure that workers participate in policy and decision-
making processes affecting their rights, duties and welfare. 42

The right to form a union or association or to self-organization comprehends two notions, to wit: (a) the liberty or freedom, that is, the
absence of restraint which guarantees that the employee may act for himself without being prevented by law; and (b) the power, by
virtue of which an employee may, as he pleases, join or refrain from joining an association. 43

In view of the revered right of every worker to self-organization, the law expressly allows and even encourages the formation of labor
organizations. A labor organization is defined as "any union or association of employees which exists in whole or in part for the
purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment." 44 A labor
organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and conditions of
employment. To bargain collectively is a right given to a union once it registers itself with the DOLE. Dealing with the employer, on
the other hand, is a generic description of interaction between employer and employees concerning grievances, wages, work hours and
other terms and conditions of employment, even if the employees' group is not registered with the DOLE.45

A union refers to any labor organization in the private sector organized for collective bargaining and for other legitimate
purpose,46 while a workers' association is an organization of workers formed for the mutual aid and protection of its members or for
any legitimate purpose other than collective bargaining. 47

Many associations or groups of employees, or even combinations of only several persons, may qualify as a labor organization yet fall
short of constituting a labor union. While every labor union is a labor organization, not every labor organization is a labor union. The
difference is one of organization, composition and operation. 48

Collective bargaining is just one of the forms of employee participation. Despite so much interest in and the promotion of collective
bargaining, it is incorrect to say that it is the device and no other, which secures industrial democracy. It is equally misleading to say
that collective bargaining is the end-goal of employee representation. Rather, the real aim is employee participation in whatever form
it may appear, bargaining or no bargaining, union or no union. 49 Any labor organization which may or may not be a union may deal
with the employer. This explains why a workers' association or organization does not always have to be a labor union and why
employer-employee collective interactions are not always collective bargaining. 50

To further strengthen employee participation, Article 255 (now 261) 51 of the Labor Code mandates that workers shall have the right to
participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will
directly affect their rights, benefits and welfare. For this purpose, workers and employers may form LMCs.

A cursory reading of the law demonstrates that a common element between unionism and the formation of LMCs is the existence of
an employer-employee relationship. Where neither party is an employer nor an employee of the other, no duty to bargain collectively
would exist.52 In the same manner, expressed in Article 255 (now 261) is the requirement that such workers be employed in the
establishment before they can participate in policy and decision making processes.

In contrast, the existence of employer-employee relationship is not mandatory in the formation of workers' association. What the law
simply requires is that the members of the workers' association, at the very least, share the same interest. The very definition of a
workers' association speaks of "mutual aid and protection."

Right to choose whether to form or join a union or workers' association belongs to workers themselves

In the case at bench, the Court cannot sanction the opinion of the CA that Samahan should have formed a union for purposes of
collective bargaining instead of a workers' association because the choice belonged to it. The right to form or join a labor organization
necessarily includes the right to refuse or refrain from exercising the said right. It is self-evident that just as no one should be denied
the exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred right. 53 Also inherent in the
right to self-organization is the right to choose whether to form a union for purposes of collective bargaining or a workers' association
for purposes of providing mutual aid and protection.

The right to self-organization, however, is subject to certain limitations as provided by law. For instance, the Labor Code specifically
disallows managerial employees from joining, assisting or forming any labor union. Meanwhile, supervisory employees, while eligible
for membership in labor organizations, are proscribed from joining the collective bargaining unit of the rank and file
employees.54 Even government employees have the right to self-organization. It is not, however, regarded as existing or available for
purposes of collective bargaining, but simply for the furtherance and protection of their interests. 55

Hanjin posits that the members of Samahan have definite employers, hence, they should have formed a union instead of a workers'
association. The Court disagrees. There is no provision in the Labor Code that states that employees with definite employers may
form, join or assist unions only.

The Court cannot subscribe either to Hanjin's position that Samahan's members cannot form the association because they are not
covered by the second sentence of Article 243 (now 249), to wit:

Article 243. Coverage and employees' right to self-organization. All persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational institutions, whether operating for profit or not, shall have the right to
self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and protection. (As amended by Batas Pambansa Bilang 70, May 1,
1980)

[Emphasis Supplied]

Further, Article 243 should be read together with Rule 2 of Department Order (D.O.) No. 40-03, Series of 2003, which provides:
RULE II

COVERAGE OF THE RIGHT TO SELF-ORGANIZATION

Section 1. Policy. - It is the policy of the State to promote the free and responsible exercise of the right to self-organization through
the establishment of a simplified mechanism for the speedy registration of labor unions and workers associations, determination of
representation status and resolution of inter/intra-union and other related labor relations disputes. Only legitimate or registered labor
unions shall have the right to represent their members for collective bargaining and other purposes. Workers' associations shall have
the right to represent their members for purposes other than collective bargaining.

Section 2. Who may join labor unions and workers' associations. - All persons employed in commercial, industrial and agricultural
enterprises, including employees of government owned or controlled corporations without original charters established under the
Corporation Code, as well as employees of religious, charitable, medical or educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join or assist labor unions for purposes of collective bargaining: provided,
however, that supervisory employees shall not be eligible for membership in a labor union of the rank-and-file employees but may
form, join or assist separate labor unions of their own. Managerial employees shall not be eligible to form, join or assist any labor
unions for purposes of collective bargaining. Alien employees with valid working permits issued by the Department may exercise the
right to self-organization and join or assist labor unions for purposes of collective bargaining if they are nationals of a country which
grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs.

For purposes of this section, any employee, whether employed for a definite period or not, shall beginning on the first day of his/her
service, be eligible for membership in any labor organization.

All other workers, including ambulant, intermittent and other workers, the self-employed, rural workers and those without any
definite employers may form labor organizations for their mutual aid and protection and other legitimate purposes except collective
bargaining.

[Emphases Supplied]

Clearly, there is nothing in the foregoing implementing rules which provides that workers, with definite employers, cannot form or
join a workers' association for mutual aid and protection. Section 2 thereof even broadens the coverage of workers who can form or
join a workers' association. Thus, the Court agrees with Samahan's argument that the right to form a workers' association is not
exclusive to ambulant, intermittent and itinerant workers. The option to form or join a union or a workers' association lies with the
workers themselves, and whether they have definite employers or not.

No misrepresentation on the part of Samahan to warrant cancellation of registration

In this case, Samahan's registration was cancelled not because its members were prohibited from forming a workers' association but
because they allegedly committed misrepresentation for using the phrase, "KAMI, ang mga Manggagawa sa HAN JIN Shipyard."

Misrepresentation, as a ground for the cancellation of registration of a labor organization, is committed "in connection with the
adoption, or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who
took part in the ratification of the constitution and by-laws or amendments thereto, and those in connection with the election of
officers, minutes of the election of officers, and the list of voters, xxx." 56

In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director granted the petition for the cancellation of certificate of
registration of Samahang Lakas Manggagawa sa Takata (Salamat) after finding that the employees who attended the organizational
meeting fell short of the 20% union registration requirement. The BLR, however, reversed the ruling of the DOLE Regional Director,
stating that petitioner Takata Corporation (Takata) failed to prove deliberate and malicious misrepresentation on the part of respondent
Salamat. Although Takata claimed that in the list of members, there was an employee whose name appeared twice and another was
merely a project employee, such facts were not considered misrepresentations in the absence of showing that the respondent
deliberately did so for the purpose of increasing their union membership. The Court ruled in favor of Salamat.

In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for cancellation of certificate of registration was denied.
The Court wrote:

If the union's application is infected by falsification and like serious irregularities, especially those appearing on the face of the
application and its attachments, a union should be denied recognition as a legitimate labor organization. Prescinding from these
considerations, the issuance to the Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily implies that its
application for registration and the supporting documents thereof are prima facie free from any vitiating irregularities. Another factor
which militates against the veracity of the allegations in the Sinumpaang Petisyon is the lack of particularities on how, when and
where respondent union perpetrated the alleged fraud on each member. Such details are crucial for in the proceedings for
cancellation of union registration on the ground of fraud or misrepresentation, what needs to be established is that the specific
act or omission of the union deprived the complaining employees-members of their right to choose.

[Emphases Supplied]

Based on the foregoing, the Court concludes that misrepresentation, to be a ground for the cancellation of the certificate of
registration, must be done maliciously and deliberately. Further, the mistakes appearing in the application or attachments must be
grave or refer to significant matters. The details as to how the alleged fraud was committed must also be indubitably shown.

The records of this case reveal no deliberate or malicious intent to commit misrepresentation on the part of Samahan. The use of such
words "KAMI, ang mga Manggagawa sa HANJIN Shipyard" in the preamble of the constitution and by-laws did not constitute
misrepresentation so as to warrant the cancellation of Samahan's certificate of registration. Hanjin failed to indicate how this phrase
constitutes a malicious and deliberate misrepresentation. Neither was there any showing that the alleged misrepresentation was serious
in character. Misrepresentation is a devious charge that cannot simply be entertained by mere surmises and conjectures.

Even granting arguendo that Samahan's members misrepresented themselves as employees or workers of Hanjin, said
misrepresentation does not relate to the adoption or ratification of its constitution and by-laws or to the election of its officers.

Removal of the word "Hanjin Shipyard" from the association's name, however, does not infringe on Samahan's right to self-
organization

Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be removed in the name of the association. A legitimate
workers' association refers to an association of workers organized for mutual aid and protection of its members or for any legitimate
purpose other than collective bargaining registered with the DOLE. 59 Having been granted a certificate of registration, Samahan's
association is now recognized by law as a legitimate workers' association.

According to Samahan, inherent in the workers' right to self-organization is its right to name its own organization. It seems to equate
the dropping of words "Hanjin Shipyard" from its name as a restraint in its exercise of the right to self-organization. Hanjin, on the
other hand, invokes that "Hanjin Shipyard" is a registered trade name and, thus, it is within their right to prohibit its use.

As there is no provision under our labor laws which speak of the use of name by a workers' association, the Court refers to the
Corporation Code, which governs the names of juridical persons. Section 18 thereof provides:

No corporate name may be allowed by the Securities and Exchange Commission if the proposed name
is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or
is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall
issue an amended certificate of incorporation under the amended name.

[Emphases Supplied]

The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical or deceptively or
confusingly similar" to that of any existing corporation or which is "patently deceptive" or "patently confusing" or "contrary to
existing laws," is the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion of
legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations.60

For the same reason, it would be misleading for the members of Samahan to use "Hanjin Shipyard" in its name as it could give the
wrong impression that all of its members are employed by Hanjin.

Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:

The change of name of a labor organization shall not affect its legal personality. All the rights and obligations of a labor organization
under its old name shall continue to be exercised by the labor organization under its new name.

Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no abridgement of Samahan's right to self-organization was
committed.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision and the January 28, 2014 Resolution of the
Court of Appeals are hereby REVERSED and SET ASIDE. The September 6, 2010 Resolution of the Bureau of Labor Relations, as
modified by its November 28, 2011 Resolution, is REINSTATED.
THIRD DIVISION

G.R. No. 199683, February 10, 2016

ARLENE T. SAMONTE, VLADIMIR P. SAMONTE, MA. AUREA S. ELEPANO, Petitioners, v. LA SALLE GREENHILLS,
INC., BRO. BERNARD S. OCA, Respondents.

DECISION

PEREZ, J.:

As each and all of the various and varied classes of employees in the gamut of the labor force, from non-professionals to professionals,
are afforded full protection of law and security of tenure as enshrined in the Constitution, the entitlement is determined on the basis of
the nature of the work, qualifications of the employee, and other relevant circumstances.

Assailed in this petition for review on certiorari is the Decision1 of the Court of Appeals in C.A. G.R. SP No. 110391. affirming the
Decision of the National Labor Relations Commission (NLRC) in NLRC CA No. 044835-052 finding that petitioners Arlene T.
Samonte, Vladimir P. Samonte and Ma. Aurea S. Elepano were fixed-term employees of respondent La Salle Greenhills, Inc. (LSGI).
The NLRC (First Division) ruling is a modification of the ruling of the Labor Arbiter that petitioners were independent contractors of
respondent LSGI.3

The facts are not in dispute.

From 1989, and for fifteen (15) years thereafter, LSGI contracted the services of medical professionals, specifically pediatricians,
dentists and a physician, to comprise its Health Service Team (HST).

Petitioners, along with other members of the HST signed uniform one-page Contracts of Retainer for the period of a specific academic
calendar beginning in June of a certain year (1989 and the succeeding 15 years) and terminating in March of the following year when
the school year ends. The Contracts of Retainer succinctly read, to wit:

CONTRACTOFRETAINER

Name of Retainer _________________________________________

Address_________________________________________________
Community Tax Cert. No.__________________________________
�Issued at_______________ on ____________________________
Taxpayer Identification No. (TIN)_________________
Department Assigned to________ HRD-CENTRO Operation___________
Project/Undertaking (Description and Duration)
____________ Health Services__________________
Job Task (Description and Duration)
School [physician] from June 1, [x x x] to March 31, [x x x]
Rate__________________

Conditions:

1. This retainer is only temporary in character and, as above specified, shall be solely and exclusively limited to the
project/undertaking and/ or to the job/task assigned to the retainer within the said project/undertaking;

2. This retainer shall, without need of any notice to the retainer, automatically cease on the aforespecified expiration date/s of the said
project/undertaking and/or the said job/task; provided, that this retainer shall likewise be deemed terminated if the said
project/undertaking and/or fob/task shall be completed on a date/s priot to their aforespecified expiration date/s;

3. The foregoing notwithstanding, at any time prior to said expiration or completion date/s, La Salle Greenhills, Inc. may upon prior
written notice to the retainer, terminate this contract should the retainer fail in any way to perform his assigned job/task to the
satisfaction of La Salle Greenhills, Inc. or for any other just cause.

HERMAN G. ROCHESTER�������� � ������������������ _____________________

Head Administrator � � � � � � � � � � � � � � � � � � � � � � � � � � � Retainer

BELEN T. MASILUNGAN���������������������������������
_____________________
Personnel Officer��������������������������������� � � � � � � � �����
Date Signed

Signed in the Presence of:

DANTE M. FERRER������ � � � � � � � � � � � � � � � � � � � � BRO. BERNARD S. OCA

FRD Head Administrator � � � � � � � � � � � � � � � � � � � � � � President4

After fifteen consecutive years of renewal each academic year, where the last Contract of Retainer was for the school year of 2003-
2004 i.e., June 1, 2003 to March 31, 2004, LSGI Head Administrator, Herman Rochester, on that last day of the school year, informed
the Medical Service Team, including herein petitioners, that their contracts will no longer be renewed for the following school year by
reason of LSGI's decision to hire two (2) full-time doctors and dentists. One of the physicians from the same Health Service Team was
hired by LSGI as a full-time doctor.

When petitioners', along with their medical colleagues', requests for

payment of their separation pay were denied, they filed a complaint for illegal dismissal with prayer for separation pay, damages and
attorney's fees before the NLRC. They included the President of LSGI, Bro. Bernard S. Oca, as respondent.

In their Position Paper, petitioners alleged that they were regular employees who could only be dismissed for just and authorized
causes, who, up to the time of their termination, regularly received the following amounts:

1. Monthly salary for the ten-month period of a given school year:

Name Monthly Salary

a) Jennifer A. Ramirez Php 20,682.73

b) Brandon D. Ericta 28,603.62

c) [Petitioner] Arlene T. Samonte 20,682.73

d) [Petitioner] Vladimir P. Samonte 20,682.73

e) Alma S. Resurrecion 12,700.83

f) Ma. Socorro A. Salazar 21,117.00

g) [Petitioner] Ma. Aurea S. Elepano 8,429.43

2. Annual 13th Month Pay equivalent to their one month salary;

3. Automatic yearly increase to their monthly salary, the rate of which is discretionary to LSGFs Executive Administrator based on a
comparative rate to the across the board increase of the regular school employees which increase was subsequently reflected in their
[HST'S] monthly salaries for the following school year;

4. Since 1996, as a result of the HST's request for a performance bonus, the team was likewise evaluated for a year-end performance
rating by HRD- CENTRO Head Administrator, the Assistant Principal, the Health Services Team Leader and the designated
Physician's Coordinator, complainant Jennifer Ramirez.

To further bolster their claim of regular employment, complainants pointed out the following in their Position Paper:
In the course of their employment, each of the complainants served an average of nine hours a week. But beyond their duty hours, they
were on call for any medical exigencies of the La Sallian community. Furthermore, over the years, additional tasks were assigned to
the complainants and were required to suffer the following services/activites:

a) To attend staff meetings and to participate in the formulation/adoption of policies and programs designed to enhance the School
services to its constituents and to upgrade the School's standards. Complainants' involvement in Staff Meetings of the Health Services
Unit of respondent school was a regular activity associated with personnel who are regular employees of an institution;

b) To participate in various gatherings and activities sponsored by the respondent school such as the Kabihasnan (the bi-annual school
fair), symposiums, seminars, orientation programs, workshops, lectures, etc., including purely political activities such as the
NAMFREL quick count, of which the respondent school is a staunch supporter;

c) Participation of the complainants in Medical/Dental Missions in the name of respondent school;

d) Formulation of the Health Services Unit Manual;

e) Participation in the collation of evaluation of services rendered by the Health Services Unit, as required for the continuing
PAASCU (Philippine Association of Accredited Schools Colleges & Universities) accreditation of the School;

f) Participation in the yearly evaluation of complainants, which is a

function of regular employees in the HRD-CENTRO Operations, of the HRD-CENTRO Head Administrator;

g) Designation of certain complainants, particularly Dr. Jennifer A. Ramirez, as member of panel of investigation to inquire into an
alleged misdemeanor of a regular employee of respondent school; and

h) Regular inspection of the canteen concessionaire and the toilet facilities of the school premises to insure its high standards of
sanitation.

Complainants were likewise included among so-called members of the "LA SALLIAN FAMILY: Builder of a Culture of Peace,"
under the heading "Health Services Team" of the La Salle Green Hills High School Student Handbook 2003-2004. Such public
presentation of the complainants as members of the "LA SALLIAN FAMILY" leaves no doubt about the intent of respondent school
to project complainants as part of its professional staff. 5ChanRoblesVirtualawlibrary

On the other hand, in their Position Paper,6 LSGI denied that complainants were regular employees, asserting that complainants were
independent contractors who were retained by LSGI by reason of their medical skills and expertise to provide ancillary medical and
dental services to both its students and faculty, consistent with the following circumstances:

1. Complainants were professional physicians and dentists on retainer basis, paid on monthly retainer fees, not regular salaries;

2. LSGI had no power to impose disciplinary measures upon complainants including dismissal from employment;

3. LSGI had no power of control over how complainants actually performed their professional services.

In the main, LSGI invoked the case of Sonza v. ABS-CBN7 to justify its stance that complainants were independent contractors and not
regular employees citing, thus:

SONZA contends that ABS-CBN exercised control over the means and methods of his work.

SONZA's argument is misplaced. ABS-CBN engaged SONZA's services specifically to co-host the "Mel & Jay" programs. ABS-CBN
did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his
lines, appeared on television, and sounded on radio were outside ABS-CBN's control. SONZA did not have to render 8 hours of work
per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre and post-production staff
meetings. ABS-CBN could not dictate the contents of SONZA's script. However, the Agreement prohibited SONZA from criticising
in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on what to say or discuss in his shows
provided he did not attack ABS-CBN or its interests.

As previously adverted, the Labor Arbiter dismissed petitioners' (and their colleagues') complaint and ruled that complainants, as
propounded by LSGI, were independent contractors under retainership contracts and never became regular employees of LSGI. The
Labor Arbiter based its over-all finding of the absence of control by LSGI over complainants on the following points:
1. The professional services provided by complainants, including herein petitioners, cannot be considered as necessary to LSGI's
business of providing primary and secondary education to its students.

2. The pay slips of complainants are not salaries but professional fees less taxes withheld for the medical services they provided;

3. Issuance of identification cards to, and the requirement to log the time-in and time-out of, complainants are not indicia of LSGI's
power of control over them but were only imposed for security reasons and in compliance with the agreed clinic schedules of
complainants at LSGI premises.

4. In contrast to regular employees of LSGI, complainants: (a) were not required to attend or participate in school-sponsored activities
and (b) did not enjoy benefits such as educational subsidy for their dependents.

5. On this score alone, complainants' respective clinic schedule at LSGI for two (2) to three (3) days a week for three (3) hours a day,
for a maximum of nine (9) hours a week, was not commensurate to the required number of hours work rendered by a regular employee
in a given week of at least 40 hours a week or 8 hours a day for five (5) days. In addition, the appointed clinic schedule was based on
the preference of complainants.

Curiously, despite the finding that complainants were independent contractors and not regular employees, the Labor Arbiter, on the
ground of compassionate social justice, awarded complainants separation pay at the rate of one-half month salary for every year of
service:

Separately, both parties, complainants, including herein petitioners, and respondents appealed to the NLRC.

At the outset, the NLRC disagreed with the Labor Arbiter's ruling that complainants were independent contractors based on the latter's
opinion that the services rendered by complainants are not considered necessary to LSGI's operation as an educational institution. The
NLRC noted that Presidential Decree No. 856, otherwise known as the Sanitation Code of the Philippines, requires that private
educational institutions comply with the sanitary laws. Nonetheless, the NLRC found that complainants were fixed-period employees
whose terms of employment were subject to agreement for a specific duration. In all, the NLRC ruled that the Contracts of Retainer
between complainants and LSGI are valid fixed-term employment contracts where complainants as medical professionals understood
the terms thereof when they agreed to such continuously for more than ten (10) years. Consequently, the valid termination of their
retainership contracts at the end of the period stated therein, did not entitle complainants to reinstatement, nor, to payment of
separation pay.

At this point, only herein petitioners, filed a petition for certiorari under Rule 65 of the Rules of Court before the Court of Appeals
alleging that grave abuse of discretion attended the ruling of the NLRC that they were not regular employees and thus not entitled to
the twin remedies of reinstatement to work with payment of full backwages or separation pay with backwages.

In dismissing the petition for certiorari, the appellate court ruled that the NLRC did not commit an error of jurisdiction which is
correctible by a writ of certiorari. The Court of Appeals found that the NLRC's ruling was based on the Contracts of Retainer signed
by petitioners who, as professionals, supposedly ought to have known the import of the contracts they voluntarily signed, i.e. (a)
temporary in character; (b) automatically ceasing on the specified expiration date, or (c) likewise deemed terminated if job/task shall
be completed on a date prior to specified expiration date.

The Court of Appeals ruled against petitioners' claim of regular employment, thus:

Moreover, this Court is not persuaded by petitioners' averments that they are regular employees simply because they received benefits
such as overtime pay, allowances, Christmas bonuses and the like; or because they were subjected to administrative rules such as those
that regulate their time and hours of work, or subjected to LSGFs disciplinary rules and regulations; or simply because they were
treated as part of LSGFs professional staff. It must be emphasised that LSGI, being the employer, has the inherent right to regulate all
aspects of employment of every employee whether regular, probationary, contractual or fixed-term. Besides, petitioners were hired for
specific tasks and under fixed terms and conditions and it is LSGI's prerogative to monitor their performance to see if they are doing
their tasks according to the terms and conditions of their contract and to give them incentives for good performance. 8

Hence, this petition for review on certiorari raising the following issues for resolution of the Court:

I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS WERE FIXED-PERIOD
EMPLOYEES AND NOT REGULAR EMPLOYEES OF LSGI.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HAVING RULED THAT PETITIONERS WERE
ILLEGALLY DISMISSED FROM WORK.
 III. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HAVING RULED THAT PETITIONERS ARE
ENTITLED TO REINSTATEMENT, BACKWA'GES AND OTHER MONETARY BENEFITS PROVIDED BY LAW,
MORAL AND EXEMPLARY DAMAGES, AS WELL AS ATTORNEY'S FEES.

IV. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HAVING RULED THAT RESPONDENTS ARE
SOLIDARILY LIABLE AS THEY ACTED IN BAD FAITH AND WITH MALICE IN DEALING WITH THE
PETITIONERS.9

The pivotal issue for resolution is whether the Court of Appeals correctly ruled that the NLRC did not commit grave abuse of
discretion in ruling that petitioners were not regular employees who may only be dismissed for just and authorized causes.

Our inquiry and disposition will delve into the kind of employment relationship between the parties, such employment relationship
having been as much as admitted by LSGI and then ruled upon categorically by the NLRC and the appellate court which both held
that petitioners were fixed-term employees and not independent contractors.

Article 280 of the Labor Code classifies employees into regular, project, seasonal, and casual:

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the . work or service to be performed is seasonal in nature and the employment is for the
duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has
rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such activity exists.

The provision classifies regular employees into two kinds (1) those "engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer"; and (2) casual employees who have "rendered at least one year of service,
whether such service is continuous or broken."

The NLRC correctly identified the existence of an employer-employee relationship between petitioners and LSGI and not a bilateral
independent contractor relationship. On more than one occasion, we recognised certain workers to be independent contractors:
individuals with unique skills and talents that set them apart from ordinary employees. 10 We found them to be independent contractors
because of these unique skills and talents and the lack of control over the means and methods in the performance of their work. In
some instances, doctors and other medical professional may fall into this independent contractor category, legitimately providing
medical professional services. However, as has been declared by the-NLRC and the appellate court, petitioners herein are not
independent contractors.

We need to examine next the ruling of the NLRC and the Court of Appeals that petitioners were fixed-term employees.

To factually support such conclusion, the NLRC solely relied on the case of Brent v. Zamor11 and perfunctorily noted that petitioners,
professional doctors and dentists, continuously signed the contracts for more than ten (10) years. Such was heedless of our
prescription that the ruling in Brent be strictly construed, applying only to cases where it appears that the employer and employee are
on equal footing. Observably, nowhere in the two and half page ratiocination of the NLRC was there reference to the standard that "it
[should] satisfactorily appear that the employer and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former on the latter."

From Brent, which remains as the exception rather than the rule in the determination of the nature of employment, we are schooled
that there are employment contracts where a "fixed term is an essential and natural appurtenance" such as overseas employment
contracts and officers in educational institutions. We learned thus:

[T]he decisive determinant in the term employment contract should not be the activities that the employee is called upon to perform,
but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain
being understood to be "that which must necessarily come, although it may not be known when.

xxx
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor
Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the
clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements
entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment
was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the
latter.

Tersely put, a fixed-term employment is allowable under the Labor Code only if the term was voluntarily and knowingly entered into
by the parties who must have dealt with each other on equal terms not one exercising moral dominance over the other.

Indeed, Price, et. al. v. Innodata Corp., teaches us, from the wording of Article 280 of the Labor Code, that the nomenclature of
contracts, especially employment contracts, does not define the employment status of a person: Such is defined and prescribed by law
and not by what the parties say it should be. Equally important to consider is that a contract of employment is impressed with public
interest such that labor contracts must yield to the common good. Thus, provisions of applicable statutes are deemed written into the
contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations
by simply contracting with each other.

Further, a fixed-term contract is an employment contract, the repeated renewals of which make for a regular employment. In Fuji
Network Television v. Espiritu,12 wenoted that Fuji's argument that Espiritu was an independent contractor under a fixed-term contract
is contradictory where employees under fixed-term contracts cannot be independent contractors because in fixed-term contracts, an
employer-employee relationship exists. Significantly, we ruled therein that Espiritu's contract indicating a fixed term did not
automatically mean that she could never be a regular employee which is precisely what Article 280 of the Labor Code sought to avoid.
The repeated renewal of Espiritu's contract coupled with the nature of work performed pointed to the regular nature of her
employment despite contrary claims of Fuji and the nomenclature of the contract. Citing Dumpit-Murillo v. Court of
Appeals13 and Philips Semiconductors, Inc. v. Fadriquela,14 we declared in Fuji that the repeated engagement under contract of hire is
indicative of the necessity and desirability of the [employee's] work in respondent's business and where employee's contract has been
continuously extended or renewed to the same position, with the same duties and remained in the employ without any interruption,
then such employee is a regular employee.

In the case at bar, the Court of Appeals disregarded the repeated renewals of the Contracts of Retainer of petitioners spanning a decade
and a half. The Court of Appeals ruled that petitioners never became regular employees:

[T]his Court is not persuaded by petitioners' averments that they are regular employees simply because they received benefits such as
overtime pay, allowances, Christmas bonuses and the like; or because they were subjected to administrative rules such as those that
regulate their time and hours of work, or subjected to LSGl's disciplinary rules and regulations; or simply because they were treated as
part of LSGLs professional staff. It must be emphasised that LSG1, as the employer, has the inherent right to regulate all aspects of
employment of every employee whether regular, probationary, contractual or fixed-term. Besides, petitioners were hired for specific
tasks and under fixed terms and conditions and it is LSGl's prerogative to monitor their performance to see if they are doing their tasks
according to the terms and conditions of their contract and to give them incentives for good
performance.15ChanRoblesVirtualawlibrary

We completely disagree with the Court of Appeals.

The uniform one-page Contracts of Retainer signed by petitioners were prepared by LSGI alone. Petitioners, medical professionals as
they were, were still not on equal footing with LSGI as they obviously did not want to lose their jobs that they had stayed in for fifteen
(15) years. There is no specificity in the contracts regarding terms and conditions of employment that would indicate that petitioners
and LSGI were on equal footing in negotiating it. Notably, without specifying what are the tasks assigned to petitioners, LSGI "may
upon prior written notice to the retainer, terminate [the] contract should the retainer fail in any way to perform his assigned job/task to
the satisfaction of La Salle Greenhills, Inc. or for any other just cause." 16

While vague in its sparseness, the Contract of Retainer very clearly spelled out that LSGI had the power of control over petitioners.

Time and again we have held that the power of control refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee.17 It is enough that the
employer has the right to wield that power.

In all, given the following: (1) repeated renewal of petitioners' contract for fifteen years, interrupted only by the close of the school
year; (2) the necessity of the work performed by petitioners as school physicians and dentists; and (3) the existence of LSGI's power of
control over the means and method pursued by petitioners in the performance of their job, we rule that petitioners attained regular
employment, entitled to security of tenure who could only be dismissed for just and authorized causes. Consequently, petitioners were
illegally dismissed and are entitled to the twin remedies of payment of separation pay and full back wages. We order separation pay in
lieu of reinstatement given the time that has lapsed, twelve years, in the litigation of this case.

We clarify, however, that our ruling herein is only confined to the three (3) petitioners who had filed this appeal by certiorari under
Rule 45 of theRules of Court, and prior thereto, the petition for certiorari under Rule 65 thereof before the Court of Appeals. The
Decision of the NLRC covering other complainants in NLRC CA No. 044835-05 has already become final and executory as to them.

Not being trier of facts, we remand this case to the NLRC for the determination of separation pay and full back wages from the time
petitioners were precluded from returning to work the school year 2004 and compensation for work performed in that
period.chanrobleslaw

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA G.R. SP No. 110391 is REVERSED AND
SET ASIDE. The Decisions of the NLRC in NLRC CA No. 044835-05 and NLRC CASE No. 00-0607081-04 are ANNULLED
AND SET ASIDE.� The Complaint of petitioners Arlene T. Samonte, Vladimir P. Samonte, Ma. Carmen Aurea S. Elepano against
La Salle Greenhills, Inc. for illegal dismissal is GRANTED. We REMAND this case to the NLRC for the computation of the three
(3) petitioners' separation pay and full back wages.

No pronouncement as to costs.

SO ORDERED.cralawlawlibrary
THIRD DIVISION

G.R. NOS. 178085 - 178086, September 14, 2015

UNIVERSITY OF THE IMMACULATE CONCEPTION, Petitioner, v. OFFICE OF THE SECRETARY OF LABOR AND
EMPLOYMENT, ULC TEACHING AND NON-TEACHING EMPLOYEES UNION-FFW, OFELIA DIAPUEZ, M ELAN IE
DE LA ROSA, ANGELINA ABADILLA, LELIAN CONCON, MARY ANN DE RAMOS, ZENAIDA CANOY, ALMA
VILLACARLOS, PAULINA PALMA GIL, JOSIE BOSTON, GEMMA GALOPE AND LEAH CRUZA, Respondents.

DECISION

JARDELEZA, J.:

These consolidated cases stem from the labor dispute between petitioner University of the Immaculate Conception (UIC) and
respondent UIC Teaching and Non-leaching Employees Union � FFW (the "Union") dating back to 1994. On January 23, 1995, the
Secretary of Labor and Employment (the "Secretary") assumed jurisdiction over the dispute, docketed as OS-AJ-003-95, pursuant to
his powers under Section 263(g) of the Labor Code. 1 The first consolidated case involves a question of whether the Secretary has the
authority to order the creation of a tripartite committee to determine the amount of net incremental proceeds of tuition fee increases;
the second case concerns the legality of the dismissal of 12 employees in connection with the labor dispute.cralawlawlibrary

The following findings of fact by the Court of Appeals are undisputed:

UIC is a non-stock, non-profit educational institution with campuses at Fr. Selga and Bonifacio Sts., Davao City. Private respondent
[the Union] is the certified sole bargaining agent of UIC's rank and file employees.

On 20 June 1994, the Union filed a notice of strike on the grounds of bargaining deadlock and unfair labor practice. On 20 July 1994,
the National Conciliation and Mediation Board (NCMB) called the parties to a conference where they agreed that an increase be
granted to the workers in the amount equivalent to: seventy-five percent (75%) of increment on the tuition fee for the first year, eighty
percent (80%) for the second year, and eighty percent (80%) for the third year.

On the same occasion, the UIC demanded the exclusion of secretaries, registrars, accounting personnel and guidance counselors from
the bargaining unit, on account of their being confidential employees. When the parties agreed to submit this particular issue to
voluntary arbitration, the arbitration panel sustained the UIC on 08 November 1994. The Union's motion for reconsideration thereto
was denied by the arbitration panel on 08 February 1995.

Accordingly, the UIC gave the affected employees namely: Melanie de la Rosa, Angelina Abadilla, Jovita Mamburan, Zenaida Canoy,
Gemma Galope, Paulina Palma Gil, Lelian Concon, Mary Ann de Ramos, Alma Villacarlos, [Leah] Cruza, [Ofelia] Diapuez and Josie
Boston [collectively, except Jovita Mamburan, the "Respondent Employees"] the option to choose between keeping their positions or
resigning from the Union. When they elected to keep both their positions and their union membership, UIC sent them notices of
termination on 21 February 1995, which led into a notice of strike filed by the Union on 10 March 1995.

In an Order dated 28 March 1995, the [Secretary] suspended the effects of the said termination pending the determination of its
legality and ordered QIC to reinstate the respondent employees under the same conditions prevailing prior to the labor dispute. This
Order was later modified by the [Secretary] directing the payroll reinstatement of the respondent employees, instead of physical
reinstatement. On 15 September 1995, the UIC filed a petition for certiorari on the said payroll reinstatement. The Court of Appeals
denied the same in its 08 October 2001 Decision and 10 January 2002 Resolution. These were affirmed by the Supreme Court on 14
January 2005 [448 SCRA 190],

On 20 June 2006, the [Secretary] issued a Resolution ruling that the respondent employees were illegally dismissed and directed UIC
to reinstate them (except for Jovita Mamburan who died on 18 October 2003) and to pay them backwages and other benefits. UIC's
motion for reconsideration thereto was denied by the [Secretary] on 18 September 2006.

Meanwhile, on [20 January I995],2 the Union filed its second notice of strike mostly on the grounds of bargaining deadlock on the
issues of computing the seventy percent (70%) incremental proceeds and unfair labor practices. On 23 January 1995, the [Secretary]
assumed jurisdiction over the dispute, issued a Return-to-Work Order and enjoined the parties to desist from all acts which might
exacerbate the situation.
On 08 October 1998, the [Secretary] issued an Order directing the parties to execute a collective bargaining agreement (CBA)
embodying all items agreed upon by the parties and the salary increases consisting of the following: lst year - 75% of increment
increase of tuition fee; 2nd year � 80% of increment increase of tuition fee; and 3 rd year -80% of increment increase of tuition fee. The
[Secretary] likewise upheld the validity of the strike declared by the Union on 20 January 1995. This Order was challenged by UIC
before the Court of Appeals and the Supreme Court, both of which affirmed the same. The fallo of the Supreme Court decision
reads:cralawlawlibrary

WHEREFORE, the Court DENIES the petition and enjoins the parties to comply with the directive of the Secretary of Labor and
Employment to negotiate a collective bargaining agreement in good faith. No costs.
SO ORDERED.

On 21 April 2004, UIC and the Union signed an Agreement (21 April 2004 Agreement hereafter) before the DOLE, the second
paragraph of which provides:cralawlawlibrary

["The parties agreed that all issues in this particular case have been settled, except the issue on whether the full settlement clause in the
CBA to be signed by the parties bars the filing and/or continuation of alleged illegal dismissal cases which arose in the year 1994 and
which the Secretary of Labor had ruled not to have been subsumed by the Assumption of Jurisdiction case pending with the Office of
the Secretary which is agreed upon to be submitted for voluntary arbitration before the Honorable Secretary of Labor.]

["Likewise in the interpretation and implementation of the full settlement clause,] 3 the parties agree that the net incremental proceeds
for the five [5] school years of the CBA (1995-1996 to 1999-2000) will be computed and compared with the actual amount distributed
to the employees for each of these five [5] years. If the amount distributed in any of these 5 school years is less than what is provided
in the CBA, the University shall pay the deficiency. If the amount distributed in any of these 5 school years is more than what is
provided in the CBA, the excess shall be chargeable to the [seventy percent] 70% share of the employees in the school year 2004-
2005.chanrobleslaw

On 17 May 2004, the Union moved before the [Secretary] for the creation of a tripartite committee to compute the net. proceeds of the
tuition fee increases for the school years 1995-2000. UIC opposed the motion stating that the computation should be done by the
grievance machinery provided for in the CBA about to be signed by the parties.

On 08 June 2004, the parties signed the CBA (08 June 2004 CBA hereafter) for school years 1995-2000. On that occasion, (he parties
agreed to rescind the aforequoted paragraph of the 21 April 2004 Agreement to give way for the signing of the CBA. The 08 June
2004 CBA was submitted to the Regional Labor Office on 14 July 2004.

As mentioned earlier, on 05 July 2004, the DOLE issued an Order granting the motion to create a tripartite committee. UIC moved for
reconsideration but the same was denied in an Order dated 19 May 2005.

On 09 December 2004, the Union submitted bargaining proposals for school years 2005-2010, but U1C refused to bargain on the
ground that out of more than 200 rank and file employees of the UIC, only 37 employees are members of the Union. UIC also
disclosed that it refused to sign the application to register their 08 June 2004 CBA because it was ratified by only 47 employees.

Meanwhile, the Union named three (3) representatives to compose the tripartite committee. UIC, on the other hand, initially refused to
name their representatives contending that the computation was no longer called for and that the 08 June 2004 CBA was not ratified.
When UIC named its three representatives, the tripartite committee held meetings on 14 September 2005 and 18 October 2005
wherein both parties presented their respective computations. On 18 September 2006, the [Secretary] issued a [second] Resolution (18
September 2006 Resolution hereafter) disposing as follows:cralawlawlibrary

WHEREFORE, this Office hereby Orders:chanRoblesvirtualLawlibrary

1. The University to distribute the total amount of PI 1,070,473.00 to the affected employees in equal lump-sum amounts.

2. Any illegal dismissal |case] filed against the University shall continue, without further delay.

SO ORDERED.4

chanrobleslaw

On November 20, 2006, UIC filed two separate Petitions for Certiorari before the Court of Appeals. In the first petition, docketed as
CA-G.R. SP No. 0I396-MIN (the "Net Incremental Proceeds Case"), UIC assailed the Secretary's order mandating the creation of a
tripartite committee for the purpose of computing the net incremental proceeds, and the subsequent computation and award of
Php11,070,473.00 representing the net incremental proceeds covering the school years 1995 to 2000. 5In the second petition, docketed
as CA-G.R. SP No. 01398-MIN (the "Illegal Dismissal Case"), UIC assailed the Secretary's finding that the Respondent Employees
were illegally dismissed, as well as the award of full back wages and other monetary benefits. 6 The Court of Appeals ordered the
consolidation of the two cases on December 14, 2006.7

On April 24, 2007, the Court of Appeals promulgated its Decision denying the consolidated petitions.8 In the Net Incremental
Proceeds Case, the appellate court held that the power of the Secretary to assume jurisdiction over labor disputes under Article 263(g)
of the Labor Code is plenary and discretionary in nature, which necessarily involves the power to resolve questions incidental to the
labor dispute.9 The Court of Appeals also affirmed the amount of net incremental proceeds as computed by the tripartite committee,
finding that U1C failed to substantiate its claims for deductions.10 In the Illegal Dismissal Case, the Court of Appeals upheld the
Secretary's conclusion that the Respondent Employees were illegally dismissed on the ground that UIC could not validly prevent them
from joining the Union since they did not perform managerial functions. The appellate court opined that notwithstanding the
confidential nature of Respondent Employees' position, they were not prohibited from joining the Union; hence, their dismissal by
UIC was not legally justified.11 The Court of Appeals subsequently denied UIC's motions for reconsideration on May 31, 2007. 12

Aggrieved, UIC filed the present petition, where it essentially raises the same arguments with respect to the Secretary's creation of the
tripartite committee, computation of net incremental proceeds, finding of illegal dismissal, and award of back wages.

In its comment, respondent Union counters that it was constrained to file an urgent motion with the Office of the Secretary for the
creation of a tripartite committee because there was no other way to solve the issue on computation of the incremental proceeds,
considering that UIC had ignored and rejected the existence and efficacy of the CBA. 13 On the issue of the computation of the net
incremental proceeds, the Union maintains that the parties had mutually agreed on the manner of computing the same. 14 With regard
to the Illegal Dismissal Case, the Union points out that the Respondent Employees were dismissed on the same date that the
termination notices were sent, in violation of their right to due process.15

In a separate comment filed by the Respondent Employees, they claim that they have the right to maintain their union membership not
for the purpose of collective bargaining, but for legal representation in dealing with the employer; thus, there is no legal justification
for their dismissal.16 They further assert that the matter of back wages and other monetary benefits is already barred by res
judicata since the Secretary's award merely complied with our ruling in G.R. No. 151379 17 affirming the payroll reinstatement of the
Respondent Employees.18

On July 9, 2007, we issued a temporary restraining order directing the respondents to refrain from enforcing the Court of Appeals'
April 24, 2007 Decision and May 31, 2007 Resolution. 19

II

In LMG Chemicals Corporation v. Secretary of Labor, we already settled the extent of the Secretary's jurisdiction under Article
263(g):cralawlawlibrary

It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and
controversies arising therefrom.. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose
of the primary dispute.20 (Emphasis in original.)chanrobleslaw

The powers of the Secretary in "national interest" cases are not set by metes and bounds. Rather, the Secretary is given wide latitude to
adopt appropriate means to finally resolve the labor dispute. The doctrine of "great breadth of discretion" 21 possessed by the Secretary
dates back to our earlier rulings which recognized the broad powers of the former Court of Industrial Relations (CIR), which had
jurisdiction over national interest cases prior to the enactment of the Labor Code. In Philippine Marine Radio Officers' Association v.
CIR, decided in 1957, we held that "[i]f the [CIR] is granted authority to find a solution in an industrial dispute and such solution
consists in the ordering of employees to return back to work, it cannot be contended that the [CIR] does not have the power or
jurisdiction to carry that solution into effect." 22 Again, in FEATI University v. Bautista: "Once the jurisdiction is acquired pursuant to
the presidential certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor
dispute and the employer-employee relationship may be threshed out before the CIR, and the CIR may issue such order or orders as
may be necessary to make effective the exercise of its jurisdiction." 23 Judicial authorities defining the scope of the former CIR's power
in respect of national interest cases apply mutatis mutandis in cases involving the Secretary's assumption of jurisdiction under Article
263(g).

In the Secretary's exercise of such broad discretion, the prevailing rule is that we will not interfere or substitute the Secretary's
judgment with our own, unless grave abuse is cogently shown.24 And in determining whether the acts of the Secretary constitute grave
abuse of discretion, the standard we apply is that of reasonableness. 25cralawred

Here, the Secretary ordered the creation of a tripartite committee for the purpose of resolving one of the contentious issues in OS-AJ-
003-95, i.e., the computation of the net incremental proceeds under Republic Act No. 6728, 26 as increased by mutual agreement of the
parties. It must be recalled that the second notice of strike filed by the Union on January 20, 1995 was triggered by, among others, the
bargaining deadlock on the very issue of the correct computation of the net incremental proceeds. The notice of strike consequently
prompted the Secretary to assume jurisdiction over the dispute. It cannot therefore be denied that the disposition of the net incremental
proceeds issue is necessary to resolve the long-standing dispute between UIC and the Union. Put simply, there is a reasonable
connection between the Secretary's order and the settlement of the labor dispute. Accordingly, we conclude that it is well within the
allowable area of discretion that the Secretary ordered the creation of the tripartite committee.

The authority to create the tripartite committee flows from the jurisdiction conferred by Article 263(g) to the Secretary. A grant of
jurisdiction, in the absence of prohibitive legislation, implies the necessary and usual incidental powers essential to effectuate it27�
also referred to as "incidental jurisdiction." Incidental jurisdiction includes the power and authority of an office or tribunal to do all
things reasonably necessary for the administration of justice within the scope of its jurisdiction, and for the enforcement of its
judgment and mandates. Incidental jurisdiction is presumed to attach upon the conferment of jurisdiction over the main case, unless
explicitly withheld by the legislature. In this regard, we find nothing in the Labor Code that prohibits the Secretary from creating ad
hoc committees to aid in the resolution of labor disputes after he has assumed jurisdiction. The primary objective of Article 263(g) is
not merely to terminate labor disputes between private parties; rather, it is the promotion of the common good considering that a
prolonged strike or lockout in an industry indispensable to the national interest can be inimical to the economy. 28 Hence, provided that
the Secretary's orders are reasonably connected with the objective of the law, as it is in this case, courts will not disturb the same.

UIC argues that the Secretary gravely abused his discretion because at the time he ordered the creation of the tripartite committee, the
parties had already signed � but not yet ratified - - the final draft of the CBA, which contains grievance mechanism provisions. UIC
posits that the grievance procedure in the signed CBA should apply insofar as the determination of the net incremental proceeds is
concerned. In support of its contention, UIC cites University of San Agustin Employees' Union � FFW v. Court of Appeals,29 where
we held that the grievance machinery embodied in the CBA must be recognized and enforced by the Secretary. In response, the Union
asserts that UIC itself had rejected and disregarded the execution and efficacy of the CBA and, thus, cannot rely on the grievance
machinery contained in the same CBA.

UIC's reliance in University of San Agustin is misplaced. In said case, there was already a valid and subsisting live-year CBA between
the parties. The CBA provided, among others, that the economic provisions shall be for a term of three years. Towards the end of the
third year of the CBA, as the economic provisions were about to expire, the employer and the union reached an impasse on economic
matters, ultimately resulting in a labor dispute.30 Thus, at the time the dispute arose in University of San Agustin, the grievance
machinery was in place. The existence of an effective CBA was an important factual consideration for the Court's holding that the
grievance machinery must be respected.

In this case, however, the facts show that the CBA had not been ratified by the majority of all workers in the bargaining unit, as
required by Article 231 of the Labor Code, when the Secretary mandated the creation of the tripartite committee. Compliance with the
ratification requirement is mandatory; otherwise, the CBA is ineffective. 31 In fact, UIC itself admits that the CBA did not become
effective for want of ratification.32 The CBA not having been ratified, there was no enforceable grievance machinery to speak of�
unlike in University of San Agustin. When the Secretary ordered the creation of the tripartite committee, the dispute was already
almost a decade old. Certainly, the Secretary cannot be faulted for endeavoring to settle the issue involving the net incremental
benefits once and for all.

UIC's additional argument that the matter of net incremental proceeds is a non-issue, since it would be covered by the full settlement
clause in the CBA, deserves scant consideration. As already discussed, the CBA� including the full settlement clause � did not take
effect. Furthermore, we observe that UIC is effectively proposing that the Union waived its rights to the net incremental proceeds
when the latter subsequently agreed to disregard the second paragraph of the agreement dated April 21, 2004. However, for a waiver
to be effective, it must be certain and unequivocal33 and cannot be presumed.34 We rule that the mere omission of the paragraph
pertaining to the manner of computing the net incremental proceeds is insufficient to prove the intent of the Union to abandon the
rights of its members with respect to such proceeds.

Next, UIC assails the tripartite committee's computation of the net incremental proceeds, which was affirmed by the Secretary and the
Court of Appeals. UIC is essentially asking us to review and evaluate the probative value of the evidence presented below. Suffice it
to say that such exercise is not proper in an appeal by certiorari. In a petition for review under Rule 45, only questions of law may be
put in issue.35 We cannot emphasize to litigants enough that the Supreme Court is not a trier of facts. 36 It is not our function to analyze
or weigh the evidence all over again.37 Corollary to this is the doctrine that findings of fact of labor tribunals, when affirmed by the
Court of Appeals, are accorded not only great respect but even finality. 38 In this case, the tripartite committee, the Secretary, and the
Court of Appeals were unanimous in disallowing the deductions being claimed by UIC. We find no cogent reason to disturb the same.

In any case, the rationale for the disallowance of deductions in the proceedings below, i.e., the amounts being claimed did not appear
in UIC's audited financial statements, is consistent with established jurisprudence. In Asia Brewery v. TPMA,39 we
held:cralawlawlibrary

In Restaurante Las Conchas v. Llego, several employees filed a case for illegal dismissal after the employer closed its restaurant
business. The employer sought to justify the closure through unaudited financial statements showing the alleged losses of the business.
We ruled that such financial statements are mere self-serving declarations and inadmissible in evidence even if the employees did not
object to their presentation before the Labor Arbiter. Similarly, in Uichico v. National Labor Relations Commission, the services of
several employees were terminated on the ground of retrenchment due to alleged serious business losses suffered by the employer. We
ruled that by submitting unaudited financial statements, the employer failed to prove the alleged business losses, viz:

"... It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the
adjudication of cases.� However, this procedural rule should not be construed as a license to disregard certain fundamental
evidentiary rules. While the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings before the
NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. The
Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a
certified public accountant or audited by an independent auditor, are nothing but sell-serving documents which ought to be
treated as a mere scrap of paper devoid of any probative value. For sure, this is not the kind of sufficient and convincing evidence
necessary to discharge the burden of proof required of petitioners to establish the alleged losses suffered by Crispa, Inc. in the years
immediately preceding 1990 that would justify the retrenchment of respondent employees. ..." (Emphasis in original.)

While the above-cited cases involve proof necessary to establish losses in cases of business closure or retrenchment, we see no reason
why this rule should not equally apply to the determination of the proper level of wage award in cases where the Secretary of Labor
assumes jurisdiction in a labor dispute pursuant to Article 263(g) of the Labor Code.40(Citations omitted.)chanrobleslaw

Parenthetically, we cannot agree with UIC's contention that the computation of the net incremental proceeds did not comply with our
ruling in St. Joseph's College v. St. Joseph's College Workers' Association.41 We note that the basic formula used by the tripartite
committee, and agreed upon by the parties, is consistent with St. Joseph's College, including deductions for "non-paying students like
scholars," "students who did not pay," "increase in salaries," and "increases in related benefits." 42However, some of the amounts
submitted by UIC were disallowed by the tripartite committee for being inadmissible and self-serving, based as they were on
unaudited financial statements. As a result, certain items in the initial formula no longer appeared in the final computation. Such
disallowance, however, should not be interpreted as a departure from St. Joseph 's College; it simply means that the deduction is
effectively nil because the amounts claimed had not been adequately proved.

III

The resolution of the Illegal Dismissal Case rests upon the determination of whether or not a confidential employee's refusal to vacate
his or her union membership is a valid ground for dismissal. The Secretary and the Court of Appeals believe it is not. We reverse.

As a preliminary matter, we clarify that the issue of whether or not the Respondent Employees are confidential employees has long
been settled and its reexamination is already barred by res judicata. In VA Case No. XI-354-02-94 (the "Arbitration Case"), the
panel of voluntary arbitrators had already determined that the Respondent Employees are confidential employees who must be
excluded from the bargaining unit. The panel's decision dated November 8, 199443 and resolution of the motion for reconsideration
dated February 8, 199544 became final and executory after we dismissed the Union's petition for certiorari on June 21, 199545 without
any further incidents. The Arbitration Case having attained finality, the issues resolved therein may no longer be disturbed or
modified.

The just causes for terminating an employee, confidential or not, are numerated in Article 282 of the Labor Code:cralawlawlibrary

Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection
with his work;ChanRoblesVirtualawlibrary

(b) Gross and habitual neglect by the employee of his duties;ChanRoblesVirtualawlibrary

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;ChanRoblesVirtualawlibrary

(d)� Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family
or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

chanrobleslaw

UIC cites willful disobedience and "loss of confidence" as the grounds for dismissing the Respondent Employees. In its termination
letters dated February 21, 1995, UIC informed the Respondent Employees that because of their continued union membership
notwithstanding the voluntary arbitration decision, "management no longer has any trust and confidence in you in the delicate,
sensitive and confidential position you hold." 46

Generally, employers are given wide latitude in terminating the services of employees who perform functions which by their nature
require the employer's full trust and confidence.47 It is well established that an employer cannot be compelled to continue in
employment an employee guilty of acts inimical to the interest of the employer and justifying loss of confidence in him. 48 It has been
held that when an employee has been guilty of breach of trust or his employer has ample reason to distrust him, a labor tribunal cannot
deny the employer the authority to dismiss him.49 To constitute a valid ground for dismissal, it is sufficient that there be some
reasonable basis, supported by substantial evidence, for such loss of confidence. 50

Nonetheless, employers do not have unbridled authority to dismiss employees by simply invoking Article 282(c). The loss of
confidence must be genuine and cannot be used as a subterfuge for causes which are illegal, improper and unjust. 51 "Loss of
confidence as a ground for dismissal has never been intended to afford an occasion for abuse by the employer of its prerogative, as it
can easily be subject to abuse because of its subjective nature.52

In Cruz v. Court of Appeals,53 we summarized the guidelines when loss of confidence constitutes a valid ground for
dismissal:cralawlawlibrary

[T]he language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the
trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based
on substantial evidence and not on the employer's whims or caprices or suspicions otherwise, the employee would eternally remain at
the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the
dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-
related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just
cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care
and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an
employee is penalized.54chanrobleslaw

In determining whether loss of confidence is a just cause for dismissal under Article 282(c), we laid down the following requisites in
the 2008 case of Bristol Myers Squibb (Phils.), Inc. v. Baban:55cralawlawlibrary

(a) The employee must hold a position of trust and confidence.

(b) There must be a willful ad that would justify the loss of trust and confidence.56
chanrobleslaw

As a rule, loss of confidence may only be invoked by the employer against an employee occupying a position of responsibility, trust
and confidence57 � hence, the first requisite. Ordinarily, this would require us to make a determination with regard to the true nature
of the Respondent Employees' positions. But given the facts of this case, noting in particular the final and executory decision in the
Arbitration Case which deemed Respondent Employees as confidential employees, we only now need to determine
whether confidential employees hold positions of trust and confidence.

The leading case explaining what is a "position of trust and confidence" is Mabeza v. NLRC,58 where we held that:cralawlawlibrary

[L]oss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those
situations where the employee is routinely charged with the care and custody of the employer's money or property. To (he first class
belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to
the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property. ... 59chanrobleslaw

Bristol Myers and subsequent cases60 essentially follow the same formula by subdividing positions of trust and confidence into two
classes: managerial employees and fiduciary rank-and-file employees. Respondent Employees fall under the latter category.

We understand that Mabeza's failure to specifically mention the category of "confidential employees" may cause some confusion, at
least superficially, with respect to the applicability of Article 282(c) to this specific class of employees. For the sake of avoiding any
future misperception, we rule that confidential employees must perforce hold positions of trust and confidence. Mabeza's silence
regarding confidential employees may simply be attributed to the fact that confidential employees do not constitute a distinct category
of employees based on the plain text of the Labor Code. But jurisprudence recognizes the existence of such category, 61 and it has been
held that confidentiality may attach to a managerial, supervisory, or rank-and-file position.62 As the commentator Azucena aptly
notes:cralawlawlibrary

... Confidentiality is not a matter of official rank, it is a matter of job content and authority. It is not measured by closeness to or
distance from top management but by the significance of the jobholder's role in the pursuit of corporate objectives and strategy. In
principle, every managerial position is confidential � one does not become a manager without having gained the confidence of the
appointing authority. But not every confidential employee is managerial; lie may be a supervisory or even a rank-and-file employee.
Confidentiality, in other words, cuts across the pyramid of jobs from the base to the apex, from messengerial to managerial.63
chanrobleslaw

A confidential employee is defined as one entrusted with confidence on delicate matters, or with the custody, handling, or care and
protection of the employer's property.64 For all intents and purposes, the terms "confidential employee" and "employee holding a
position of trust and confidence" are synonymous. Fundamentally, the two categories mentioned in Mabeza are simply subcategories
of the broader category of confidential employees.

The essence of the second requisite is that the loss of confidence must be based on a willful breach of trust founded on clearly
established facts.65 Here, it is not disputed that the Respondent Employees refused to resign from the Union, notwithstanding the
decision in the Arbitration Case. Respondent Employees do not claim that they were coerced into retaining their union membership; in
fact, they even insist upon their right to join the Union. The voluntariness of Respondent Employees' refusal to vacate their union
membership � which constitutes the "willful act" � is therefore unequivocally established.

We hold that the willful act of refusing to leave the Union is sufficient basis for UIC to lose its trust and confidence on Respondent
Employees. There was just cause for dismissing the Respondent Employees. Our conclusion follows the same reasoning why we
finally adopted the doctrine that confidential employees should be excluded from the bargaining unit and disqualified from joining any
union:66employees should not be placed in a position involving a potential conflict of interests.67 In this regard, the Court of Appeals
erred in holding that Respondent Employees are allowed to join the Union. 68If Respondent Employees were allowed to retain their
union membership, UIC would not be assured of their loyalty because of the apparent conflict between the employees' personal
interests and their duty as confidential employees. Such a result is likely to create an atmosphere of distrust between UIC and the
confidential employees, and it would be nigh unreasonable to compel UIC to continue in employment persons whom it no longer
trusts to handle delicate matters.

Finally, the Secretary cites Article 248 of the Labor Code to support his conclusion that Respondent Employees were illegally
dismissed.69 Article 248(a) considers as unfair labor practice an employer's act of interfering with, restraining or coercing employees
in the exercise of their right to self-organization. However, it is well established that the right to self-organization under the Labor
Code does not extend to managerial70 and confidential employees,71 while supervisory employees are not allowed to join the rank-and-
file union. In view of the limitation imposed upon these specific classes of employees, Article 248(a) should therefore be interpreted to
cover only interference with the right to self-organization of bona fide members of the bargaining unit. The provision finds no
application in this case which involves confidential employees who are, by law, denied the right to join labor unions.

B
Although there is just cause for dismissing the Respondent Employees, we find that UIC failed to comply with the mandatory two-
notice due process requirement. Under our labor laws, the employer has the burden of proving that the dismissed employee has been
served two written notices: (a) one to apprise him of the particular acts or omissions for which his dismissal is sought, and (b) the
other to inform him of the employer's decision to dismiss him. 73 The first notice must state that the employer seeks dismissal for the
act or omission charged against the employee; otherwise, the notice does not comply with the rules. 74 The records show that UIC sent
only one such written notice to Respondent Employees on February 21, 1995, i.e., a notice of termination effective at the close of
business of the same date.75 We do not agree with UIC's submission that the agreement to arbitrate and the request to comply with the
arbitration decision constitute the "first notice" required by law, 76 considering that UIC was unable to establish by substantial evidence
that these categorically contain what is legally required to appear in the first notice. In fine, we agree with the observation of the Court
of Appeals that the Respondent Employees were hastily terminated. 77

Pursuant to the doctrine laid down in Agabon v. NLRC,78 the dismissal for just cause remains valid but UIC should be held liable, by
way of nominal damages, for non-compliance with procedural due process. Conformably with existing jurisprudence, 79 UIC is liable
to pay each of the Respondent Employees the sum of Php30,000.00 as nominal damages.

Notwithstanding our ruling that there was just cause for dismissal, we reject UIC's claim for reimbursement of the amount it has paid
to Respondent Employees for being contrary to established jurisprudence. The prevailing rule is that an employee cannot be
compelled to reimburse the salaries and wages he received during the pendency of the appeal, notwithstanding the subsequent reversal
of the order of reinstatement.80 As we held in the case of Garcia v. Philippine Airlines, Inc., "it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court."81

Furthermore, in G.R. No. 151379, we already affirmed the Secretary's order to reinstate the Respondent Employees in UIC's payroll
until the validity of their termination is finally resolved. Respondents correctly point out that the back wages now being disputed by
UIC actually represent Respondent Employees' unpaid salaries pursuant to the order of payroll reinstatement in our previous decision.
The Secretary precisely ordered the payment of back wages because UIC had been remiss in making payments, despite the
immediately executory nature of a reinstatement order.82

IV

On November 23, 2007, UIC filed an Omnibus Motion 83 asking us to, among others, cite Alfredo Olvida in contempt for unauthorized
practice of law. UIC alleges that Olvida, a non-lawyer, "has been preparing, signing and filing pleadings before this Honorable Court
and even before the Court of Appeals in CA-G.R. SP Nos. 01396-MIN and 01398-MIN."84 In a resolution dated February 11, 2008,
we ordered Olvida to file a comment on the motion to cite him in contempt. 85 Olvida submitted his comment on April 10, 2008, in
which he did not deny the allegations but justified his acts by stating that he is the Regional Legal Assistant of the Federation of Free
Workers (FFW) and is authorized by the Union to handle the cases. 86 He also mentioned past instances wherein he prepared and
signed pleadings for local affiliates of FFW in matters pending before the Supreme Court and the Court of Appeals, without having
been held in contempt in those previous instances. 87

Since the facts are not disputed, it is clear that Olvida willfully engaged in the unauthorized practice of law before the Supreme Court
and the Court of Appeals in these consolidated cases. There can be no question that one who prepares, signs, and files pleadings in
court is engaged in the practice of law.88Olvida is not covered by the exception under Article 222(a) of the Labor Code, 89which only
pertains to proceedings before the NLRC and labor arbiters and do not extend to courts of law. Not being a member of the Philippine
Bar, Olvida had no authority to act as the Union's counsel in the proceedings before the Court of Appeals and, now, before us. ynder
Section 3(e), Rule 71 of the Rules of Court, the act of "[a]ssuming to be an attorney... and acting as such without authority" constitutes
indirect contempt. Accordingly, we find Olvida guilty of indirect contempt.

We want to clarify, however, that our ruling on indirect contempt is the exception rather than the rule. Counsel for UIC ought to know
that under the Rules of Court, a charge for indirect contempt must be initiated through a verified petition, unless the charge is directly
made by the court against which the contemptuous act is committed. 90 In Mallari v. GSIS, we quoted with approval Justice Regalado's
comments on Section 4 of Rule 71:cralawlawlibrary

This new provision clarifies with a regulatory norm the proper procedure for commencing contempt proceedings. While such
proceeding has been classified as a special civil action under the former Rules, the heterogeneous practice, tolerated by the courts, has
been for any party to file a mere motion without paying any docket or lawful fees therefor and without complying with the
requirements for initiatory pleadings, which is now required in the second paragraph of this amended section. Worse, and as a
consequence of unregulated motions for contempt, said incidents sometimes remain pending for resolution although the main case has
already been decided. There are other undesirable aspects but, at any rate, the same may now be eliminated by this amendatory
procedure.

Henceforth, except for indirect contempt proceedings initiated motu proprio by order of or a formal charge by the offended
court, all charges shall be commenced by a verified petition with full compliance with the requirements therefor and shall be
disposed of in accordance with the second paragraph of this section.91 (Emphasis in original.)chanrobleslaw

One exception to the above rule is that the Supreme Court may, incidental to its power to suspend its own rules whenever the interest
of justice requires,92 resolve an issue involving indirect contempt when there is (a) no factual controversy to be resolved or the case
falls under the res ipsa loquitur rule and (b) only after granting the respondent the opportunity to comment.93 We resolve UIC's
pending motion on the basis of this exception, and only to fully dispose of all pending issues in these consolidated cases. While we do
not condone the initiation of indirect contempt proceedings by mere motion without payment of the proper docket fees, requiring UIC
to file a verified petition for indirect contempt will only serve to prolong the dispute between the parties.

WHEREFORE, the petition is PARTIALLY GRANTED and the appealed Decision dated April 24, 2007 and Resolution dated
May 31, 2007 with respect to CA-G.R. SP. No. 01398-MIN are MODIFIED as follows: (1) petitioner's dismissal of Melanie de la
Rosa, Angelina Abadilla, Zenaida Canoy, Gemma Galope, Paulina Palm a Gil, Lelian Concon, Mary Ann de Ramos, Alma
Villacarlos, Leah Cruza, Ofelia Diapuez and Josie Boston is hereby declared valid for just cause and petitioner is therefore authorized
to remove the aforementioned employees from its payroll upon finality of this decision; and (2) petitioner is ordered to pay each of the
Respondent-Employees the sum of Thirty Thousand Pesos (Php30,000.00) as nominal damages for non-compliance with the
mandatory procedural due process requirements. The Decision and Resolution are AFFIRMED in all other respects.

Petitioner's motion to cite Alfredo Olvida for indirect contempt is hereby GRANTED. Alfredo Olvida is ordered to pay a FINE of
Two Thousand Pesos (Php2,000.00) for assuming to be an attorney and acting as such without authority, with a STERN
WARNING that repetition of the same or similar offense in the future will be dealt with more severely.

Finally, the Temporary Restraining Order issued on July 9, 2007 is hereby LIFTED effective immediately.

SO ORDERED.chanroblesvirtuallawlibrary
SECOND DIVISION

G.R. No. 64948 September 27, 1994

MANILA GOLF & COUNTRY CLUB, INC., petitioner,

vs.
INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR, respondents.

Bito, Misa & Lozada for petitioner.

Remberto Z. Evio for private respondent.

NARVASA, C.J.:

The question before the Court here is whether or not persons rendering caddying services for members of golf clubs and their guests in
said clubs' courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security
System (SSS).

That question appears to have been involved, either directly or peripherally, in three separate proceedings, all initiated by or on behalf
of herein private respondent and his fellow caddies. That which gave rise to the present petition for review was originally filed with
the Social Security Commission (SSC) via petition of seventeen (17) persons who styled themselves "Caddies of Manila Golf and
Country Club-PTCCEA" for coverage and availment of benefits under the Social Security Act as amended, "PTCCEA" being
the acronym of a labor organization, the "Philippine Technical, Clerical, Commercial Employees Association," with which the
petitioners claimed to be affiliated. The petition, docketed as SSC Case No. 5443, alleged in essence that although the petitioners were
employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as such with the SSS.

At about the same time, two other proceedings bearing on the same question were filed or were pending; these were:

(1) a certification election case filed with the Labor Relations Division of the Ministry of Labor by the PTCCEA on
behalf of the same caddies of the Manila Golf and Country Club, the case being titled "Philippine Technical,
Clerical, Commercial Association vs. Manila Golf and Country Club" and docketed as Case No. R4-LRDX-M-10-
504-78; it appears to have been resolved in favor of the petitioners therein by Med-Arbiter Orlando S. Rojo who was
thereafter upheld by Director Carmelo S. Noriel, denying the Club's motion for reconsideration; 1

(2) a compulsory arbitration case initiated before the Arbitration Branch of the Ministry of Labor by the same labor
organization, titled "Philippine Technical, Clerical, Commercial Employees Association (PTCCEA), Fermin Lamar
and Raymundo Jomok vs. Manila Golf and Country Club, Inc., Miguel Celdran, Henry Lim and Geronimo Alejo;" it
was dismissed for lack of merit by Labor Arbiter Cornelio T. Linsangan, a decision later affirmed on appeal by the
National Labor Relations Commission on the ground that there was no employer-employee relationship between the
petitioning caddies and the respondent Club. 2

In the case before the SSC, the respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the
petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and
guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not subject
to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's
employees.

Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for social security coverage, avowedly
coming to realize that indeed there was no employment relationship between them and the Club. The case continued, and was
eventually adjudicated by the SSC after protracted proceedings only as regards the two holdouts, Fermin Llamar and Raymundo
Jomok. The Commission dismissed the petition for lack of merit, 3ruling:

. . . that the caddy's fees were paid by the golf players themselves and not by respondent club. For instance,
petitioner Raymundo Jomok averred that for their services as caddies a caddy's Claim Stub (Exh. "1-A") is issued by
a player who will in turn hand over to management the other portion of the stub known as Caddy Ticket (Exh. "1")
so that by this arrangement management will know how much a caddy will be paid (TSN, p. 80, July 23, 1980).
Likewise, petitioner Fermin Llamar admitted that caddy works on his own in accordance with the rules and
 regulations (TSN, p. 24, February 26, 1980) but petitioner Jomok could not state any policy of respondent that
directs the manner of caddying (TSN, pp. 76-77, July 23, 1980). While respondent club promulgates rules and
regulations on the assignment, deportment and conduct of caddies (Exh. "C") the same are designed to impose
personal discipline among the caddies but not to direct or conduct their actual work. In fact, a golf player is at liberty
to choose a caddy of his preference regardless of the respondent club's group rotation system and has the discretion
on whether or not to pay a caddy. As testified to by petitioner Llamar that their income depends on the number of
players engaging their services and liberality of the latter (TSN, pp. 10-11, Feb. 26, 1980). This lends credence to
respondent's assertion that the caddies are never their employees in the absence of two elements, namely, (1)
payment of wages and (2) control or supervision over them. In this connection, our Supreme Court ruled that in the
determination of the existence of an employer-employee relationship, the "control test" shall be considered decisive
(Philippine Manufacturing Co. vs. Geronimo and Garcia, 96 Phil. 276; Mansal vs. P.P. Coheco Lumber Co., 96 Phil.
941; Viana vs.
Al-lagadan, et al., 99 Phil. 408; Vda, de Ang, et al. vs. The Manila Hotel Co., 101 Phil. 358, LVN Pictures Inc. vs.
Phil. Musicians Guild, et al.,
L-12582, January 28, 1961, 1 SCRA 132. . . . (reference being made also to Investment Planning Corporation Phil.
vs. SSS 21 SCRA 925).

Records show the respondent club had reported for SS coverage Graciano Awit and Daniel Quijano, as bat unloader
and helper, respectively, including their ground men, house and administrative personnel, a situation indicative of
the latter's concern with the rights and welfare of its employees under the SS law, as amended. The unrebutted
testimony of Col. Generoso A. Alejo (Ret.) that the ID cards issued to the caddies merely intended to identify the
holders as accredited caddies of the club and privilege(d) to ply their trade or occupation within its premises which
could be withdrawn anytime for loss of confidence. This gives us a reasonable ground to state that the defense
posture of respondent that petitioners were never its employees is well taken. 4

From this Resolution appeal was taken to the Intermediate appellate Court by the union representing Llamar and Jomok. After the
appeal was docketed 5 and some months before decision thereon was reached and promulgated, Raymundo Jomok's appeal was
dismissed at his instance, leaving Fermin Llamar the lone appellant. 6

The appeal ascribed two errors to the SSC:

(1) refusing to suspend the proceedings to await judgment by the Labor Relations Division of National Capital
Regional Office in the certification election case (R-4-LRD-M-10-504-78) supra, on the precise issue of the
existence of employer-employee relationship between the respondent club and the appellants, it being contended that
said issue was "a function of the proper labor office"; and

(2) adjudicating that self same issue a manner contrary to the ruling of the Director of the Bureau of Labor
Relations, which "has not only become final but (has been) executed or (become) res adjudicata." 7

The Intermediate Appellate Court gave short shirt to the first assigned error, dismissing it as of the least importance. Nor, it would
appear, did it find any greater merit in the second alleged error. Although said Court reserved the appealed SSC decision and declared
Fermin Llamar an employee of the Manila Gold and Country Club, ordering that he be reported as such for social security coverage
and paid any corresponding benefits, 8 it conspicuously ignored the issue of res adjudicata raised in said second assignment. Instead, it
drew basis for the reversal from this Court's ruling in Investment Planning Corporation of the Philippines vs. Social Security
System, supra 9 and declared that upon the evidence, the questioned employer-employee relationship between the Club and Fermin
Llamar passed the so-called "control test," establishment in the case — i.e., "whether the employer controls or has reserved the right to
control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be
accomplished," — the Club's control over the caddies encompassing:

(a) the promulgation of no less than twenty-four (24) rules and regulations just about every aspect of the conduct
that the caddy must observe, or avoid, when serving as such, any violation of any which could subject him to
disciplinary action, which may include suspending or cutting off his access to the club premises;

(b) the devising and enforcement of a group rotation system whereby a caddy is assigned a number which designates
his turn to serve a player;

(c) the club's "suggesting" the rate of fees payable to the caddies.

Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid by the players, not by the Club, that they
observed no definite working hours and earned no fixed income. It quoted with approval from an American decision 10 to the effect
that: "whether the club paid the caddies and afterward collected in the first instance, the caddies were still employees of the club."
This, no matter that the case which produced this ruling had a slightly different factual cast, apparently having involved a claim for
workmen's compensation made by a caddy who, about to leave the premises of the club where he worked, was hit and injured by an
automobile then negotiating the club's private driveway.

That same issue of res adjudicata, ignored by the IAC beyond bare mention thereof, as already pointed out, is now among the
mainways of the private respondent's defenses to the petition for review. Considered in the perspective of the incidents just recounted,
it illustrates as well as anything can, why the practice of forum-shopping justly merits censure and punitive sanction. Because the
same question of employer-employee relationship has been dragged into three different fora, willy-nilly and in quick succession, it has
birthed controversy as to which of the resulting adjudications must now be recognized as decisive. On the one hand, there is the
certification case [R4-LRDX-M-10-504-78), where the decision of the Med-Arbiter found for the existence of employer-employee
relationship between the parties, was affirmed by Director Carmelo S. Noriel, who ordered a certification election held, a disposition
never thereafter appealed according to the private respondent; on the other, the compulsory arbitration case (NCR Case No. AB-4-
1771-79), instituted by or for the same respondent at about the same time, which was dismissed for lack of merit by the Labor Arbiter,
which was afterwards affirmed by the NLRC itself on the ground that there existed no such relationship between the Club and the
private respondent. And, as if matters were not already complicated enough, the same respondent, with the support and assistance of
the PTCCEA, saw fit, also contemporaneously, to initiate still a third proceeding for compulsory social security coverage with the
Social Security Commission (SSC Case No. 5443), with the result already mentioned.

Before this Court, the petitioner Club now contends that the decision of the Med-Arbiter in the certification case had never become
final, being in fact the subject of three pending and unresolved motions for reconsideration, as well as of a later motion for early
resolution. 11 Unfortunately, none of these motions is incorporated or reproduced in the record before the Court. And, for his part, the
private respondent contends, not only that said decision had been appealed to and been affirmed by the Director of the BLR, but that a
certification election had in fact been held, which resulted in the PTCCEA being recognized as the sole bargaining agent of the
caddies of the Manila Golf and Country Club with respect to wages, hours of work, terms of employment, etc. 12 Whatever the truth
about these opposing contentions, which the record before the Court does not adequately disclose, the more controlling consideration
would seem to be that, however, final it may become, the decision in a certification case, by the
very nature of that proceedings, is not such as to foreclose all further dispute between the parties as to the existence, or non-existence,
of employer-employee relationship between them.

It is well settled that for res adjudicata, or the principle of bar by prior judgment, to apply, the following essential requisites must
concur: (1) there must be a final judgment or order; (2) said judgment or order must be on the merits; (3) the court rendering the same
must have jurisdiction over the subject matter and the parties; and (4) there must be between the two cases identity of parties, identity
of subject matter and identity of cause of action. 13

Clearly implicit in these requisites is that the action or proceedings in which is issued the "prior Judgment" that would operate in bar
of a subsequent action between the same parties for the same cause, be adversarial, or contentious, "one having opposing parties; (is)
contested, as distinguished from an ex parte hearing or proceeding. . . . of which the party seeking relief has given legal notice to the
other party and afforded the latter an opportunity to contest it" 14 and a certification case is not such a proceeding, as this Court already
ruled:

A certification proceedings is not a "litigation" in the sense in which the term is commonly understood, but mere
investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a
disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their
representation. The court enjoys a wide discretion in determining the procedure necessary to insure the fair and free
choice of bargaining representatives by the employees.15

Indeed, if any ruling or judgment can be said to operate as res adjudicata on the contested issue of employer-employee relationship
between present petitioner and the private respondent, it would logically be that rendered in the compulsory arbitration case (NCR
Case No. AB-4-771-79, supra), petitioner having asserted, without dispute from the private respondent, that said issue was there
squarely raised and litigated, resulting in a ruling of the Arbitration Branch (of the same Ministry of Labor) that such relationship did
not exist, and which ruling was thereafter affirmed by the National Labor Relations Commission in an appeal taken by said
respondent. 16

In any case, this Court is not inclined to allow private respondent the benefit of any doubt as to which of the conflicting ruling just
adverted to should be accorded primacy, given the fact that it was he who actively sought them simultaneously, as it were, from
separate fora, and even if the graver sanctions more lately imposed by the Court for forum-shopping may not be applied to him
retroactively.

Accordingly, the IAC is not to be faulted for ignoring private respondent's invocation of res adjudicata; on contrary, it acted correctly
in doing so.

Said Court’s holding that upon the facts, there exists (or existed) a relationship of employer and employee between petitioner and
private respondent is, however, another matter. The Court does not agree that said facts necessarily or logically point to such a
relationship, and to the exclusion of any form of arrangements, other than of employment, that would make the respondent's services
available to the members and guest of the petitioner.

As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the
petitioner's regulations, does not, in the mind of the Court, so circumscribe the actions or judgment of the caddies concerned as to
leave them little or no freedom of choice whatsoever in the manner of carrying out their services. In the very nature of things, caddies
must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and
grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves
on sufference but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay
away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them
beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules,
and without violating any right to work on their part. All these considerations clash frontally with the concept of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication
of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the
Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess.

The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control than an assurance that
the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned
instead the last number for the day. 17

By and large, there appears nothing in the record to refute the petitioner's claim that:

(Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation
in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or
otherwise with any entity or individual without restriction by petitioner. . . .

. . . In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not required to
render a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute
because a player is at liberty to choose a caddy of his preference regardless of the caddy's order in the rotation.

It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work
elsewhere. Under such circumstances, he may then leave the premises of petitioner and go to such other place of
work that he wishes (sic). Or a caddy who is on call for a particular day may deliberately absent himself if he has
more profitable caddying, or another, engagement in some other place. These are things beyond petitioner's control
and for which it imposes no direct sanctions on the caddies. . . . 18

WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is sought, is reversed and set aside, it being hereby
declared that the private respondent, Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that
petitioner is under no obligation to report him for compulsory coverage to the Social Security System. No pronouncement as to costs.

SO ORDERED.
FIRST DIVISION

ANGELINA FRANCISCO, G.R. No. 170087

Petitioner,

Present:

Panganiban, C.J. (Chairperson),

- versus - Ynares-Santiago,

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

NATIONAL LABOR RELATIONS

COMMISSION, KASEI CORPORATION,

SEIICHIRO TAKAHASHI, TIMOTEO

ACEDO, DELFIN LIZA, IRENE

BALLESTEROS, TRINIDAD LIZA Promulgated:

and RAMON ESCUETA,

Respondents.

August 31, 2006

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision and Resolution of
the Court of Appeals dated October 29, 2004 [1] and October 7, 2005,[2] respectively, in CA-G.R. SP No. 78515 dismissing the
complaint for constructive dismissal filed by herein petitioner Angelina Francisco. The appellate court reversed and set aside the
Decision of the National Labor Relations Commission (NLRC) dated April 15, 2003, [3] in NLRC NCR CA No. 032766-02 which
affirmed with modification the decision of the Labor Arbiter dated July 31, 2002,[4] in NLRC-NCR Case No. 30-10-0-489-01, finding
that private respondents were liable for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate
Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City
of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. [5]

Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she
attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its
Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company. [6]

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of
petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with government agencies, especially with the Bureau of Internal
Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to administer all other matters pertaining to
the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. [7]

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus
P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. [8]

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a
prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo,
the designated Treasurer, convened a meeting of all employees of Kasei Corporation and announced that nothing had changed and that
petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters.[9]

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total
reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not
earning well. On October 2001, petitioner did not receive her salary from the company. She made repeated follow-ups with the
company cashier but she was advised that the company was not earning well. [10]

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is
no longer connected with the company.[11]

Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal
before the labor arbiter.

Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in
1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant,
petitioner performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time
record and she came to the office any time she wanted. The company never interfered with her work except that from time to time, the
management would ask her opinion on matters relating to her profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a Board Resolution designating her as technical consultant. The money
received by petitioner from the corporation was her professional fee subject to the 10% expanded withholding tax on professionals,
and that she was not one of those reported to the BIR or SSS as one of the companys employees.[12]
 Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may
be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation.

To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the
years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a
list of payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioners
latest employer was Seiji Corporation.[13]

The Labor Arbiter found that petitioner was illegally dismissed, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. finding complainant an employee of respondent corporation;

2. declaring complainants dismissal as illegal;

3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and
jointly and severally pay complainant her money claims in accordance with the following computation:

a. Backwages 10/2001 07/2002 275,000.00

(27,500 x 10 mos.)

b. Salary Differentials (01/2001 09/2001) 22,500.00

c. Housing Allowance (01/2001 07/2002) 57,000.00

d. Midyear Bonus 2001 27,500.00

e. 13th Month Pay 27,500.00

f. 10% share in the profits of Kasei

Corp. from 1996-2001 361,175.00

g. Moral and exemplary damages 100,000.00

h. 10% Attorneys fees 87,076.50

P957,742.50

If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional
backwages that would accrue up to actual payment of separation pay.

SO ORDERED.[14]
 On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which
reads:

PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:

1) Respondents are directed to pay complainant separation pay computed at one month per year of service
in addition to full backwages from October 2001 to July 31, 2002;

2) The awards representing moral and exemplary damages and 10% share in profit in the respective
accounts of P100,000.00 and P361,175.00 are deleted;

3) The award of 10% attorneys fees shall be based on salary differential award only;

4) The awards representing salary differentials, housing allowance, mid year bonus and 13 th month pay are
AFFIRMED.

SO ORDERED.[15]

On appeal, the Court of Appeals reversed the NLRC decision, thus:

WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations
Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered
dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal.

SO ORDERED.[16]

The appellate court denied petitioners motion for reconsideration, hence, the present recourse.

The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner
and private respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed.

Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on one hand, and the
Court of Appeals on the other, there is a need to reexamine the records to determine which of the propositions espoused by the
contending parties is supported by substantial evidence.[17]
 We held in Sevilla v. Court of Appeals[18] that in this jurisdiction, there has been no uniform test to determine the existence of
an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such
end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion
of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.

However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties,
owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside
from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished,
economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual,
whether as employee, independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities
of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where
there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on
the various positions and responsibilities given to the worker over the period of the latters employment.

The control test initially found application in the case of Viaa v. Al-Lagadan and Piga,[19] and lately in Leonardo v. Court of
[20]
Appeals, where we held that there is an employer-employee relationship when the person for whom the services are performed
reserves the right to control not only the end achieved but also the manner and means used to achieve that end.

In Sevilla v. Court of Appeals,[21] we observed the need to consider the existing economic conditions prevailing between the
parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in
determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the
worker.

Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole
economic activity,[22] such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the
extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the
workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree
of dependency of the worker upon the employer for his continued employment in that line of business. [23]

The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued
employment in that line of business.[24] In the United States, the touchstone of economic reality in analyzing possible employment
relationships for purposes of the Federal Labor Standards Act is dependency.[25] By analogy, the benchmark of economic reality in
analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on
his employer.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the
direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in
various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially
the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and
desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of
engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation
because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages,
benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000.[26] When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by
the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent corporation. [27]

It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in
the latters line of business.

In Domasig v. National Labor Relations Commission,[28] we held that in a business establishment, an identification card is
provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues
it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial
evidence adequate to support a conclusion that petitioner was an employee of private respondent.

We likewise ruled in Flores v. Nuestro[29] that a corporation who registers its workers with the SSS is proof that the latter
were the formers employees. The coverage of Social Security Law is predicated on the existence of an employer-employee
relationship.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as
Corporate Secretary and that her designation as such was only for convenience. The actual nature of petitioners job was as Kamuras
direct assistant with the duty of acting as Liaison Officer in representing the company to secure construction permits, license to
operate and other requirements imposed by government agencies. Petitioner was never entrusted with corporate documents of the
company, nor required to attend the meeting of the corporation. She was never privy to the preparation of any document for the
corporation, although once in a while she was required to sign prepared documentation for the company. [30]

The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly
withdrawn by Kamura himself from the records of the case. [31] Regardless of this fact, we are convinced that the allegations in the first
affidavit are sufficient to establish that petitioner is an employee of Kasei Corporation.

Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look with favor on any
retraction or recanted testimony, for it could have been secured by considerations other than to tell the truth and would make solemn
trials a mockery and place the investigation of the truth at the mercy of unscrupulous witnesses. [32] A recantation does not necessarily
cancel an earlier declaration, but like any other testimony the same is subject to the test of credibility and should be received with
caution.[33]

Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She
was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued
employment in that line of business. Her main job function involved accounting and tax services rendered to respondent corporation
on a regular basis over an indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation,
with the power to dismiss her for cause. More importantly, respondent corporation had the power to control petitioner with the means
and methods by which the work is to be accomplished.

The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September
2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of
petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to
separation pay, in lieu of reinstatement.[34]

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an
involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to an employee.[35] In Globe Telecom, Inc. v. Florendo-Flores,[36] we ruled that where an employee
ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working
environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the
company was not of her own making and therefore amounted to an illegal termination of employment.

In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as
we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact
that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the
benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their
welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development.

WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated October 29, 2004
and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE. The Decision of the National Labor
Relations Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02, is REINSTATED. The case is REMANDED to the
Labor Arbiter for the recomputation of petitioner Angelina Franciscos full backwages from the time she was illegally terminated until
the date of finality of this decision, and separation pay representing one-half month pay for every year of service, where a fraction of
at least six months shall be considered as one whole year.

SO ORDERED.
FIRST DIVISION

G.R. No. 102467 June 13, 1997

EQUITABLE BANKING CORPORATION, Chairman MANUEL L. MORALES, President & Director GEORGE L. GO,
Vice-Chairman & Director RICARDO J. ROMULO, Vice-Chairman & Director JOHN C.B. GO, Director HERMINIO B.
BANICO, Director FRANCISCO C. CHUA, Director PETER GO PAILIAN, Director RICARDO C. LEONG, Director
JULIUS T. LIMPE and Director PEDRO A. ORTIZ, petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, First Division, and RICARDO L. SADAC, respondents.

VITUG, J.:

In the special civil action of certiorari, the petitioners, in order to have a reasonable chance of success, must be able to come up with
proof that the tribunal, board or officer against whom the petition is brought has, in the exercise of judicial or quasi-judicial function,
acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. In the instant
petition, the Court is asked to rule against the National Labor Relations Commission ("NLRC") in holding private respondent Ricardo
L. Sadac, Vice-President for the Legal Department and General Counsel of petitioner Equitable Banking Corporation, to have been a
regular employee of the bank whose services could only be terminated in accordance with the Labor Code. Petitioner bank submits
that the services of private respondent, its legal counsel, could be dispensed with at anytime pursuant to the provision on the cessation
of lawyer-client relationship under Rule 138 of the Rules of Court.

The facts, essentially, do not appear to be in dispute.

Private respondent Sadac was appointed, effective 01 August 1981, Vice-President for the Legal Department of petitioner bank by its
then President, Manuel L. Morales, with a monthly salary of P8,000.00, plus an allowance of P4,500.00 and a Christmas bonus
equivalent to a two-month salary. 1 On 08 December 1981, private respondent was also designated as the bank's General Counsel.
Private respondent had these functions:

Duties & Responsibilities

— Provides legal advice to the Board of Directors and Management of the Bank.

— Takes charge of all Bank cases arising from bank transactions and rendering opinions on legal questions in
connection therewith.

— Insures effective conduct of litigation, collection of past due accounts, and investigation of irregularities and
other legal matters affecting the interest of the Bank.

— Participates in action of major character, financing, amendments to the Articles of Incorporation and By-laws of
the Bank, changes in corporate structures acquisition and disposal of important segments of enterprises or real
estate, determination of action to comply with statutory and other government requirements.

— Directs, plans, coordinates and maintains supervision and control over the staff of the Legal Department.

— Provides for and insures proper documentation and notarization of all Bank transactions.

— Assumes primary responsibility in the account of continuing research and studies on questions of law affecting
the Bank and its subsidiary corporations and the formulation and development of legal opinions.

— Recommends appointments, promotions, transfers and disciplinary actions involving Legal Department
personnel.

— Establishes and maintains effective discipline, work performances, high level of morale and cooperation among
the staff.

— Performs such other duties as may be assigned from time to time by the President and the Board of Directors. 2
The turning point in the relationship among the parties surfaced, when, on 26 June 1989, nine lawyers 3 of the bank's Legal
Department, who were all under private respondent, addressed a "letter-petition" to the Chairman of the Board of Directors, accusing
private respondent of abusive conduct, inefficiency, mismanagement, ineffectiveness and indecisiveness. 4 The individual written
complaints of each of the nine lawyers were attached to the "letter-petition." Private respondent was furnished with a copy of the
letter.

Private respondent promptly responded and manifested an intention to file criminal, civil and administrative charges against the nine
lawyers. Petitioner Morales, by now Chairman of the Board of Directors, called the contending lawyers to a conference in his office in
an attempt to resolve their differences. The meeting held on 29 June 1989, in the presence of Vice-President for Personnel and Human
Relations Dean Alejandro C. Reyes, apparently did not amount to much and only resulted, it would seem, in a broad commitment of
the parties to implement the "existing procedures and practices in the Legal Department." 5 The dialogue was marked, in fact, by
"rancorous and very heated altercation" between private respondent and his subordinates. Mr. Morales considered the problem serious
enough to merit the Board's attention. In its meeting on 11 July 1989, the Board of Directors, apprised of the situation, adopted a
resolution directing one of its directors, petitioner Herminio B. Banico, to look further into the matter and to "determine a course of
action for the best interest of the bank."

Petitioner Banico met with the complaining nine lawyers on 17 July 1989. He was warned that if private respondent were to be
retained in his position, the lawyers would resign en masse. The following day, Mr. Banico saw private respondent. The latter denied
the charges leveled against him. Although the two would appear to have explored various alternatives and avenues to solve the crisis,
nothing positive, however, came out of their meeting. Convinced that reconciliation was out of the question, Mr. Banico, on 08 August
1989, submitted a report to the Board of Directors with these findings:

a. ABUSIVE CONDUCT

There is no doubt at all, in my mind that the charge of "abusive conduct" against Atty. Sadac, in his treatment in
varying degrees, of the complaining lawyers, is true, as this is supported by overwhelming evidence. Atty. Sadac
himself, in effect, admitted this when he proferred his apologies in the presence of the Chairman in the
"confrontation" held in the latter's office.

b. MISMANAGEMENT

In my study and investigation, I found abundant evidence to support a finding of mismanagement of the Legal
Department by Atty. Sadac.

c. INEFFICIENCY, INEFFECTIVENESS, AND INDECISIVENESS

The above specific charges are each proven and/or established by the same nature of evidence. 6

Two days later, or on 10 August 1989, Mr. Morales issued a memorandum to private respondent which, among other things,
pertinently stated:

. . . The Board, however, feels that because during all its existence of almost forty (40) years, the Bank never had in
its employ any senior officer who had compelled it to resort to the unfortunate, sorry and nasty spectacle of
conducting a formal hearing (which of course is distasteful to all parties concerned) of whatever charge such as the
one lodged against you just to terminate your services, consonant with the due process requirements of the
Constitution, the Labor Code, the Implementing Regulations thereof and other pertinent laws, it has chosen the more
compassionate option of waiting for your voluntary resignation from your employ with the Bank.

In the meantime, since all the lawyers under you, by petitioning for a change in leadership of the department despite
the fact that all these lawyers have all been hired and promoted to their positions upon your recommendation, have
thus shown lack of confidence in you, the Board feels it has no reason to continue reposing confidence in you and
therefore elected to exercise its prerogative as your client, under the rules of client and lawyer relationship to direct
Atty. William R. Veto, Legal Counsel of the Bank these many years to appear in substitution of you in all the cases
in which you are presently appearing as counsel of record for the Bank. For this purpose, the Bank as your client,
therefore, instructs you to deliver the folders of pleadings and documents of all cases you are now personally
handling and submit a list of all the cases where you appear as the counsel of record for the bank and the
corresponding titles thereof not later than the close of office hours on Tuesday, August 15, 1989 so that the Legal
Counsel of the Bank, Atty. William R. Veto, could file his substitution of appearance in all said cases where you are
counsel of record. Atty. Veto has already been instructed and authorized by the Board to take over from you the
functions that you are now performing in the Legal Department. 7
Reacting to the above memorandum, private respondent, on 14 August 1989 addressed a letter to Board Chairman Morales, furnishing
the other members of the Board, to the effect that the report of Mr. Banico contained libelous statements and that the implementation
of the chairman's memorandum would lead to an illegal dismissal. Pointing out that he could not now in conscience resign in the face
of Mr. Banico's "baseless and libelous findings," private respondent requested for a full hearing by the Board of Directors so that he
could clear his name. 8

On 17 August 1989, petitioner Ricardo J. Romulo, Board Vice-Chairman, answered private respondent. Mr. Romulo stressed that
private respondent's services were not terminated by the Board which, instead, was merely exercising its managerial prerogative "to
control, conduct (its) business in the manner (it) deems fit and to regulate the same." In reply to private respondent's request for a
formal hearing, Mr. Romulo reiterated the Board's decision that it would be to the best interest of all concerned if the "distasteful
spectacle" of a hearing would not be resorted to "in order to adhere to (the bank's) long standing compassionate policy." 9 Mr. Romulo
also said:

We would like to emphasize that our decision as a Board did not dismiss you from the service of the Bank. All that
the Board is saying to you is that it has lost its confidence in you and therefore it is patiently awaiting your
resignation of course with your right of retirement pay in accordance with the policy adopted by the Bank under
these situations. Trust or confidence like love are feelings which emanate from the heart and, as the song goes, "once
a heart is torn apart it is never the same again." So also confidence like a tooth once pulled can never be restored. 10

In his memorandum of 28 August 1989 to the members of the Board, private respondent again made a request for a full hearing and
cautioned that, under Section 31 of the Corporation Code, individual members of the Board could be held accountable for voting or
assenting to patently unlawful acts of the corporation.

On 31 August 1989, Mr. Romulo wrote back expressing, in part, as follows:

7. The charge that you have been constructively dismissed is likewise without basis because as we said before, you
are free to remain in the employ of the bank if you so wish, even if the bank were to incur the tremendous expense
of continuing to pay your high salary just so it can continue to adhere to its compassionate policy of avoiding
ruining the future of any of its officers by a possible dismissal for cause which is certainly bound to leak to the
public. It is believed, however, that there is no law which can compel an employer to give any of his employees any
particular work at all. 11

Mr. Romulo stated that the bank's confidence on private respondent had been lost "most especially in the light of (his)
threats" and that the latter could "bring the matter up in the appropriate forum." 12

Undaunted, private respondent, in his memorandum of 07 September 1989 to the individual members of the Board of Directors,
persisted in his request for a formal investigation. 13 Having been unheeded, private respondent, on 09 November 1989, filed with the
Manila arbitration branch of the NLRC, a complaint, docketed NLRC Case No. 00-11-05252-89, against herein petitioners for illegal
dismissal and damages. 14

After learning of the filing of the complaint, the Board of Directors, on 21 November 1989, adopted Resolution No. 5803 terminating
the services of private respondent "in view of his belligerence" and the Board's "honest belief that the relationship" between private
respondent and petitioner bank was one of "client and lawyer." Private respondent was removed from his office occupancy in the bank
and ordered disentitled, starting 10 August 1989, to any compensation and other benefits. The Board instructed management to take
the necessary steps to "defend itself and all the members of the Board of Directors" from private respondent's complaint. 15

Pursuing their stand that the association between the bank and private respondent was one of a client-lawyer relationship, herein
petitioners filed a motion to dismiss the complaint with the NLRC on the ground of lack of jurisdiction. 16 Private respondent,
opposing the motion, insisted on the existence of an employer-employee relationship between them. 17 In their reply, petitioners added
another ground for seeking a dismissal of the complaint, i.e., that under the ruling in Besa vs. PNB, 18 the rule governing the duration
of private respondent's term was provided for by the Rules of Court and not by the Labor Code. 19

Following an exchange of position papers and other pleadings, Labor Arbiter Jovencio Ll. Mayor, Jr., on 02 October 1990, rendered a
decision dismissing the complaint for lack of merit. 20 The Labor Arbiter was convinced that the relationship between petitioner bank
and private respondent was one of lawyer-client based on the functions of the latter which "only a lawyer with highly trained legal
mind, can effectively discharge." 21 He distinguished the instant controversy from the situation in Hydro Resources Contractors
Corporation vs. Pagalilauan 22 in that herein private respondent, he said, only performed functions encompassed by the practice of
law while in Hydro Resources, the involved lawyer was a "mere legal assistant" tasked with certain duties not all that related to the
practice of law. The Labor Arbiter concluded that the complaint stated no cause of action because a lawyer-client relationship should
instead be governed by Section 26, Rule 138, of the Rules of Court. On whether or not there were valid grounds to terminate the
services of private respondent, the Labor Arbiter, noting the "letter-petition" of the nine subordinate lawyers of private respondent,
said:
 . . . The truth and veracity of these complaints were respectively affirmed under oath by each and every one of these
nine subordinate lawyers in their individual affidavits (Annexes "1-J" to "1-R", inclusive), (Ibid). From these
individual statements, it can be culled that complainant has been charged, among others, with committing such acts
as shouting and insulting lawyers even in the presence of clients, having frequent outbursts of temper, being
indecisive even on simple and fundamental questions, of devoting time to private and personal matters such that he
is always out of the office, of being closed and narrow minded to the ideas of subordinates, and other similar acts.
These charges were never refuted by herein complainant and instead narrated a general refutation . . . 23

The Labor Arbiter brushed aside private respondent's claim that he was denied due process, holding that private respondent
was "heard exhaustively on the matter of the charge lodged against him" and that, "for valid practical reasons," petitioners
"were not in a position to accede" to the demand for a formal hearing. 24

On appeal, the NLRC concluded differently. On 24 September 1991, the First Division of the NLRC rendered a resolution 25 reversing
the decision of the Labor Arbiter. It held that private respondent was an employee of petitioner bank which "never stated that
complainant was an outside counsel for he was never so" 26 as against the pronouncement of the Court in Hydro Resources that
distinguished between an in-house counsel and an outsidecounsel hired on a retainer basis. Certain other circumstances that likewise
did not escape NLRC's attention were that petitioner George L. Go, the bank's president, had enjoined private respondent to attend a
bank-sponsored symposium on Japanese investment on 08 September 1989 at the Hotel Intercontinental; that in petitioners' letter of
31 August 1989, private respondent was referred to as an employee; that in another letter, dated 24 November 1989, petitioner
admitted having terminated private respondent's employment and requested the return of the 1988 Mitsubishi Galant 1800 which he
had acquired through the bank's car plan; and that, through a communication of 02 January 1990 of the Personnel and HRD
Department, the bank announced that private respondent's employment had been terminated effective 21 November 1989.

Turning to the issue of whether or not the employment of private respondent was terminated for cause, the NLRC held that because he
had not been afforded a hearing in accordance with law, there was no factual basis to support the allegation of loss of confidence made
by petitioners who, instead, had relied on the doctrine of res ipsa loquitor.

The NLRC ruled that private respondent was denied the right to due process with the bank's failure to observe the twin requirements
of notice and hearing. The 10th August 1989 memorandum could not have been a substitute for notice because it did not manifest
petitioners' intention to dismiss him from employment, and neither the meeting between private respondent and the complaining
lawyers nor those held between private respondent and petitioner Banico could be considered the "investigations" which private
respondent had consistently sought.

For having been made to undergo unnecessary embarrassment by being stripped of his functions and made "to undergo the sad and
painful experience of reporting to office every day doing nothing," the NLRC, citing Sibal vs. Notre Dame of Greater
Manila, 27 awarded damages.

The NLRC, thereby concluded:

WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2, 1990 be, as it is hereby,
SET ASIDE and a new one ENTERED declaring the dismissal of the complainant as illegal, and consequently
ordering the respondents jointly and severally to reinstate him to his former position as bank Vice-President and
General Counsel without loss of seniority rights and other privileges, and to pay him full backwages and other
benefits from the time his compensation was withheld to his actual reinstatement, as well as moral damages of
P100,000.00, exemplary damages of P50,000.00, and attorney's fees equivalent to Ten Percent (10%) of the
monetary award. Should reinstatement be no longer possible due to strained relations, the respondents are ordered
likewise jointly and severally to grant separation pay at one (1) month per year of service in the total sum of
P293,650.00 with backwages and other benefits from November 16, 1989 to September 15, 1991 (cut-off date
subject to adjustment) computed at P1,055,740.48, plus damages of P100,000.00 (moral damages), P50,000.00
(exemplary damages) and attorney's fees equal to Ten Percent (10%) of all the monetary award, or a grand total of
P1,649,329.53.

SO ORDERED. 28

Petitioners filed a motion, 29 opposed by private respondent, 30 for a reconsideration of the resolution.

The motion for reconsideration was still pending when private respondent, following an exchange of yet additional pleadings, filed an
urgent ex-parte motion for immediate reinstatement grounded on Article 223 of the Labor Code. 31 On 07 November 1991, NLRC
Executive Clerk Pascual Y. Reyes addressed a communication, with the letterhead of the First Division of the NLRC, to Attys.
Vicente Abad Santos and William R. Veto, counsel for petitioners, which read:

G R E E T I N G S:
 Consistent with the NLRC New Rules and Procedure on Appeal under Republic Act 6715, amending Article 223 of
the Labor Code, RESPONDENT(s) is/are hereby directed within ten (10) calendar days from receipt of this Order:

To immediately reinstate complainant under the same terms and conditions prevailing prior to his
dismissal or separation or, at RESPONDENT(s) option to reinstate him in the payroll, and to
submit proof of compliance thereof, otherwise, a Writ of Execution shall issue. 32

Petitioners filed a motion to quash the "untitled document" which was claimed to be "highly irregular." Private respondent
countered, on the strength of the ruling in Aris (Phil.) Inc. vs. NLRC, 33 that even before its amendment by Section 12 of R.A.
6715, Article 223 of the Labor Code already allowed execution of decisions of the NLRC pending their appeal to the
Secretary of Labor and Employment, and that, under Section 2, Rule XII, of the New Rules of Procedure of the NLRC,
Executive Clerk Reyes could be said to be performing a function similar or equivalent to that discharged by the Clerk of
Court of the Court of Appeals.

Petitioners, on their part filed an urgent motion for immediate resolution of their motion for reconsideration, 34 on account of what was
felt to be the "dubious legality" of the directive for reinstatement.

Pending the above incidents, particularly the motion for reconsideration of NLRC's resolution that has reversed the Labor Arbiter's
decision, petitioners have filed the instant petition for certiorari, with prayer for the issuance of a writ of preliminary injunction,
before this Court. The petition questions the resolution of the NLRC finding that an employer-employee relationship existed between
petitioner bank and private respondent invoking the rulings in Besa vs. PNB 35 and Asis vs. Minister of Labor and
Employment, 36 against that of Hydro Resources Contractors vs. Pagalilauan; 37 that the facts on record do support valid grounds for
terminating the employment of private respondent; and that due process has been duly observed. The petition likewise assails the
NLRC for its monetary awards and in omitting to resolve the allegation of forum-shopping committed by private respondent.

This Court required petitioners to post a cash bond in the amount of P500,000.00 for the issuance of a temporary restraining orders. 38

Prefatorily, the Court must state that the filing of a motion for reconsideration of a decision of the NLRC is prerequisite to the
elevation of the case to this Court on a petition for certiorari. The rule is aimed at enabling the commission to look into and correct its
error or mistake, if any has been committed, without the precipitate intervention of this Court. 39 The failure to allow that opportunity
for whatever reason is ordinarily a fatal procedural defect that could warrant the dismissal of the petition. 40

In this case, petitioners, instead of waiting for the resolution by the NLRC of their motion for reconsideration, posthaste filed the
instant petition. Its prematurity notwithstanding, the instant petition for certiorari was given due course in order not to unduly delay
the final disposition of the case considering that the issues involved 41 have heretofore been ventilated practically to the limit by the
parties.

While the Court agrees with private respondent that execution pending appeal may be ordered by the NLRC, 42 it is equally true,
however, that where the dismissed employee's reinstatement would lead to a strained relation between the employer and the employee
or to an atmosphere of antipathy and antagonism, the exception to the twin remedies of reinstatement and payment of backwages can
be invoked and reinstatement, which might become anathema to industrial peace, could be held back pending appeal. 43 Nevertheless,
the Court is not prepared to preempt the NLRC and conclude that the directive for reinstatement is of "dubious" character. 44 It can be
assumed that had petitioners waited for NLRC's resolution on the motion for reconsideration, the question on the regularity in the
issuance of the directive for reinstatement could have perhaps properly been delved into.

The existence of an employer-employee relationship is, itself, a factual question 45 well within the province of the NLRC. Considering,
nevertheless, that its findings are at odds with the Labor Arbiter, the Court sees it fit to dwell a bit into the issue. 46

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal, and (4) the power to control the employee's
conduct, with the control test generally assuming primacy in the overall consideration. The power of control refers to the existence of
the power and not necessarily to the actual exercise thereof. It is not essential, in other words, for the employer to actually supervise
the performance of duties of the employee; it is enough that the former has the right to wield the power. 47

The NLRC, in the instant case, based its finding that there existed an employer-employee relationship between petitioner bank and
private respondent on these factual settings:

It was complainant's understanding with respondent Morales that he would be appointed and assigned to the Legal
Department as vice President with the same salary, privileges and benefits granted by the respondent bank to its
ranking senior officers. He was not hired as lawyer on a retainership basis but as an officer of the bank.
 Thus, the complainant was given an appointment as Vice President, Legal Department, effective August 1, 1981,
with a monthly salary of P8,000.00, monthly allowance of P4,500.00, and the usual two months Christmas bonus
based on basic salary likewise enjoyed by the other officers of the bank.

Then, as part of the ongoing organization of the Legal Department, the position of General Counsel of the bank was
created and extended to the complainant. In addition to his duties as Vice President of the bank, the complainant's
duties and responsibilities were so defined as to prove that he was a bank officer working under the supervision of
the President and the Board of Directors of the respondent bank.

In his more than eight years employment with the respondent bank, the complainant was given the usual payslips to
evidence his monthly gross compensation. The respondent bank, as employer, withheld taxes due to the Bureau of
Internal Revenue from the complainant's salary as employee. Moreover, the bank enrolled the complainant as its
employee under the Social Security System and Medicare programs. The complainant contributed to the bank
Employees' Provident Fund.

When the respondent bank changed its payroll accounting system in September 1988 by appointing SGV & Co. to
handle it and Far East Bank & Trust Company to pay the salaries and other benefits of Equitable Banking
Corporation officers, the complainant was included as one of corporate officers. Specifically, that there were eleven
Far East Bank and Trust Company credit memos starting October 13, 1988 up to September 13, 1989 received by
the complainant from FBTC crediting his salary and Christmas bonus to his account with FBTC per instruction of
the respondent bank.

Inasmuch as the complainant and the lawyers in the Legal Department were receiving salaries and other benefits as
other bank officers and employees, the attorney's fees, documentary and notarial fees earned in the exercise of their
profession as in-house lawyers were not given to or even shared with them, instead all were credited to the income
of the bank. In 1987 and 1988, the complainant and his subordinate lawyers were able to generate by way of
attorney's fees, documentary and notarial fees a total income of P973,028.00 for the bank('s) benefit. In turn, the
respondent bank shouldered the professional tax and Integrated Bar of the Philippines dues of the complainant and
his subordinate lawyers. Further proofs that there existed employer-employee relationship between the respondent
bank and the complainant are the following, to wit:

(1) Complainant's monthly attendance, like those of other bank officers, was recorded by the Chief Security Officer
and reported to the Office of the President with copy of the report furnished to the bank Personnel and HRD
Department.

(2) Complainant was authorized by the President to sign for and in behalf of the bank contracts covering legal
services of lawyers to be retained by the respondent bank for its branches on periodical retainership basis.

(3) Complainant participated as part of management in annual Management Planning Conferences which started in
1986 on objective-setting and long-range planning in response to the requirement of the rapidly changing
environment.

(4) Respondent bank extended to complainant the benefit (of) a car plan like any other qualified senior officer of the
bank.

(5) Respondent bank since 1982 continuously reported and included the complainant as one of its senior officers in
its statements of financial condition holding the position of Vice President. These bank statements have been
distributed and circularized to the public, including bank clients and government entities.

(6) Complainant, like other bank officers, prepared his biographical data for submission to the Central Bank after his
assumption of duties in 1981. Thereafter, and pursuant to the regulations of the Central Bank, he has been required
to update annually his biographical data. 48

It would virtually be foolhardy to so challenge the NLRC as having committed grave abuse of discretion in coming up with its above
findings. Just to the contrary, NLRC appears to have been rather exhaustive in its examination of this particular question (existence or
absence of an employer-employee relationship between the parties). Substantial evidence, which is the quantum of evidence required
to establish a fact in cases before administrative and quasi-judicial bodies, connotes merely that amount of relevant evidence which a
reasonable mind might accept to be adequate in justifying a conclusion. 49

The rulings in Besa and Asis, cited by petitioners, could not be all that controlling in this instance. In both cases, the question of
whether or not the parties had an employer-employee relationship was not the focal point of controversy. In Besa, the Court said:
 Petitioner's reliance on the constitutional provision against removal without cause is misplaced. It is appropriate to
invoke it when an officer or employee in the civil service enjoying a fixed term is made to lose his position without
warrant or justification. It certainly finds no application when the duration of one's term depends on the will of the
appointing power. That is so where the position held is highly confidential in character. Such is the case of the Chief
Legal Counsel of respondent Philippine National Bank. That is our answer to the specific question before us. Our
decision is limited to the validity of the action taken by respondent Bank. We do not by any means intimate an
opinion as to the legal consequences attaching to an action similar in character taken by any other office or agency
of the government concerning a lawyer in its staff, especially one who was not employed precisely because of the
marked degree of confidence reposed in him, but rather because of his technical competence.

As far as the petitioner is concerned, however, it is our conclusion that he could not plausibly contend that there was
a removal in the constitutional sense as what did take place was a termination of official relation. Accepting as he
did the position of chief legal adviser, the essence of which is the utmost degree of confidence involving such "close
intimacy which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals"
whether of personal trust or official matters, he could not have been unaware that his term could be cut short any
time without giving rise to any alleged infringement of the above constitutional safeguard. There was no removal
which according to such a mandate is only allowable for cause. Hence the lack of persuasive character of petitioner's
plea. 50

And in Asis, the Court held:

The Deputy Minister found that the evidence satisfactorily established that the Central's suspension of the
petitioner's and others' monthly ration of gasoline and LPG, had been caused by unavoidable financial constraints;
that such a suspension, in line with its conservation and cost-saving policy, did not in truth effect any significant
diminution of said benefits, since the petitioner was nevertheless entitled to reimbursement of the actual amount of
gas consumed; that petitioner had encouraged his co-employees to file complaints against the Central over the
rations issue, and this, as well as his institution of his own actions, had created an atmosphere of enmity in the
Central, and caused the loss by the Central of that trust and confidence in him so essential in a lawyer-client
relationship as that theretofore existing between them; and that under the circumstances, petitioner's discharge as the
Central's Legal Counsel and Head of the Manpower & Services Department was justified. The Deputy Minister's
order of dismissal was however subsequently modified, at the petitioner's instance, by decreeing the payment to the
latter of separation pay equivalent to one month's salary for every year of service rendered. 51

It was, in fact, Hydro Resources which directly confronted the issue; there, the Court ruled:

A lawyer, like any other professional, may very well be an employee of a private corporation or even of the
government. It is not unusual for a big corporation to hire a staff of lawyers as its in-house counsel, pay them regular
salaries, rank them in its table of organization, and otherwise treat them like its other officers and employees At the
same time, it may also contract with a law firm to act as outside counsel on a retainer basis. The two classes of
lawyers often work closely together but one group is made up of employees while the other is not. A similar
arrangement may exist as to doctors, nurses, dentists, public relations practitioners, and other professionals. 52

The existence of an employer-employee relationship, between the bank and private respondent brings the case within the coverage of
the Labor Code. Under the Code, an employee may be validly dismissed if these requisites are attendant: (1) the dismissal is grounded
on any of the causes stated in Article 282 of Labor Code, and (2) the employee has been notified in writing and given the opportunity
to be heard and to defend himself as so required by Section 2 and Section 5, Rule XIV, Book V, of the Implementing Rules of the
Labor
Code. 53

Article 282(c) of the Labor Code provides that "willful breach by the employee of the trust reposed in him by his employer" is a cause
for the termination of employment by an employer. Ordinary breach of trust will not suffice, it must be willful and without justifiable
excuse. 54 This ground must be founded on facts established by the employer who must clearly and convincingly prove by substantial
evidence 55 the facts and incidents upon which loss of confidence in the employee may fairly be made to rest; otherwise, the dismissal
will be rendered illegal. 56

Petitioners' stated loss of trust and confidence on private respondent was spawned by the complaints leveled against him by the
lawyers in his department. The letter-complaint signed by the nine lawyers read:

June 26,
1989
 Mr. Manuel L. Morales
Chairman, Board of Directors
Equitable Banking Corporation

S i r:

With utmost respect, we have taken the liberty of seeking your intercession on the problems besetting the Legal
Department.

For a long time, we have kept silent, containing within us the abusive conduct and inefficiency of our department
head, Atty. Ricardo L. Sadac, if only to preserve cohesion among us. But we have reached the breaking point where
we could endure no more except to speak out. We realize the gravity of our action and its possible repercussions but
we only have ourselves to blame if we remained silent.

Atty. Sadac's insults to the lawyers which are totally uncalled for and made even in the presence of clients are
simply too much for a fellow lawyer. His outburst of temper on inconsequential matters have now become
commonplace in the department. His mismanagement, ineffectiveness as a head and indecisiveness on basic legal
questions have adversely affected the smooth operation of the department and the output of the lawyers. He berates
rather than inspires, delays rather than facilitates. Each lawyer's complaint are (sic) attached hereto attached (sic) as
Annexes "A", "A-1" to "A-8".

At present, we are disgruntled on how he runs the department and our morale is at its ebb. While our only desire is
to work under an auspicious environment and under an effective head, we could not do so because of the General
Counsel.

We, therefore, respectfully pray for an immediate change in the department leadership in order to pave the way for a
more effective system, a new image for the department, and restore professionalism and the dignity of the lawyers.

Please accept our assurances that the interest of the bank is primordial to us as we pledge our total commitment and
unflinching loyalty to this institution.

Thank you. 57

Concededly, a wide latitude of discretion is given an employer in terminating the employment of managerial employees on the ground
of breach of trust and confidence. 58 In order to constitute a "just cause" for dismissal, however, the act complained of must be related
to the performance of the duties of the employee such as would show him to be thereby unfit to continue working for the
employer. 59 Here, the grievances of the lawyers, in main, refer to what are perceived to be certain objectionable character traits of
private respondent. Although petitioners have charged private respondent with allegedly mishandling two cases in his long service
with the bank, it is quite apparent that private respondent would not have been asked to resign had it not been for the letter-complaint
of his associates in the Legal Department.

Confident that no employer-employee existed between the bank and private respondent, petitioners have put aside the procedural
requirements for terminating one's employment, i.e., (a) a notice apprising the employee of the particular acts or omissions for which
his dismissal is sought, and (b) another notice informing the employee of the employer's decision to dismiss him. 60 Failure to comply
with these requirements taints the dismissal with illegality. This procedure is mandatory, any judgment reached by management
without that compliance can be considered void and inexistent. 61 While it is true that the essence of due process is simply an
opportunity to be heard or, as applied in administrative proceedings, an opportunity to explain one's side, 62 meetings in the nature of
consultation and conferences such as the case here, however, may not be valid substitutes for the proper observance of notice and
hearing. 63

Moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to
labor, or is done in a manner contrary to good morals, good customs or public policy. Exemplary damages may be awarded if the
dismissal is effected in a wanton, oppressive or malevolent manner. 64

The Court has deliberated closely on this case and, after reviewing all the facts and circumstances heretofore described, it is its
considered view that petitioners have not been motivated by malice or bad faith nor have they acted in wanton, oppressive or
malevolent manner such as to warrant a judgment against them for moral and exemplary damages. Malice or bad faith, the lesser evil
of the two, the Court has once said, "implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively
operating with furtive design or ill will." 65
It, too, then follows that the individual petitioners may not be held solidarily liable with the bank. In Santos vs. NLRC, 66 the Court has
explained the rule quite elaborately; thus:

A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf
and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting
through its directors, officers and employees, are its sole liabilities. Nevertheless, being a mere fiction of law,
peculiar situations or valid grounds can exist to warrant, albeit done sparingly, the disregard of its independent being
and the lifting of the corporate veil. As a rule, this situation might arise when a corporation is used to evade a just
and due obligation or to justify a wrong, to shield or perpetrate fraud, to carry out similar other unjustifiable aims or
intentions, or as a subterfuge to commit injustice and so circumvent the law. In Tramat Mercantile, Inc., vs. Court of
Appeals [238 SCRA 14, 19], the Court has collated the settled instances when, without necessarily piercing the veil
of corporate fiction, personal civil liability can also be said to lawfully attach to a corporate director, trustee or
officer; to wit: When —

(1) He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross
negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the
corporation, its stockholders or other persons;

(2) He consents to the issuance of watered stocks or who, having knowledge thereof, does not
forthwith file with the corporate secretary his written objection thereto;

(3) He agrees to hold himself personally and solidarily liable with the corporation; or

(4) He is made, by a specific provision of law, to personally answer for his corporate action.

The case of petitioner is way off these exceptional instances. It is not even shown that petitioner has had a direct
hand in the dismissal of private respondent enough to attribute to him (petitioner) a patently unlawful act while
acting for the corporation. Neither can Article 289 of the Labor Code be applied since this law specifically refers
only to the imposition of penalties under the Code. . . . .

It is true, there were various cases when corporate officers were themselves held by the Court to be personally
accountable for the payment of wages and money claims to its employees. In A.C. Ransom Labor Union-CCLU
vs. NLRC [142 SCRA 269] for instance, the Court ruled that under the Minimum Wage Law, the responsible officer
of an employer corporation could be held personally liable for nonpayment of backwages for "(i)f the policy of the
law were otherwise, the corporation employer (would) have devious ways for evading payment of back wages." In
the absence of a clear identification of the officer directly responsible for failure to pay the backwages, the Court
considered the President of the corporation as such officer. The case was cited in Chua vs. NLRC [182 SCRA 353]
in holding personally liable the vice-president of the company, being the highest and most ranking official of the
corporation next to the President who was dismissed, for the latter's claim for unpaid wages.

A review of the above exceptional cases would readily disclose the attendance of facts and circumstances that could
rightly sanction personal liability on the part of the company officer. In A.C.Ransom, the corporate entity was a
family corporation and execution against it could not be implemented because of the disposition posthaste of its
leviable assets evidently in order to evade its just and due obligations. The doctrine of "piercing the veil of corporate
fiction" was thus clearly appropriate. Chua likewise involved another family corporation, and this time the conflict
was between two brothers occupying the highest ranking positions in the company. There were incontrovertible
facts which pointed to extreme personal animosity that resulted, evidently in bad faith, in the easing out from the
company of one of the brothers by the other.

The basic rule is still that which can be deduced from the Court's pronouncement in Sunio vs. National Labor
Relations Commission [127 SCRA 390]; thus:

We come now to the personal liability of petitioner, Sunio, who was made jointly and severally
responsible with petitioner company and CIPI for the payment of the backwages of private
respondents. This is reversible error. The Assistant Regional Director's Decision failed to disclose
the reason why he was made personally liable. Respondents, however, alleged as grounds thereof,
his the being owner of one-half (1/2) interest of said corporation, and his alleged arbitrary
dismissal of private respondents.

Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner
corporation There appears to be no evidence on record that he acted maliciously or in bad faith in
 terminating the services of private respondents. His act, therefore, was within the scope of his
authority and was a corporate act.

It is basic that a corporation is invested by law with a personality separate and distinct from those
of the persons composing it as well as from that of any other legal entity to which it may be
related. Mere ownership by a single stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not of itself sufficient ground for disregarding the separate
corporate personality. Petitioner Sunio, therefore, should not have been made personally
answerable for the payment of private respondents' back salaries.

The Court, to be sure, did appear to have deviated somewhat in Gudez vs. NLRC [183 SCRA 644];
however, it should be clear from our recent pronouncement in Mam Realty Development
Corporation and Manuel Centeno vs. NLRC [244 SCRA 797] that the Suniodoctrine still
prevails. 67

For having violated private respondent's right to due process private respondent shall, considering the attendant circumstances
particularly his repeated, but unheeded, request for a hearing, be entitled to an amount of P5,000.00.

The allegation that private respondent was guilty of forum-shopping deserves scant consideration. Suffice it said that, for forum-
shopping to exist, both actions should involve a common transaction with essentially the same facts and circumstances and raise
identical causes of action, subject matter and issues. 68 Certainly, the filing by private respondent of a criminal action for libel during
the pendency of this illegal dismissal case could not constitute forum-shopping.

The controversy spawning this case has generated not too little personal animosities. 69 Reinstatement, which is the consequence of
illegal dismissal, has markedly been rendered undesirable. Private respondent shall, instead, be entitled to backwages from the time of
his dismissal until reaching sixty (60) years of age (1995) 70 and, thereupon, to retirement benefits in accordance with Article 287 of
the Labor Code and Section 14, 71 Rule 1, Book VI, of the Implementing Rules of the Labor Code. 72

WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following MODIFICATIONS: That private
respondent shall be entitled to backwages from termination of employment until turning sixty (60) years of age (in 1995) and,
thereupon, to retirement benefits in accordance with law; that private respondent shall be paid an additional amount of P5,000.00; that
the award of moral and exemplary damages are deleted; and that the liability herein pronounced shall be due from petitioner bank
alone, the other petitioners being absolved from solidary liability. No costs.

SO ORDERED.
FIRST DIVISION

G.R. No. L-98368 December 15, 1993

OPULENCIA ICE PLANT AND STORAGE AND/OR DR. MELCHOR OPULENCIA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), LABOR ARBITER NUMERIANO VILLENA
AND MANUEL P. ESITA, respondents.

Inocentes, De Leon, Leogardo, Atienza, Magnaye & Azucena (IDLAMA) Law Offices for petitioners.

Noli J. De los Santos for private respondent.

BELLOSILLO, J.:

MANUEL P. ESITA was for twenty (20) years a compressor operator of Tiongson Ice Plant in San Pablo City. In 1980 he was hired
as compressor operator-mechanic for the ice plants of petitioner Dr. Melchor Opulencia located in Tanauan, Batangas, and Calamba,
Laguna. Initially assigned at the ice plant in Tanauan, Esita would work from seven o'clock in the morning to five o'clock in the
afternoon receiving a daily wage of P35.00.

In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing overhauling, taking the place of compressor
operator Lorenzo Eseta, who was relieved because he was already old and weak. For less than a month, Esita helped in the
construction-remodeling of Dr. Opulencia's house.

On 6 February 1989, for demanding the correct amount of wages due him, Esita was dismissed from service. Consequently, he filed
with Sub-Regional Arbitration Branch IV, San Pablo City, a complaint for illegal dismissal, underpayment, non-payment for overtime,
legal holiday, premium for holiday and rest day, 13th month, separation/retirement pay and allowances against petitioners.

Petitioners deny that Esita is an employee. They claim that Esita could not have been employed in 1980 because the Tanauan ice plant
was not in operation due to low voltage of electricity and that Esita was merely a helper/peonof one of the contractors they had
engaged to do major repairs and renovation of the Tanauan ice plant in 1986. Petitioners further allege that when they had the
Calamba ice plant repaired and expanded, Esita likewise rendered services in a similar capacity, and thus admitting that he worked as
a helper/peon in the repair or remodeling of Dr. Opulencia's residence in Tanauan.

Opulencia likewise maintains that while he refused the insistent pleas of Esita for employment in the ice plants due to lack of vacancy,
he nonetheless allowed him to stay in the premises of the ice plant for free and to collect fees for crushing or loading ice of the
customers and dealers of the ice plant. Opulencia claims that in addition, Esita enjoyed free electricity and water, and was allowed to
cultivate crops within the premises of the ice plant to augment his income. Petitioners however admit that "following the tradition of
'pakikisama' and as a token of gratitude of the part of the complainant (Esita), he helps in the cleaning of the ice plant premises and
engine room whenever he is requested to do so, and this happens only (at) twice a month."

On 8 December 1989, Labor Arbiter Nemeriano D. Villena rendered a decision 1 finding the existence of an employer-employee
relationship between petitioners and Esita and accordingly directed them to pay him P33,518.02 representing separation pay,
underpayment of wages, allowances, 13th month, holiday, premium for holiday, and rest day pays. The claim for overtime pay was
however dismissed for lack of basis, i.e., Esita failed to prove that overtime services were actually rendered.

On 29 November 1990, the Third Division of the National Labor Relations Commission, in Case No. RAB-IV-2-2206-89, affirmed
the decision of Labor Arbiter Villena but reduced the monetary award to P28,344.60 as it was not proven that Esita worked every day
including rest days and on the days before the legal holidays. On 26 March 1991, petitioners' motion for reconsideration was denied.

In this present recourse, petitioners seek reversal of the ruling of public respondents Labor Arbiter and NLRC, raising the following
arguments: that public respondents have no jurisdiction over the instant case; that Esita's work in the repair and construction of Dr.
Opulencia's residence could not have ripened into a regular employment; that petitioners' benevolence in allowing Esita to stay inside
the company's premises free of charge for humanitarian reason deserves commendation rather than imposition of undue penalty; that
Esita's name does not appear in the payrolls of the company which necessarily means that he was not an employee; and, that Esita's
statements are inconsistent and deserving of disbelief. On 13 May 1991, petitioners' prayer for a temporary restraining order to prevent
respondents from enforcing the assailed resolutions of NLRC was granted.
The instant petition lacks merit, hence, must be dismissed.

Petitioners allege that there is no employer-employee relationship between them and Esita; consequently, public respondents have no
jurisdiction over the case. Petitioners even go to the extent of asserting that "in case like the one at bar where employer-employee
relationship has been questioned from the very start, Labor Arbiters and the NLRC have no jurisdiction and should not assume
jurisdiction therein."

While the Labor Arbiter and the NLRC may subsequently be found without jurisdiction over a case when it would later appear that no
employer-employee relationship existed between the contending parties, such is not the situation in this case where the employer-
employee relationship between the petitioners and Esita was clearly established. If the argument of petitioners were to be allowed,
then unscrupulous employers could readily avoid the jurisdiction of the Labor Arbiters and NLRC, and may even elude compliance
with labor laws only on the bare assertion that an employer-employee relationship does not exist.

Petitioners further argue that "complainant miserably failed to present any documentary evidence to prove his employment. There was
no time sheet, pay slip and/or payroll/cash voucher to speak of. Absence of these material documents are necessary fatal to
complainant's cause."

We do not agree. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted. For, if only documentary evidence would be required to
show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer would wish to come out
with any trace of the illegality he has authored considering that it should take much weightier proof to invalidate a written
instrument. 2 Thus, as in this case where the employer-employee relationship between petitioners and Esita was sufficiently proved by
testimonial evidence, the absence of time sheet, time record or payroll has become inconsequential.

The petitioners' reliance on Sevilla v. Court of Appeals 3 is misplaced. In that case, we did not consider the inclusion of employer's
name in the payroll as an independently crucial evidence to prove an employer-employee relation. Moreover, for a payroll to be
utilized to disprove the employment of a person, it must contain a true and complete list of the employees. But, in this case, the
testimonies of petitioners' witnesses admit that not all the names of the employees were reflected in the payroll.

In their Consolidated Reply, petitioners assert that "employees who were absent were naturally not included in the weekly
payrolls." 4 But this simply emphasizes the obvious. Petitioners' payrolls do not contain the complete list of the employees, so that the
payroll slips cannot be an accurate basis in determining who are and are not their employees. In addition, as the Solicitor General
observes: ". . . . the payroll slips submitted by petitioners do not cover the entire period of nine years during which private respondent
claims to have been employed by them, but only the periods from November 2 to November 29, 1986 and April 26 to May 30, 1987 . .
. . It should be noted that petitioners repeatedly failed or refused to submit all payroll slips covering the period during which private
respondent claims to have been employed by them despite repeated directives from the Labor Arbiter . . . ." 5 In this regard, we can
aptly apply the disputable presumption that evidence willfully suppressed would be adverse if produced. 6

Petitioners further contend that the claim of Esita that he worked from seven o'clock in the morning to five o'clock in the afternoon,
which is presumed to be continuous, is hardly credible because otherwise he would not have had the time to tend his crops. 7 As
against this positive assertion of Esita, it behooves petitioners to prove the contrary. It is not enough that they raise the issue of
probability, nay, improbability, of the conclusions of public respondents based on the facts bared before them, for in case of doubt, the
factual findings of the tribunal which had the opportunity to peruse the conflicting pieces of evidence should be sustained.

The petitioners point out that even granting arguendo that Esita was indeed a mechanic, he could never be a regular employee because
his presence would be required only when there was a need for repair. We cannot sustain this argument. This circumstance cannot
affect the regular status of employment of Esita. An employee who is required to remain on call in the employer's premises or so close
thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. 8 In
sum, the determination of regular and casual employment 9 is not affected by the fact that the employee's regular presence in the place
of work is not required, the more significant consideration being that the work of the employee is usually necessary or desirable in the
business of the employer. More importantly, Esita worked for 9 years and, under the Labor Code, "any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to that
activity in which he is employed . . . ." 10

The petitioners would give the impression that the repair of the ice plant and the renovation of the residence of Dr. Opulencia were
voluntarily extended by Esita because "[r]espondent did it on their (sic) own." Unfortunately for petitioners, we cannot permit these
baseless assertions to prevail against the factual findings of public respondents which went through the sanitizing process of a public
hearing. The same observation may be made of the alleged inconsistencies in Esita's testimonies. Moreover, on the claim that Esita's
construction work could not ripen into a regular employment in the ice plant because the construction work was only temporary and
unrelated to the ice-making business, needless to say, the one month spent by Esita in construction is insignificant compared to his
nine-year service as compressor operator in determining the status of his employment as such, and considering further that it was Dr.
Opulencia who requested Esita to work in the construction of his house.
In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to augment his income, there is no doubt
that petitioners should be commended; however, in view of the existence of an employer-employee relationship as found by public
respondents, we cannot treat humanitarian reasons as justification for emasculating or taking away the rights and privileges of
employees granted by law. Benevolence, it is said, does not operate as a license to circumvent labor laws. If petitioners were
genuinely altruistic in extending to their employees privileges that are not even required by law, then there is no reason why they
should not be required to give their employees what they are entitled to receive. Moreover, as found by public respondents, Esita was
enjoying the same privileges granted to the other employees of petitioners, so that in thus treating Esita, he cannot be considered any
less than a legitimate employee of petitioners.

WHEREFORE, there being no grave abuse of discretion on the part of public respondents, the instant petition is DISMISSED.
Accordingly, the restraining order we issued on 13 May 1991 is LIFTED.

SO ORDERED.

Cruz, Davide, Jr. and Quiason, JJ., concur.

FIRST DIVISION

G.R. No. 147816 May 9, 2003

EFREN P. PAGUIO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y.
GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA
IGLESIA,respondents.

VITUG, J.:

On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with petitioner Efren P.
Paguio, appointing the latter to be an account executive of the firm.1 Again, petitioner was to solicit advertisements for "The Manila
Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation
consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency advertisements based
on gross revenues less agency commission and the corresponding withholding tax. The commissions, released every fifteen days of
each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart from commissions,
petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the
contentious points raised by the parties had something to do with the following stipulations of the agreement; viz:

"12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards
anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only
rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any
way except with the duly authorized consent in writing of both parties.

"13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior to
effectivity of termination."2

On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from
respondent firm -

"Dear Mr. Paguio,

"Please be advised of our decision to terminate your services as Account Executive of Manila Times effective September 30,
1992.

"This is in accordance with our contract signed last July 1, 1992." 3

Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating clients from
his co-executives and failing to produce results, no definite cause for petitioner's termination was given. Aggrieved, petitioner filed a
case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages
without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for acts of
unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages.

In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside of
the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines. 4Asserting their right to terminate the
contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract
provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other.

The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times
Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his
commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise
adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the
amount of P20,000.00.

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual
relationship between the parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful as
long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to
bear upon the worker and absent any other circumstances vitiating his consent." 5 The finding of the NLRC was primarily hinged on
the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid of
counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC
held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day certain
agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to
be that which (would) necessarily come, although it (might) not be known when."6

Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the commission. In his
petition for review on certiorari, petitioner raised the following issues for resolution:

"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS FOR A FIXED
PERIOD.

"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.

"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES." 7

The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent
company - was it or was it not one of regular employment?

A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the following
factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or
absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or the
power to control the employee with respect to the means or methods by which his work is to be accomplished. 8 The "control test"
assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services are
rendered under the control and supervision of the party contracting for the service, not only as to the result of the work but also as to
the manner and details of the performance desired. 9

An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia
Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in reaching
that end.10 Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales
activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei,
company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the sales
activities of petitioner.

The Labor Code, in Article 280 thereof, provides:

"ART. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any employee
who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall continue while such activity exists."

Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business
or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these latter cases, where
such person has rendered at least one year of service, regardless of the nature of the activity performed or of whether it is continuous
or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he be first issued a
regular appointment or be formally declared as such before acquiring a regular status.11

That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on for
more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and
desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President, herself
admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent
corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once but five times, its contract
with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining
their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the
basis of the nature of the work petitioner has been called upon to perform. 12 The law affords protection to an employee, and it will not
countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to
deprive the employee of his security of tenure.13 The sheer inequality that characterizes employer-employee relations, where the scales
generally tip against the employee, often scarcely provides him real and better options.

The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal
must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized cause and must comply
with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself with either
of these requirements in terminating the services of petitioner. The notice of termination recites no valid or just cause for the dismissal
of petitioner nor does it appear that he has been given an opportunity to be heard in his defense.

The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents,
particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted.

WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the
National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to
the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted.

SO ORDERED.
SECOND DIVISION

G.R. No. 73887 December 21, 1989

GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner,

vs.
HONORATO JUDICO and NATIONAL LABOR RELATIONS COMMISSION, respondents.

G.A. Fortun and Associates for petitioner.

Corsino B. Soco for private respondent.

PARAS J.:

Before us is a Petition for certiorari to review the decision of the National Labor Relations Commission (NLRC, for brevity) dated
September 9, 1985 reversing the decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983, by 1) ordering petitioner insurance
company, Great Pacific Life Assurance Corporation (Grepalife, for brevity) to recognize private respondent Honorato Judico, as its
regular employee as defined under Art. 281 of the Labor Code and 2) remanding the case to its origin for the determination of private
respondent Judico's money claims.

The records of the case show that Honorato Judico filed a complaint for illegal dismissal against Grepalife, a duly organized insurance
firm, before the NLRC Regional Arbitration Branch No. VII, Cebu City on August 27, 1982. Said complaint prayed for award of
money claims consisting of separation pay, unpaid salary and 13th month pay, refund of cash bond, moral and exemplary damages
and attorney's fees.

Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the complaint on the ground that
the employer-employee relations did not exist between the parties but ordered Grepalife to pay complainant the sum of Pl,000.00 by
reason of Christian Charity.

On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as defined under Art. 281 of the
Labor Code and declaring the appeal of Grepalife questioning the legality of the payment of Pl,000.00 to complainant moot and
academic. Nevertheless, for the purpose of revoking the supersedeas bond of said company it ruled that the Labor Arbiter erred in
awarding Pl,000.00 to complainant in the absence of any legal or factual basis to support its payment.

Petitioner company moved to reconsider, which was denied, hence this petition for review raising four legal issues to wit:

I. Whether the relationship between insurance agents and their principal, the insurance company, is that of agent and
principal to be governed by the Insurance Code and the Civil Code provisions on agency, or one of employer-
employee, to be governed by the Labor Code.

II. Whether insurance agents are entitled to the employee benefits prescribed by the Labor Code.

III. Whether the public respondent NLRC has jurisdiction to take cognizance of a controversy between insurance
agent and the insurance company, arising from their agency relations.

IV. Whether the public respondent acted correctly in setting aside the decision of Labor Arbiter Vito J. Minoria and
in ordering the case remanded to said Labor Arbiter for further proceedings.(p. 159, Rollo)

The crux of these issues boil down to the question of whether or not employer-employee relationship existed between petitioner and
private respondent.

Petitioner admits that on June 9, 1976, private respondent Judico entered into an agreement of agency with petitioner Grepalife to
become a debit agent attached to the industrial life agency in Cebu City. Petitioner defines a debit agent as "an insurance agent
selling/servicing industrial life plans and policy holders. Industrial life plans are those whose premiums are payable either daily,
weekly or monthly and which are collectible by the debit agents at the home or any place designated by the policy holder" (p. 156,
Rollo). Such admission is in line with the findings of public respondent that as such debit agent, private respondent Judico had definite
work assignments including but not limited to collection of premiums from policy holders and selling insurance to prospective clients.
Public respondent NLRC also found out that complainant was initially paid P 200. 00 as allowance for thirteen (13) weeks regardless
of production and later a certain percentage denominated as sales reserve of his total collections but not lesser than P 200.00.
Sometime in September 1981, complainant was promoted to the position of Zone Supervisor and was given additional (supervisor's)
allowance fixed at P110.00 per week. During the third week of November 1981, he was reverted to his former position as debit agent
but, for unknown reasons, not paid so-called weekly sales reserve of at least P 200.00. Finally on June 28, 1982, complainant was
dismissed by way of termination of his agency contract.

Petitioner assails the findings of the NLRC that private respondent is an employee of the former. Petitioner argues that Judico's
compensation was not based on any fixed number of hours he was required to devote to the service of petitioner company but rather it
was the production or result of his efforts or his work that was being compensated and that the so-called allowance for the first thirteen
weeks that Judico worked as debit agent, cannot be construed as salary but as a subsidy or a way of assistance for transportation and
meal expenses of a new debit agent during the initial period of his training which was fixed for thirteen (13) weeks. Stated otherwise,
petitioner contends that Judico's compensation, in the form of commissions and bonuses, was based on actual production, (insurance
plans sold and premium collections).

Said contentions of petitioner are strongly rejected by private respondent. He maintains that he received a definite amount as his Wage
known as "sales reserve" the failure to maintain the same would bring him back to a beginner's employment with a fixed weekly wage
of P 200.00 regardless of production. He was assigned a definite place in the office to work on when he is not in the field; and in
addition to canvassing and making regular reports, he was burdened with the job of collection and to make regular weekly report
thereto for which an anemic performance would mean dismissal. He earned out of his faithful and productive service, a promotion to
Zone Supervisor with additional supervisor's allowance, (a definite or fixed amount of P110.00) that he was dismissed primarily
because of anemic performance and not because of the termination of the contract of agency substantiate the fact that he was indeed an
employee of the petitioner and not an insurance agent in the ordinary meaning of the term.

That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have held in Investment Planning Corp.
vs. SSS, 21 SCRA 294, an insurance company may have two classes of agents who sell its insurance policies: (1) salaried employees
who keep definite hours and work under the control and supervision of the company; and (2) registered representatives who work on
commission basis. The agents who belong to the second category are not required to report for work at anytime, they do not have to
devote their time exclusively to or work solely for the company since the time and the effort they spend in their work depend entirely
upon their own will and initiative; they are not required to account for their time nor submit a report of their activities; they shoulder
their own selling expenses as well as transportation; and they are paid their commission based on a certain percentage of their sales.
One salient point in the determination of employer-employee relationship which cannot be easily ignored is the fact that the
compensation that these agents on commission received is not paid by the insurance company but by the investor (or the person
insured). After determining the commission earned by an agent on his sales the agent directly deducts it from the amount he received
from the investor or the person insured and turns over to the insurance company the amount invested after such deduction is made.
The test therefore is whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the
work to be done but also as to the means and methods by which the same is to be accomplished.

Applying the aforementioned test to the case at bar, We can readily see that the element of control by the petitioner on Judico was
very much present. The record shows that petitioner Judico received a definite minimum amount per week as his wage known as
"sales reserve" wherein the failure to maintain the same would bring him back to a beginner's employment with a fixed weekly wage
of P 200.00 for thirteen weeks regardless of production. He was assigned a definite place in the office to work on when he is not in the
field; and in addition to his canvassing work he was burdened with the job of collection. In both cases he was required to make regular
report to the company regarding these duties, and for which an anemic performance would mean a dismissal. Conversely faithful and
productive service earned him a promotion to Zone Supervisor with additional supervisor's allowance, a definite amount of P110.00
aside from the regular P 200.00 weekly "allowance". Furthermore, his contract of services with petitioner is not for a piece of work
nor for a definite period.

On the other hand, an ordinary commission insurance agent works at his own volition or at his own leisure without fear of dismissal
from the company and short of committing acts detrimental to the business interest of the company or against the latter, whether he
produces or not is of no moment as his salary is based on his production, his anemic performance or even dead result does not become
a ground for dismissal. Whereas, in private respondent's case, the undisputed facts show that he was controlled by petitioner insurance
company not only as to the kind of work; the amount of results, the kind of performance but also the power of dismissal. Undoubtedly,
private respondent, by nature of his position and work, had been a regular employee of petitioner and is therefore entitled to the
protection of the law and could not just be terminated without valid and justifiable cause.

Premises considered, the appealed decision is hereby AFFIRMED in toto.

SO ORDERED.
EN BANC

G.R. No. L-21278 December 27, 1966

FEATI UNIVERSITY, petitioner,

vs.
HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations and FEATI UNIVERSITY FACULTY
CLUB-PAFLU, respondents.

----------------------------------------

G.R. No. L-21462 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant,

vs.
FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

----------------------------------------

G.R. No. L-21500 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant,

vs.
FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

Rafael Dinglasan for petitioner.

Cipriano Cid and Associates for respondents.

ZALDIVAR, J.:

This Court, by resolution, ordered that these three cases be considered together, and the parties were allowed to file only one brief for
the three cases.

On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU — hereinafter referred to as Faculty Club
— wrote a letter to Mrs. Victoria L. Araneta, President of petitioner Feati University — hereinafter referred to as University —
informing her of the organization of the Faculty Club into a registered labor union. The Faculty Club is composed of members who
are professors and/or instructors of the University. On January 22, 1963, the President of the Faculty Club sent another letter
containing twenty-six demands that have connection with the employment of the members of the Faculty Club by the University, and
requesting an answer within ten days from receipt thereof. The President of the University answered the two letters, requesting that
she be given at least thirty days to study thoroughly the different phases of the demands. Meanwhile counsel for the University, to
whom the demands were referred, wrote a letter to the President of the Faculty Club demanding proof of its majority status and
designation as a bargaining representative. On February 1, 1963, the President of the Faculty Club again wrote the President of the
University rejecting the latter's request for extension of time, and on the same day he filed a notice of strike with the Bureau of Labor
alleging as reason therefor the refusal of the University to bargain collectively. The parties were called to conferences at the
Conciliation Division of the Bureau of Labor but efforts to conciliate them failed. On February 18, 1963, the members of the Faculty
Club declared a strike and established picket lines in the premises of the University, resulting in the disruption of classes in the
University. Despite further efforts of the officials from the Department of Labor to effect a settlement of the differences between the
management of the University and the striking faculty members no satisfactory agreement was arrived at. On March 21, 1963, the
President of the Philippines certified to the Court of Industrial Relations the dispute between the management of the University and
the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875.

In connection with the dispute between the University and the Faculty Club and certain incidents related to said dispute, various cases
were filed with the Court of Industrial Relations — hereinafter referred to as CIR. The three cases now before this Court stemmed
from those cases that were filed with the CIR.

CASE NO. G.R. NO. L-21278

On May 10, 1963, the University filed before this Court a "petition for certiorari and prohibition with writ of preliminary injunction",
docketed as G.R. No. L-21278, praying: (1) for the issuance of the writ of preliminary injunction enjoining respondent Judge Jose S.
Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the proceedings in Cases Nos.
41-IPA and 1183-MC be annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated
April 6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in Case No. V-30, all be annulled; and (4) that the respondent
Judge be ordered to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.

On May 10, 1963, this Court issued a writ of preliminary injunction, upon the University's filing a bond of P1,000.00, ordering
respondent Judge Jose S. Bautista as Presiding Judge of the CIR, until further order from this Court, "to desist and refrain from further
proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations)." 1 On December 4, 1963, this
Court ordered the injunction bond increased to P100,000.00; but on January 23, 1964, upon a motion for reconsideration by the
University, this Court reduced the bond to P50,000.00.

A brief statement of the three cases — CIR Cases 41-IPA, 1183-MC and V-30 — involved in the Case G.R. No. L-21278, is here
necessary.

CIR Case No. 41-IPA, relates to the case in connection with the strike staged by the members of the Faculty Club. As we have stated,
the dispute between the University and the Faculty Club was certified on March 21, 1963 by the President of the Philippines to the
CIR. On the strength of the presidential certification, respondent Judge Bautista set the case for hearing on March 23, 1963. During
the hearing, the Judge endeavored to reconcile the part and it was agreed upon that the striking faculty members would return to work
and the University would readmit them under a status quo arrangement. On that very same day, however, the University, thru counsel
filed a motion to dismiss the case upon the ground that the CIR has no jurisdiction over the case, because (1) the Industrial Peace Act
is not applicable to the University, it being an educational institution, nor to the members of the Faculty Club, they being independent
contractors; and (2) the presidential certification is violative of Section 10 of the Industrial Peace Act, as the University is not an
industrial establishment and there was no industrial dispute which could be certified to the CIR. On March 30, 1963 the respondent
Judge issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case
and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification. In the same order, the respondent
Judge, believing that the dispute could not be decided promptly, ordered the strikers to return immediately to work and the University
to take them back under the last terms and conditions existing before the dispute arose, as per agreement had during the hearing on
March 23, 1963; and likewise enjoined the University, pending adjudication of the case, from dismissing any employee or laborer
without previous authorization from the CIR. The University filed on April 1, 1963 a motion for reconsideration of the order of March
30, 1963 by the CIR en banc, and at the same time asking that the motion for reconsideration be first heard by the CIR en banc.
Without the motion for reconsideration having been acted upon by the CIR en banc, respondent Judge set the case for hearing on the
merits for May 8, 1963. The University moved for the cancellation of said hearing upon the ground that the court en banc should first
hear the motion for reconsideration and resolve the issues raised therein before the case is heard on the merits. This motion for
cancellation of the hearing was denied. The respondent Judge, however, cancelled the scheduled hearing when counsel for the
University manifested that he would take up before the Supreme Court, by a petition for certiorari, the matter regarding the actuations
of the respondent Judge and the issues raised in the motion for reconsideration, specially the issue relating to the jurisdiction of the
CIR. The order of March 30, 1963 in Case 41-IPA is one of the orders sought to be annulled in the case, G.R. No. L-21278.

Before the above-mentioned order of March 30, 1963 was issued by respondent Judge, the University had employed professors and/or
instructors to take the places of those professors and/or instructors who had struck. On April 1, 1963, the Faculty Club filed with the
CIR in Case 41-IPA a petition to declare in contempt of court certain parties, alleging that the University refused to accept back to
work the returning strikers, in violation of the return-to-work order of March 30, 1963. The University filed, on April 5,1963, its
opposition to the petition for contempt, denying the allegations of the Faculty Club and alleging by way of special defense that there
was still the motion for reconsideration of the order of March 30, 1963 which had not yet been acted upon by the CIR en banc. On
April 6, 1963, the respondent Judge issued an order stating that "said replacements are hereby warned and cautioned, for the time
being, not to disturb nor in any manner commit any act tending to disrupt the effectivity of the order of March 30,1963, pending the
final resolution of the same."2 On April 8, 1963, there placing professors and/or instructors concerned filed, thru counsel, a motion for
reconsideration by the CIR en banc of the order of respondent Judge of April 6, 1963. This order of April 6, 1963 is one of the orders
that are sought to be annulled in case G.R. No. L-21278.

CIR Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club on March 8, 1963 before the CIR,
praying that it be certified as the sole and exclusive bargaining representative of all the employees of the University. The University
filed an opposition to the petition for certification election and at the same time a motion to dismiss said petition, raising the very same
issues raised in Case No. 41-IPA, claiming that the petition did not comply with the rules promulgated by the CIR; that the Faculty
Club is not a legitimate labor union; that the members of the Faculty Club cannot unionize for collective bargaining purposes; that the
terms of the individual contracts of the professors, instructors, and teachers, who are members of the Faculty Club, would expire on
March 25 or 31, 1963; and that the CIR has no jurisdiction to take cognizance of the petition because the Industrial Peace Act is not
applicable to the members of the Faculty Club nor to the University. This case was assigned to Judge Baltazar Villanueva of the CIR.
Before Judge Villanueva could act on the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a motion to withdraw
the petition on the ground that the labor dispute (Case No. 41-IPA) had already been certified by the President to the CIR and the
issues raised in Case No. 1183-MC were absorbed by Case No. 41-IPA. The University opposed the withdrawal, alleging that the
issues raised in Case No. 1183-MC were separate and distinct from the issues raised in Case No. 41-IPA; that the questions of
recognition and majority status in Case No. 1183-MC were not absorbed by Case No. 41-IPA; and that the CIR could not exercise its
power of compulsory arbitration unless the legal issue regarding the existence of employer-employee relationship was first resolved.
The University prayed that the motion of the Faculty Club to withdraw the petition for certification election be denied, and that its
motion to dismiss the petition be heard. Judge Baltazar Villanueva, finding that the reasons stated by the Faculty Club in the motion to
withdraw were well taken, on April 6, 1963, issued an order granting the withdrawal. The University filed, on April 24, 1963, a
motion for reconsideration of that order of April 6, 1963 by the CIR en banc. This order of April 6, 1963 in Case No. 1183-MC is one
of the orders sought to be annulled in the case, G.R. No. L-21278, now before Us.

CIR Case No. V-30 relates to a complaint for indirect contempt of court filed against the administrative officials of the University. The
Faculty Club, through the Acting Chief Prosecutor of the CIR, filed with the CIR a complaint docketed as Case No. V-30, charging
President Victoria L. Araneta, Dean Daniel Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the President Jose
Segovia, as officials of the University, with indirect contempt of court, reiterating the same charges filed in Case No. 41-IPA for
alleged violation of the order dated March 30, 1963. Based on the complaint thus filed by the Acting Chief Prosecutor of the CIR,
respondent Judge Bautista issued on April 29, 1963 an order commanding any officer of the law to arrest the above named officials of
the University so that they may be dealt with in accordance with law, and the same time fixed the bond for their release at P500.00
each. This order of April 29, 1963 is also one of the orders sought to be annulled in the case, G.R. No. L-2l278.

The principal allegation of the University in its petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-
21278, now before Us, is that respondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with grave abuse of
discretion, in taking cognizance of, and in issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be
noted that when the petition for certiorari and prohibition with preliminary injunction was filed on May 10, 1963 in this case, the
questioned order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action by the CIR en banc upon motions for
reconsideration filed by the University.

On June 10, 1963, the Faculty Club filed its answer to the petition for certiorari and prohibition with preliminary injunction, admitting
some allegations contained in the petition and denying others, and alleging special defenses which boil down to the contentions that
(1) the CIR had acquired jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential certification, so that it had
jurisdiction to issue the questioned orders in said Case No. 41-IPA; (2) that the Industrial Peace Act (Republic Act 875) is applicable
to the University as an employer and to the members of the Faculty Club as employees who are affiliated with a duly registered labor
union, so that the Court of Industrial Relations had jurisdiction to take cognizance of Cases Nos. 1183-MC and V-30 and to issue the
questioned orders in those two cases; and (3) that the petition for certiorari and prohibition with preliminary injunction was
prematurely filed because the orders of the CIR sought to be annulled were still the subjects of pending motions for reconsideration
before the CIR en banc when said petition for certiorari and prohibition with preliminary injunction was filed before this Court.

CASE G.R. NO. L-21462

This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already stated Case No. 1183-MC relates to a petition for
certification election filed by the Faculty Club as a labor union, praying that it be certified as the sole and exclusive bargaining
representative of all employees of the University. This petition was opposed by the University, and at the same time it filed a motion
to dismiss said petition. But before Judge Baltazar Villanueva could act on the petition for certification election and the motion to
dismiss the same, Faculty Club filed a motion to withdraw said petition upon the ground that the issue raised in Case No. 1183-MC
were absorbed by Case No. 41-IPA which was certified by the President of the Philippines. Judge Baltazar Villanueva, by order April
6, 1963, granted the motion to withdraw. The University filed a motion for reconsideration of that order of April 6, 1963 by the
CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorariand prohibition
with preliminary injunction in Case G.R. no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L-
21278, issued a writ of preliminary injunction on May 10, 1963, ordering respondent Judge Bautista, until further order from this
Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial
Relations).

On June 5, 1963, that is, after this Court has issued the writ of preliminary injunction in Case G.R. No. L-21278, the CIR en
banc issued a resolution denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC.

On July 8, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the CIR en
banc, dated June 5, 1963, denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC. This petition
was docketed as G.R. No. L-21462. In its petition for certiorari, the University alleges (1) that the resolution of the Court of Industrial
Relations of June 5, 1963 was null and void because it was issued in violation of the writ of preliminary injunction issued in Case G.R.
No. L-21278; (2) that the issues of employer-employee relationship, the alleged status as a labor union, majority representation and
designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-
MC prior to the determination of the issues in Case No. 41-IPA and therefore the motion to withdraw the petition for certification
election should not have been granted upon the ground that the issues in the first case have been absorbed in the second case; and (3)
the lower court acted without or in excess of jurisdiction in taking cognizance of the petition for certification election and that the
same should have been dismissed instead of having been ordered withdrawn. The University prayed that the proceedings in Case No.
1183-MC and the order of April 6, 1963 and the resolution of June 5, 1963 issued therein be annulled, and that the CIR be ordered to
dismiss Case No. 1183-MC on the ground of lack of jurisdiction.
The Faculty Club filed its answer, admitting some, and denying other, allegations in the petition for certiorari; and specially alleging
that the lower court's order granting the withdrawal of the petition for certification election was in accordance with law, and that the
resolution of the court en banc on June 5, 1963 was not a violation of the writ of preliminary injunction issued in Case G.R. No. L-
21278 because said writ of injunction was issued against Judge Jose S. Bautista and not against the Court of Industrial Relations,
much less against Judge Baltazar Villanueva who was the trial judge of Case No. 1183-MC.

CASE G.R. NO. L-21500

This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated, Case No. 41-IPA relates to the strike staged by
the members of the Faculty Club and the dispute was certified by the President of the Philippines to the CIR. The University filed a
motion to dismiss that case upon the ground that the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S.
Bautista issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the
case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification; and in that same order Judge
Bautista ordered the strikers to return to work and the University to take them back under the last terms and conditions existing before
the dispute arose; and enjoined the University from dismissing any employee or laborer without previous authority from the court. On
April 1, 1963, the University filed a motion for reconsideration of the order of March 30, 1963 by the CIR en banc. That motion for
reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in
Case G.R. No. L-21278 was filed on May 10, 1963. As we have already stated, this Court in said case G.R. No. L-21278, issued a writ
of preliminary injunction on May 10, 1963 ordering respondent Judge Jose S. Bautista, until further order from this Court, to desist
and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).

On July 2, 1963, the University received a copy of the resolution of the CIR en banc, dated May 7, 1963 but actually received and
stamped at the Office of the Clerk of the CIR on June 28, 1963, denying the motion for reconsideration of the order dated March 30,
1963 in Case No. 41-IPA.

On July 23, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the Court
of Industrial Relations en banc dated May 7, 1963 (but actually received by said petitioner on July 2, 1963) denying the motion for
reconsideration of the order of March 30, 1963 in Case No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its petition
for certiorari the University alleges (1) that the resolution of the CIR en banc, dated May 7, 1963 but filed with the Clerk of the CIR
on June 28, 1963, in Case No. 41-IPA, is null and void because it was issued in violation of the writ of preliminary injunction issued
by this Court in G.R. No. L-21278; (2) that the CIR, through its Presiding Judge, had no jurisdiction to take cognizance of Case No.
41-IPA and the order of March 30, 1963 and the resolution dated May 7, 1963 issued therein are null and void; (3) that the
certification made by the President of the Philippines is not authorized by Section 10 of Republic Act 875, but is violative thereof; (4)
that the Faculty Club has no right to unionize or organize as a labor union for collective bargaining purposes and to be certified as a
collective bargaining agent within the purview of the Industrial Peace Act, and consequently it has no right to strike and picket on the
ground of petitioner's alleged refusal to bargain collectively where such duty does not exist in law and is not enforceable against an
educational institution; and (5) that the return-to-work order of March 30, 1963 is improper and illegal. The petition prayed that the
proceedings in Case No. 41-IPA be annulled, that the order dated March 30, 1963 and the resolution dated May 7, 1963 be revoked,
and that the lower court be ordered to dismiss Case 41-IPA on the ground of lack of jurisdiction.

On September 10, 1963, the Faculty Club, through counsel, filed a motion to dismiss the petition for certiorari on the ground that the
petition being filed by way of an appeal from the orders of the Court of Industrial Relations denying the motion to dismiss in Case No.
41-IPA, the petition for certiorari is not proper because the orders appealed from are interlocutory in nature.

This Court, by resolution of September 26, 1963, ordered that these three cases (G.R. Nos. L-21278, L-21462 and L-21500) be
considered together and the motion to dismiss in Case G.R. No. L-21500 be taken up when the cases are decided on the merits after
the hearing.

Brushing aside certain technical questions raised by the parties in their pleadings, We proceed to decide these three cases on the merits
of the issues raised.

The University has raised several issues in the present cases, the pivotal one being its claim that the Court of Industrial Relations has
no jurisdiction over the parties and the subject matter in CIR Cases 41-IPA, 1183-MC and V-30, brought before it, upon the ground
that Republic Act No. 875 is not applicable to the University because it is an educational institution and not an industrial establishment
and hence not an "employer" in contemplation of said Act; and neither is Republic Act No. 875 applicable to the members of the
Faculty Club because the latter are independent contractors and, therefore, not employees within the purview of the said Act.

In support of the contention that being an educational institution it is beyond the scope of Republic Act No. 875, the University cites
cases decided by this Court: Boy Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29, 1958; University of San Agustin vs.
CIR, et al., L-12222, May 28, 1958; Cebu Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L-12015, April
22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282, April 22, 1960; University of the Philippines, et al. vs. CIR, et al., L-
15416, April 8, 1960; Far Eastern University vs. CIR, L-17620, August 31, 1962. We have reviewed these cases, and also related
cases subsequent thereto, and We find that they do not sustain the contention of the University. It is true that this Court has ruled that
certain educational institutions, like the University of Santo Tomas, University of San Agustin, La Consolacion College, and other
juridical entities, like the Boy Scouts of the Philippines and Manila Sanitarium, are beyond the purview of Republic Act No. 875 in
the sense that the Court of Industrial Relations has no jurisdiction to take cognizance of charges of unfair labor practice filed against
them, but it is nonetheless true that the principal reason of this Court in ruling in those cases that those institutions are excluded from
the operation of Republic Act 875 is that those entities are not organized, maintained and operated for profit and do not declare
dividends to stockholders. The decision in the case of University of San Agustin vs. Court of Industrial Relations, G.R. No. L-12222,
May 28, 1958, is very pertinent. We quote a portion of the decision:

It appears that the University of San Agustin, petitioner herein, is an educational institution conducted and managed by a
"religious non-stock corporation duly organized and existing under the laws of the Philippines." It was organized not for
profit or gain or division of the dividends among its stockholders, but solely for religious and educational purposes. It
likewise appears that the Philippine Association of College and University Professors, respondent herein, is a non-stock
association composed of professors and teachers in different colleges and universities and that since its organization two
years ago, the university has adopted a hostile attitude to its formation and has tried to discriminate, harass and intimidate its
members for which reason the association and the members affected filed the unfair labor practice complaint which initiated
this proceeding. To the complaint of unfair labor practice, petitioner filed an answer wherein it disputed the jurisdiction of the
Court of Industrial Relations over the controversy on the following grounds:

"(a) That complainants therein being college and/or university professors were not "industrial" laborers or
employees, and the Philippine Association of College and University Professors being composed of persons engaged
in the teaching profession, is not and cannot be a legitimate labor organization within the meaning of the laws
creating the Court of Industrial Relations and defining its powers and functions;

"(b) That the University of San Agustin, respondent therein, is not an institution established for the purpose of gain
or division of profits, and consequently, it is not an "industrial" enterprise and the members of its teaching staff are
not engaged in "industrial" employment (U.S.T. Hospital Employees Association vs. Sto. Tomas University
Hospital, G.R. No. L-6988, 24 May 1954; and San Beda College vs. Court of Industrial Relations and National
Labor Union, G.R. No. L-7649, 29 October 1955; 51 O.G. (Nov. 1955) 5636-5640);

"(c) That, as a necessary consequence, alleged controversy between therein complainants and respondent is not an
"industrial" dispute, and the Court of Industrial Relations has no jurisdiction, not only on the parties but also over
the subject matter of the complaint."

The issue now before us is: Since the University of San Agustin is not an institution established for profit or gain, nor an
industrial enterprise, but one established exclusively for educational purposes, can it be said that its relation with its
professors is one of employer and employee that comes under the jurisdiction of the Court of Industrial Relations? In other
words, do the provisions of the Magna Carta on unfair labor practice apply to the relation between petitioner and members of
respondent association?

The issue is not new. Thus, in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L-10091, promulgated
on January 29, 1958, this Court, speaking thru Mr. Justice Montemayor, answered the query in the negative in the following
wise:

"The main issue involved in the present case is whether or not a charitable institution or one organized not for profit
but for more elevated purposes, charitable, humanitarian, etc., like the Boy Scouts of the Philippines, is included in
the definition of "employer" contained in Republic Act 875, and whether the employees of said institution fall under
the definition of "employee" also contained in the same Republic Act. If they are included, then any act which may
be considered unfair labor practice, within the meaning of said Republic Act, would come under the jurisdiction of
the Court of Industrial Relations; but if they do not fall within the scope of said Republic Act, particularly, its
definitions of employer and employee, then the Industrial Court would have no jurisdiction at all.

xxx xxx xxx

"On the basis of the foregoing considerations, there is every reason to believe that our labor legislation from
Commonwealth Act No. 103, creating the Court of Industrial Relations, down through the Eight-Hour Labor Law, to
the Industrial Peace Act, was intended by the Legislature to apply only to industrial employment and to govern the
relations between employers engaged in industry and occupations for purposes of profit and gain, and their industrial
employees, but not to organizations and entities which are organized, operated and maintained not for profit or gain,
but for elevated and lofty purposes, such as, charity, social service, education and instruction, hospital and medical
service, the encouragement and promotion of character, patriotism and kindred virtues in youth of the nation, etc.
 "In conclusion, we find and hold that Republic Act No. 875, particularly, that portion thereof regarding labor
disputes and unfair labor practice, does not apply to the Boy Scouts of the Philippines, and consequently, the Court
of Industrial Relations had no jurisdiction to entertain and decide the action or petition filed by respondent Araos.
Wherefore, the appealed decision and resolution of the CIR are hereby set aside, with costs against respondent."

There being a close analogy between the relation and facts involved in the two cases, we cannot but conclude that the Court
of Industrial Relations has no jurisdiction to entertain the complaint for unfair labor practice lodged by respondent
association against petitioner and, therefore, we hereby set aside the order and resolution subject to the present petition, with
costs against respondent association.

The same doctrine was confirmed in the case of University of Santo Tomas v. Hon. Baltazar Villanueva, et al., G.R. No. L-13748,
October 30, 1959, where this Court ruled that:

In the present case, the record reveals that the petitioner University of Santo Tomas is not an industry organized for profit but
an institution of learning devoted exclusively to the education of the youth. The Court of First Instance of Manila in its
decision in Civil Case No. 28870, which has long become final and consequently the settled law in the case, found as
established by the evidence adduced by the parties therein (herein petitioner and respondent labor union) that while the
University collects fees from its students, all its income is used for the improvement and enlargement of the institution. The
University declares no dividend, and the members of the corporation who founded it, as ordained in its articles of
incorporation, receive no material compensation for the time and sacrifice they render to the University and its students. The
respondent union itself in a case before the Industrial Court (Case No. 314-MC) has averred that "the University of Santo
Tomas, like the San Beda College, is an educational institution operated not for profit but for the sole purpose of educating
young men." (See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore, that on the face of the record the
University of Santo Tomas is not a corporation created for profit but an educational institution and therefore not an industrial
or business organization.

In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282, April 22, 1960, this Court repeated the same ruling
when it said:

The main issue in this appeal by petitioner is that the industry trial court committed an error in holding that it has jurisdiction
to act in this case even if it involves unfair labor practice considering that the La Consolacion College is not a business
enterprise but an educational institution not organized for profit.

If the claim that petitioner is an educational institution not operated for profit is true, which apparently is the case, because
the very court a quo found that it has no stockholder, nor capital . . . then we are of the opinion that the same does not come
under the jurisdiction of the Court of Industrial Relations in view of the ruling in the case of Boy Scouts of the Philippines v.
Juliana V. Araos, G.R. No. L-10091, decided on January 29, 1958.

It is noteworthy that the cases of the University of San Agustin, the University of Santo Tomas, and La Consolacion College, cited
above, all involve charges of unfair labor practice under Republic Act No. 875, and the uniform rulings of this Court are that the Court
of Industrial Relations has no jurisdiction over the charges because said Act does not apply to educational institutions that are not
operated or maintained for profit and do not declare dividends. On the other hand, in the cases of Far Eastern University v. CIR, et
al., G.R. No. L-17620, August 31, 1962, this Court upheld the decision of the Court of Industrial Relations finding the Far Eastern
University, also an educational institution, guilty of unfair labor practice. Among the findings of fact in said case was that the Far
Eastern University made profits from the school year 1952-1953 to 1958-1959. In affirming the decision of the lower court, this Court
had thereby ratified the ruling of the Court of Industrial Relations which applied the Industrial Peace Act to educational institutions
that are organized, operated and maintained for profit.

It is also noteworthy that in the decisions in the cases of the Boy Scouts of the Philippines, the University of San Agustin, the
University of Sto. Tomas, and La Consolacion College, this Court was not unanimous in the view that the Industrial Peace Act
(Republic Act No. 875) is not applicable to charitable, eleemosynary or non-profit organizations — which include educational
institutions not operated for profit. There are members of this Court who hold the view that the Industrial Peace Act would apply also
to non-profit organizations or entities — the only exception being the Government, including any political subdivision or
instrumentality thereof, in so far as governmental functions are concerned. However, in the Far Eastern University case this Court is
unanimous in supporting the view that an educational institution that is operated for profit comes within the scope of the Industrial
Peace Act. We consider it a settled doctrine of this Court, therefore, that the Industrial Peace Act is applicable to any organization or
entity — whatever may be its purpose when it was created — that is operated for profit or gain.

Does the University operate as an educational institution for profit? Does it declare dividends for its stockholders? If it does not, it
must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. The University
itself admits that it has declared dividends.3 The CIR in its order dated March 30, 1963 in CIR Case No. 41-IPA — which order was
issued after evidence was heard — also found that the University is not for strictly educational purposes and that "It realizes profits
and parts of such earning is distributed as dividends to private stockholders or individuals (Exh. A and also 1 to 1-F, 2-x 3-x and 4-
x)"4 Under this circumstance, and in consonance with the rulings in the decisions of this Court, above cited, it is obvious that Republic
Act No. 875 is applicable to herein petitioner Feati University.

But the University claims that it is not an employer within the contemplation of Republic Act No. 875, because it is not an industrial
establishment. At most, it says, it is only a lessee of the services of its professors and/or instructors pursuant to a contract of services
entered into between them. We find no merit in this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of said Act
provides:

Sec. 2. Definitions.—As used in this Act —

(c) The term employer include any person acting in the interest of an employer, directly or indirectly, but shall not include
any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor
organization.

It will be noted that in defining the term "employer" the Act uses the word "includes", which it also used in defining "employee". [Sec.
2 (d)], and "representative" [Sec. 2(h)]; and not the word "means" which the Act uses in defining the terms "court" [Sec. 2(a)], "labor
organization" [Sec. 2(e)], "legitimate labor organization [Sec. 2(f)], "company union" [Sec. 2(g)], "unfair labor practice" [Sec. 2(i)],
"supervisor" [Sec. 2(k)], "strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A methodical variation in terminology is manifest. This
variation and distinction in terminology and phraseology cannot be presumed to have been the inconsequential product of an
oversight; rather, it must have been the result of a deliberate and purposeful act, more so when we consider that as legislative records
show, Republic Act No. 875 had been meticulously and painstakingly drafted and deliberated upon. In using the word "includes" and
not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition should be
complementary to what is commonly understood as employer. Congress intended the term to be understood in a broad meaning
because, firstly, the statutory definition includes not only "a principal employer but also a person acting in the interest of the
employer"; and, secondly, the Act itself specifically enumerated those who are not included in the term "employer", namely: (1) a
labor organization (otherwise than when acting as an employer), (2) anyone acting in the capacity of officer or agent of such labor
organization [Sec. 2(c)], and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to strike
for the purpose of securing changes or modifications in the terms and conditions of employment is concerned (Section 11). Among
these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer". This Court,
however, has ruled that those educational institutions that are not operated for profit are not within the purview of Republic Act No.
875.5

As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary definition of the term "employer".
The term encompasses those that are in ordinary parlance "employers." What is commonly meant by "employer"? The term
"employer" has been given several acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps
in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire." (Webster's New Twentieth Century
Dictionary, 2nd ed., 1960, p. 595). The Workmen's Compensation Act defines employer as including "every person or association of
persons, incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the owner or
lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried
on in the establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other
reason, is not the direct employer of laborers employed there." [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that
"employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include
the Government and the government corporations". [Rep. Act No. 602, Sec. 2(b)]. The Social Security Act defines employer as "any
person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of
any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any
of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government." (Rep. Act
No. 1161, Sec. 8[c]).

This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat River Workers' Union (PLUM), et al., G.R. Nos. L-
10934 and L-10944, December 28, 1957, which cases involve unfair labor practices and hence within the purview of Republic Act No.
875, defined the term employer as follows:

An employer is one who employs the services of others; one for whom employees work and who pays their wages or salaries
(Black Law Dictionary, 4th ed., p. 618).

An employer includes any person acting in the interest of an employer, directly or indirectly (Sec. 2-c, Rep. Act 875).

Under none of the above definitions may the University be excluded, especially so if it is considered that every professor, instructor or
teacher in the teaching staff of the University, as per allegation of the University itself, has a contract with the latter for teaching
services, albeit for one semester only. The University engaged the services of the professors, provided them work, and paid them
compensation or salary for their services. Even if the University may be considered as a lessee of services under a contract between it
and the members of its Faculty, still it is included in the term "employer". "Running through the word `employ' is the thought that
there has been an agreement on the part of one person to perform a certain service in return for compensation to be paid by an
employer. When you ask how a man is employed, or what is his employment, the thought that he is under agreement to perform some
service or services for another is predominant and paramount." (Ballentine Law Dictionary, Philippine ed., p. 430, citing Pinkerton
National Detective Agency v. Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202).

To bolster its claim of exception from the application of Republic Act No. 875, the University contends that it is not state that the
employers included in the definition of 2 (c) of the Act. This contention can not be sustained. In the first place, Sec. 2 (c) of Republic
Act No. 875 does not state that the employers included in the definition of the term "employer" are only and exclusively "industrial
establishments"; on the contrary, as stated above, the term "employer" encompasses all employers except those specifically excluded
by the Act. In the second place, even the Act itself does not refer exclusively to industrial establishments and does not confine its
application thereto. This is patent inasmuch as several provisions of the Act are applicable to non-industrial workers, such as Sec. 3,
which deals with "employees' right to self-organization"; Sections 4 and 5 which enumerate unfair labor practices; Section 8 which
nullifies private contracts contravening employee's rights; Section 9 which relates to injunctions in any case involving a labor dispute;
Section 11 which prohibits strikes in the government; Section 12 which provides for the exclusive collective bargaining representation
for labor organizations; Section 14 which deals with the procedure for collective bargaining; Section 17 which treats of the rights and
conditions of membership in labor organizations; Sections 18, 19, 20 and 21 which provide respectively for the establishment of
conciliation service, compilation of collective bargaining contracts, advisory labor-management relations; Section 22 which empowers
the Secretary of Labor to make a study of labor relations; and Section 24 which enumerates the rights of labor organizations. (See
Dissenting Opinion of Justice Concepcion in Boy Scouts of the Philippines v. Juliana Araos, G.R. No. L-10091, January 29, 1958.)

This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had occasion to state that the Industrial Peace Act "refers
only to organizations and entities created and operated for profits, engaged in a profitable trade, occupation or industry". It cannot be
denied that running a university engages time and attention; that it is an occupation or a business from which the one engaged in it
may derive profit or gain. The University is not an industrial establishment in the sense that an industrial establishment is one that is
engaged in manufacture or trade where raw materials are changed or fashioned into finished products for use. But for the purposes of
the Industrial Peace Act the University is an industrial establishment because it is operated for profit and it employs persons who work
to earn a living. The term "industry", for the purposes of the application of our labor laws should be given a broad meaning so as to
cover all enterprises which are operated for profit and which engage the services of persons who work to earn a living.

The word "industry" within State Labor Relations Act controlling labor relations in industry, cover labor conditions in any
field of employment where the objective is earning a livelihood on the one side and gaining of a profit on the other. Labor
Law Sec. 700 et seq. State Labor Relations Board vs. McChesney, 27 N.Y.S. 2d 866, 868." (Words and Phrases, Permanent
Edition, Vol. 21, 1960 edition p. 510).

The University urges that even if it were an employer, still there would be no employer-employee relationship between it and the
striking members of the Faculty Club because the latter are not employees within the purview of Sec. 2(d) of Republic Act No. 875
but are independent contractors. This claim is untenable.

Section 2 (d) of Republic Act No. 875 provides:

(d) The term "employee" shall include any employee and shall not be limited to the employee of a particular employer unless
the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in
connection with, any current labor dispute or because of any unfair labor practice and who has not obtained any other
substantially equivalent and regular employment.

This definition is again, like the definition of the term "employer" [Sec. 2(c)], by the use of the term "include", complementary. It
embraces not only those who are usually and ordinarily considered employees, but also those who have ceased as employees as a
consequence of a labor dispute. The term "employee", furthermore, is not limited to those of a particular employer. As already stated,
this Court in the cases of The Angat River Irrigation System, et al. v. Angat River Workers' Union (PLUM), et al., supra, has defined
the term "employer" as "one who employs the services of others; one for whom employees work and who pays their wages or salaries.
"Correlatively, an employee must be one who is engaged in the service of another; who performs services for another; who works for
salary or wages. It is admitted by the University that the striking professors and/or instructors are under contract to teach particular
courses and that they are paid for their services. They are, therefore, employees of the University.

In support of its claim that the members of the Faculty Club are not employees of the University, the latter cites as authority
Francisco's Labor Laws, 2nd ed., p. 3, which states:

While the term "workers" as used in a particular statute, has been regarded as limited to those performing physical labor, it
has been held to embrace stenographers and bookkeepers. Teachers are not included, however.
It is evident from the above-quoted authority that "teachers" are not to be included among those who perform "physical labor", but it
does not mean that they are not employees. We have checked the source of the authority, which is 31 Am. Jur., Sec. 3, p. 835, and the
latter cites Huntworth v. Tanner, 87 Wash 670, 152 P. 523, Ann Cas 1917 D 676. A reading of the last case confirms Our view.

That teachers are "employees' has been held in a number of cases (Aebli v. Board of Education of City and County of San Francisco,
145 P. 2d 601, 62 Col. App 2.d 706; Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish School Board, La. App., 15 So. 2d
98, 100; Sister Odelia v. Church of St. Andrew, 263 N. W. 111, 112, 195 Minn. 357, cited in Words and Phrases, Permanent ed., Vol.
14, pp. 806-807). This Court in the Far Eastern University case, supra, considered university instructors as employees and declared
Republic Act No. 875 applicable to them in their employment relations with their school. The professors and/or instructors of the
University neither ceased to be employees when they struck, for Section 2 of Rep. Act 875 includes among employees any individual
whose work has ceased as consequence of, or in connection with a current labor dispute. Striking employees maintain their status as
employees of the employer. (Western Cartridge Co. v. NLRB, C.C.A. 7, 139 F2d 855, 858).

The contention of the University that the professors and/or instructors are independent contractors, because the University does not
exercise control over their work, is likewise untenable. This Court takes judicial notice that a university controls the work of the
members of its faculty; that a university prescribes the courses or subjects that professors teach, and when and where to teach; that the
professors' work is characterized by regularity and continuity for a fixed duration; that professors are compensated for their services
by wages and salaries, rather than by profits; that the professors and/or instructors cannot substitute others to do their work without the
consent of the university; and that the professors can be laid off if their work is found not satisfactory. All these indicate that the
university has control over their work; and professors are, therefore, employees and not independent contractors. There are authorities
in support of this view.

The principal consideration in determining whether a workman is an employee or an independent contractor is the right to
control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but the right
to control, which constitutes the test. (Amalgamated Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261, 300 Ill. 487,
quoted in Words and Phrases, Permanent ed., Vol. 14, p. 576).

Where, under Employers' Liability Act, A was instructed when and where to work . . . he is an employee, and not a
contractor, though paid specified sum per square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and Phrases,
loc, cit.) .

Employees are those who are compensated for their labor or services by wages rather than by profits. (People vs. Distributors
Division, Smoked Fish Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and Phrases, loc, cit.)

Services of employee or servant, as distinguished from those of a contractor, are usually characterized by regularity and
continuity of work for a fixed period or one of indefinite duration, as contrasted with employment to do a single act or a
series of isolated acts; by compensation on a fixed salary rather than one regulated by value or amount of work; . . .
(Underwood v. Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and Phrases, op. cit., p. 579.)

Independent contractors can employ others to work and accomplish contemplated result without consent of contractee, while
"employee" cannot substitute another in his place without consent of his employer. (Luker Sand & Gravel Co. v. Industrial
Commission, 23 P. 2d 225, 82 Utah, 188, in Words and Phrases, Vol. 14, p. 576).

Moreover, even if university professors are considered independent contractors, still they would be covered by Rep. Act No. 875. In
the case of the Boy Scouts of the Philippines v. Juliana Araos, supra, this Court observed that Republic Act No. 875 was modelled
after the Wagner Act, or the National Labor Relations Act, of the United States, and this Act did not exclude "independent
contractors" from the orbit of "employees". It was in the subsequent legislation — the Labor Management Relation Act (Taft-Harley
Act) — that "independent contractors" together with agricultural laborers, individuals in domestic service of the home, supervisors,
and others were excluded. (See Rothenberg on Labor Relations, 1949, pp. 330-331).

It having been shown that the members of the Faculty Club are employees, it follows that they have a right to unionize in accordance
with the provisions of Section 3 of the Magna Carta of Labor (Republic Act No. 875) which provides as follows:

Sec. 3. Employees' right to self-organization.—Employees shall have the right to self-organization and to form, join or assist
labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. . . .

We agree with the statement of the lower court, in its order of March 30, 1963 which is sought to be set aside in the instant case, that
the right of employees to self-organization is guaranteed by the Constitution, that said right would exist even if Republic Act No. 875
is repealed, and that regardless of whether their employers are engaged in commerce or not. Indeed, it is Our considered view that the
members of the faculty or teaching staff of private universities, colleges, and schools in the Philippines, regardless of whether the
university, college or school is run for profit or not, are included in the term "employees" as contemplated in Republic Act No. 875
and as such they may organize themselves pursuant to the above-quoted provision of Section 3 of said Act. Certainly, professors,
instructors or teachers of private educational institutions who teach to earn a living are entitled to the protection of our labor laws —
and one such law is Republic Act No. 875.

The contention of the University in the instant case that the members of the Faculty Club can not unionize and the Faculty Club can
not exist as a valid labor organization is, therefore, without merit. The record shows that the Faculty Club is a duly registered labor
organization and this fact is admitted by counsel for the University. 5a

The other issue raised by the University is the validity of the Presidential certification. The University contends that under Section 10
of Republic Act No. 875 the power of the President of the Philippines to certify is subject to the following conditions, namely: (1) that
here is a labor dispute, and (2) that said labor dispute exists in an industry that is vital to the national interest. The University maintains
that those conditions do not obtain in the instant case. This contention has also no merit.

We have previously stated that the University is an establishment or enterprise that is included in the term "industry" and is covered by
the provisions of Republic Act No. 875. Now, was there a labor dispute between the University and the Faculty Club?

Republic Act No. 875 defines a labor dispute as follows:

The term "labor dispute" includes any controversy concerning terms, tenure or conditions of employment, or concerning the
association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or
conditions of employment regardless of whether the disputants stand in proximate relation of employer and employees.

The test of whether a controversy comes within the definition of "labor dispute" depends on whether the controversy involves or
concerns "terms, tenure or condition of employment" or "representation." It is admitted by the University, in the instant case, that on
January 14, 1963 the President of the Faculty Club wrote to the President of the University a letter informing the latter of the
organization of the Faculty Club as a labor union, duly registered with the Bureau of Labor Relations; that again on January 22, 1963
another letter was sent, to which was attached a list of demands consisting of 26 items, and asking the President of the University to
answer within ten days from date of receipt thereof; that the University questioned the right of the Faculty Club to be the exclusive
representative of the majority of the employees and asked proof that the Faculty Club had been designated or selected as exclusive
representative by the vote of the majority of said employees; that on February 1, 1963 the Faculty Club filed with the Bureau of Labor
Relations a notice of strike alleging as reason therefor the refusal of the University to bargain collectively with the representative of
the faculty members; that on February 18, 1963 the members of the Faculty Club went on strike and established picket lines in the
premises of the University, thereby disrupting the schedule of classes; that on March 1, 1963 the Faculty Club filed Case No. 3666-
ULP for unfair labor practice against the University, but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified
to the CIR); and that on March 7, 1963 a petition for certification election, Case No. 1183-MC, was filed by the Faculty Club in the
CIR.6 All these admitted facts show that the controversy between the University and the Faculty Club involved terms and conditions
of employment, and the question of representation. Hence, there was a labor dispute between the University and the Faculty Club, as
contemplated by Republic Act No. 875. It having been shown that the University is an institution operated for profit, that is an
employer, and that there is an employer-employee relationship, between the University and the members of the Faculty Club, and it
having been shown that a labor dispute existed between the University and the Faculty Club, the contention of the University, that the
certification made by the President is not only not authorized by Section 10 of Republic Act 875 but is violative thereof, is groundless.

Section 10 of Republic Act No. 875 provides:

When in the opinion of the President of the Philippines there exists a labor dispute in an industry indispensable to the national
interest and when such labor dispute is certified by the President to the Court of Industrial Relations, said Court may cause to
be issued a restraining order forbidding the employees to strike or the employer to lockout the employees, and if no other
solution to the dispute is found, the Court may issue an order fixing the terms and conditions of employment.

This Court had occasion to rule on the application of the above-quoted provision of Section 10 of Republic Act No. 875. In the case
of Pampanga Sugar Development Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it was held:

It thus appears that when in the opinion of the President a labor dispute exists in an industry indispensable to national interest
and he certifies it to the Court of Industrial Relations the latter acquires jurisdiction to act thereon in the manner provided by
law. Thus the court may take either of the following courses: it may issue an order forbidding the employees to strike or the
employer to lockout its employees, or, failing in this, it may issue an order fixing the terms and conditions of employment. It
has no other alternative. It can not throw the case out in the assumption that the certification was erroneous.

xxx xxx xxx

. . . The fact, however, is that because of the strike declared by the members of the minority union which threatens a major
industry the President deemed it wise to certify the controversy to the Court of Industrial Relations for adjudication. This is
 the power that the law gives to the President the propriety of its exercise being a matter that only devolves upon him. The
same is not the concern of the industrial court. What matters is that by virtue of the certification made by the President the
case was placed under the jurisdiction of said court. (Emphasis supplied)

To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court will not interfere in, much less
curtail, the exercise of that prerogative. The jurisdiction of the CIR in a certified case is exclusive (Rizal Cement Co., Inc. v. Rizal
Cement Workers Union (FFW), et al., G.R. No. L-12747, July 30, 1960). Once the jurisdiction is acquired pursuant to the presidential
certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor dispute and the
employer-employee relationship may be threshed out before the CIR, and the CIR may issue such order or orders as may be necessary
to make effective the exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from the order or
orders thus issued by the CIR.

And so, in the instant case, when the President took into consideration that the University "has some 18,000 students and employed
approximately 500 faculty members", that `the continued disruption in the operation of the University will necessarily prejudice the
thousand of students", and that "the dispute affects the national interest", 7and certified the dispute to the CIR, it is not for the CIR nor
this Court to pass upon the correctness of the reasons of the President in certifying the labor dispute to the CIR.

The third issue raised by the University refers to the question of the legality of the return-to-work order (of March 30, 1963 in Case
41-IPA) and the order implementing the same (of April 6, 1963). It alleges that the orders are illegal upon the grounds: (1) that
Republic Act No. 875, supplementing Commonwealth Act No. 103, has withdrawn from the CIR the power to issue a return-to-work
order; (2) that the only power granted by Section 10 of Republic Act No. 875 to the CIR is to issue an order forbidding the employees
to strike or forbidding the employer to lockout the employees, as the case may be, before either contingency had become a fait
accompli; (3) that the taking in by the University of replacement professors was valid, and the return-to-work order of March 30, 1963
constituted impairment of the obligation of contracts; and (4) the CIR could not issue said order without having previously determined
the legality or illegality of the strike.

The contention of the University that Republic Act No. 875 has withdrawn the power of the Court of Industrial Relations to issue a
return-to-work order exercised by it under Commonwealth Act No. 103 can not be sustained. When a case is certified by the President
to the Court of Industrial Relations, the case thereby comes under the operation of Commonwealth Act No. 103, and the Court may
exercise the broad powers and jurisdiction granted to it by said Act. Section 10 of Republic Act No. 875 empowers the Court of
Industrial Relations to issue an order "fixing the terms of employment." This clause is broad enough to authorize the Court to order the
strikers to return to work and the employer to readmit them. This Court, in the cases of the Philippine Marine Officers Association vs.
The Court of Industrial Relations, Compania Maritima, et al.; and Compañia Martima, et al. vs. Philippine Marine Radio Officers
Association and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31, 1957, declared:

We cannot subscribe to the above contention. We agree with counsel for the Philippine Radio Officers' Association that upon
certification by the President under Section 10 of Republic Act 875, the case comes under the operation of Commonwealth
Act 103, which enforces compulsory arbitration in cases of labor disputes in industries indispensable to the national interest
when the President certifies the case to the Court of Industrial Relations. The evident intention of the law is to empower the
Court of Industrial Relations to act in such cases, not only in the manner prescribed under Commonwealth Act 103, but with
the same broad powers and jurisdiction granted by that act. If the Court of Industrial Relations is granted authority to find a
solution to an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be
contended that the Court of Industrial Relations does not have the power or jurisdiction to carry that solution into effect. And
of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the
solution it has adopted? Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can
order the return of the workers with or without backpay as a term or condition of employment.

The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v. CIR, et al., G.R. No. L-13364, July 26, 1960.

When a case is certified to the CIR by the President of the Philippines pursuant to Section 10 of Republic Act No. 875, the CIR is
granted authority to find a solution to the industrial dispute; and the solution which the CIR has found under the authority of the
presidential certification and conformable thereto cannot be questioned (Radio Operators Association of the Philippines vs. Philippine
Marine Radio Officers Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218).

Untenable also is the claim of the University that the CIR cannot issue a return-to-work order after strike has been declared, it being
contended that under Section 10 of Republic Act No. 875 the CIR can only prevent a strike or a lockout — when either of this
situation had not yet occurred. But in the case of Bisaya Land Transportation Co., Inc. vs. Court of Industrial Relations, et al., No. L-
10114, Nov. 26, 1957, 50 O.G. 2518, this Court declared:

There is no reason or ground for the contention that Presidential certification of labor dispute to the CIR is limited to the
prevention of strikes and lockouts. Even after a strike has been declared where the President believes that public interest
demands arbitration and conciliation, the President may certify the ease for that purpose. The practice has been for the Court
 of Industrial Relations to order the strikers to work, pending the determination of the union demands that impelled the strike.
There is nothing in the law to indicate that this practice is abolished." (Emphasis supplied)

Likewise untenable is the contention of the University that the taking in by it of replacements was valid and the return-to-work order
would be an impairment of its contract with the replacements. As stated by the CIR in its order of March 30, 1963, it was agreed
before the hearing of Case 41-IPA on March 23, 1963 that the strikers would return to work under the status quo arrangement and the
University would readmit them, and the return-to-work order was a confirmation of that agreement. This is a declaration of fact by the
CIR which we cannot disregard. The faculty members, by striking, have not abandoned their employment but, rather, they have only
ceased from their labor (Keith Theatre v. Vachon et al., 187 A. 692). The striking faculty members have not lost their right to go back
to their positions, because the declaration of a strike is not a renunciation of their employment and their employee relationship with the
University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13, 138). The employment of replacements was not authorized by the CIR.
At most, that was a temporary expedient resorted to by the University, which was subject to the power of the CIR to allow to continue
or not. The employment of replacements by the University prior to the issuance of the order of March 30, 1963 did not vest in the
replacements a permanent right to the positions they held. Neither could such temporary employment bind the University to retain
permanently the replacements.

Striking employees maintained their status as employees of the employer (Western Castridge Co. v. National Labor Relations
Board, C.C.A. 139 F. 2d 855, 858) ; that employees who took the place of strikers do not displace them as `employees." '
(National Labor Relations Board v. A. Sartorius & Co., C.C.A. 2, 140 F. 2d 203, 206, 207.)

It is clear from what has been said that the return-to-work order cannot be considered as an impairment of the contract entered into by
petitioner with the replacements. Besides, labor contracts must yield to the common good and such contracts are subject to the special
laws on labor unions, collective bargaining, strikes and similar subjects (Article 1700, Civil Code).

Likewise unsustainable is the contention of the University that the Court of Industrial Relations could not issue the return-to-work
order without having resolved previously the issue of the legality or illegality of the strike, citing as authority therefor the case
of Philippine Can Company v. Court of Industrial Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not applicable
to the case at bar, the facts and circumstances being very different. The Philippine Can Company case, unlike the instant case, did not
involve the national interest and it was not certified by the President. In that case the company no longer needed the services of the
strikers, nor did it need substitutes for the strikers, because the company was losing, and it was imperative that it lay off such laborers
as were not necessary for its operation in order to save the company from bankruptcy. This was the reason of this Court in ruling, in
that case, that the legality or illegality of the strike should have been decided first before the issuance of the return-to-work order. The
University, in the case before Us, does not claim that it no longer needs the services of professors and/or instructors; neither does it
claim that it was imperative for it to lay off the striking professors and instructors because of impending bankruptcy. On the contrary,
it was imperative for the University to hire replacements for the strikers. Therefore, the ruling in the Philippine Can case that the
legality of the strike should be decided first before the issuance of the return-to-work order does not apply to the case at bar. Besides,
as We have adverted to, the return-to-work order of March 30, 1963, now in question, was a confirmation of an agreement between
the University and the Faculty Club during a prehearing conference on March 23, 1963.

The University also maintains that there was no more basis for the claim of the members of the Faculty Club to return to their work, as
their individual contracts for teaching had expired on March 25 or 31, 1963, as the case may be, and consequently, there was also no
basis for the return-to-work order of the CIR because the contractual relationships having ceased there were no positions to which the
members of the Faculty Club could return to. This contention is not well taken. This argument loses sight of the fact that when the
professors and instructors struck on February 18, 1963, they continued to be employees of the University for the purposes of the labor
controversy notwithstanding the subsequent termination of their teaching contracts, for Section 2(d) of the Industrial Peace Act
includes among employees "any individual whose work has ceased a consequence of, or in connection with, any current labor dispute
or of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment."

The question raised by the University was resolved in a similar case in the United States. In the case of Rapid Roller Co. v. NLRB 126
F. 2d 452, we read:

On May 9, 1939 the striking employees, eighty-four in number, offered to the company to return to their employment. The
company believing it had not committed any unfair labor practice, refused the employees' offer and claimed the right to
employ others to take the place of the strikers, as it might see fit. This constituted discrimination in the hiring and tenure of
the striking employees. When the employees went out on a strike because of the unfair labor practice of the company, their
status as employees for the purpose of any controversy growing out of that unfair labor practice was fixed. Sec. 2 (3) of the
Act. Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S. Ct. 845, 85. L. ed. 1271, 133 A.L.R. 1217.

For the purpose of such controversy they remained employees of the company. The company contended that they could not
be their employees in any event since the "contract of their employment expired by its own terms on April 23, 1939."
 In this we think the company is mistaken for the reason we have just pointed out, that the status of the employees on strike
became fixed under Sec. 2 (3) of the Act because of the unfair labor practice of the company which caused the strike.

The University, furthermore, claims that the information for indirect contempt filed against the officers of the University (Case No. V-
30) as well as the order of April 29, 1963 for their arrest were improper, irregular and illegal because (1) the officers of the University
had complied in good faith with the return-to-work order and in those cases that they did not, it was due to circumstance beyond their
control; (2) the return-to-work order and the order implementing the same were illegal; and (3) even assuming that the order was legal,
the same was not Yet final because there was a motion to reconsider it.

Again We find no merit in this claim of Petitioner. We have already ruled that the CIR had jurisdiction to issue the order of March 30,
1963 in CIR Case 41-IPA, and the return-to-work provision of that order is valid and legal. Necessarily the order of April 6, 1963
implementing that order of March 30, 1963 was also valid and legal.

Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial Relations of any Judge thereof to punish direct and
indirect contempts as provided in Rule 64 (now Rule 71) of the Rules of Court, under the same procedure and penalties provided
therein. Section 3 of Rule 71 enumerates the acts which would constitute indirect contempt, among which is "disobedience or
resistance to lawful writ, process, order, judgment, or command of a court," and the person guilty thereof can be punished after a
written charge has been filed and the accused has been given an opportunity to be heard. The last paragraph of said section provides:

But nothing in this section shall be so construed as to prevent the court from issuing process to bring the accused party into
court, or from holding him in custody pending such proceedings.

The provision authorizes the judge to order the arrest of an alleged contemner (Francisco, et al. v. Enriquez, L-7058, March 20, 1954,
94 Phil., 603) and this, apparently, is the provision upon which respondent Judge Bautista relied when he issued the questioned order
of arrest.

The contention of petitioner that the order of arrest is illegal is unwarranted. The return-to-work order allegedly violated was within
the court's jurisdiction to issue.

Section 14 of Commonwealth Act No. 103 provides that in cases brought before the Court of Industrial Relations under Section 4 of
the Act (referring to strikes and lockouts) the appeal to the Supreme Court from any award, order or decision shall not stay the
execution of said award, order or decision sought to be reviewed unless for special reason the court shall order that execution be
stayed. Any award, order or decision that is appealed is necessarily not final. Yet under Section 14 of Commonwealth Act No. 103
that award, order or decision, even if not yet final, is executory, and the stay of execution is discretionary with the Court of Industrial
Relations. In other words, the Court of Industrial Relations, in cases involving strikes and lockouts, may compel compliance or
obedience of its award, order or decision even if the award, order or decision is not yet final because it is appealed, and it follows that
any disobedience or non-compliance of the award, order or decision would constitute contempt against the Court of Industrial
Relations which the court may punish as provided in the Rules of Court. This power of the Court of Industrial Relations to punish for
contempt an act of non-compliance or disobedience of an award, order or decision, even if not yet final, is a special one and is
exercised only in cases involving strikes and lockouts. And there is reason for this special power of the industrial court because in the
exercise of its jurisdiction over cases involving strikes and lockouts the court has to issue orders or make decisions that are necessary
to effect a prompt solution of the labor dispute that caused the strike or the lockout, or to effect the prompt creation of a situation that
would be most beneficial to the management and the employees, and also to the public — even if the solution may be temporary,
pending the final determination of the case. Otherwise, if the effectiveness of any order, award, or decision of the industrial court in
cases involving strikes and lockouts would be suspended pending appeal then it can happen that the coercive powers of the industrial
court in the settlement of the labor disputes in those cases would be rendered useless and nugatory.

The University points to Section 6 of Commonwealth Act No. 103 which provides that "Any violation of any order, award, or decision
of the Court of Industrial Relations shall after such order, award or decision has become final, conclusive and executory constitute
contempt of court," and contends that only the disobedience of orders that are final (meaning one that is not appealed) may be the
subject of contempt proceedings. We believe that there is no inconsistency between the above-quoted provision of Section 6 and the
provision of Section 14 of Commonwealth Act No. 103. It will be noted that Section 6 speaks of order, award or decision that
is executory. By the provision of Section 14 an order, award or decision of the Court of Industrial Relations in cases involving strikes
and lockouts are immediately executory, so that a violation of that order would constitute an indirect contempt of court.

We believe that the action of the CIR in issuing the order of arrest of April 29, 1963 is also authorized under Section 19 of
Commonwealth Act No. 103 which provides as follows:

SEC. 19. Implied condition in every contract of employment.—In every contract of employment whether verbal or written, it
is an implied condition that when any dispute between the employer and the employee or laborer has been submitted to the
Court of Industrial Relations for settlement or arbitration pursuant to the provisions of this Act . . . and pending award, or
decision by the Court of such dispute . . . the employee or laborer shall not strike or walk out of his employment when so
 enjoined by the Court after hearing and when public interest so requires, and if he has already done so, that he shall forthwith
return to it, upon order of the Court, which shall be issued only after hearing when public interest so requires or when the
dispute cannot, in its opinion, be promptly decided or settled; and if the employees or laborers fail to return to work, the
Court may authorize the employer to accept other employees or laborers. A condition shall further be implied that while such
dispute . . . is pending, the employer shall refrain from accepting other employees or laborers, unless with the express
authority of the Court, and shall permit the continuation in the service of his employees or laborers under the last terms and
conditions existing before the dispute arose. . . . A violation by the employer or by the employee or laborer of such an order
or the implied contractual condition set forth in this section shall constitute contempt of the Court of Industrial Relations and
shall be punished by the Court itself in the same manner with the same penalties as in the case of contempt of a Court of First
Instance. . . .

We hold that the CIR acted within its jurisdiction when it ordered the arrest of the officers of the University upon a complaint for
indirect contempt filed by the Acting Special Prosecutor of the CIR in CIR Case V-30, and that order was valid. Besides those ordered
arrested were not yet being punished for contempt; but, having been charged, they were simply ordered arrested to be brought before
the Judge to be dealt with according to law. Whether they are guilty of the charge or not is yet to be determined in a proper hearing.

Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is being questioned in Case G.R. No. L-21278 before
this Court in a special civil action for certiorari. The University did not appeal from that order. In other words, the only question to be
resolved in connection with that order in CIR Case V-30 is whether the CIR had jurisdiction, or had abused its discretion, in issuing
that order. We hold that the CIR had jurisdiction to issue that order, and neither did it abuse its discretion when it issued that order.

In Case G.R. No. L-21462 the University appealed from the order of Judge Villanueva of the CIR in Case No. 1183-MC, dated April
6, 1963, granting the motion of the Faculty Club to withdraw its petition for certification election, and from the resolution of the
CIR en banc, dated June 5, 1963, denying the motion to reconsider said order of April 6, 1963. The ground of the Faculty Club in
asking for the withdrawal of that petition for certification election was because the issues involved in that petition were absorbed by
the issues in Case 41-IPA. The University opposed the petition for withdrawal, but at the same time it moved for the dismissal of the
petition for certification election.

It is contended by the University before this Court, in G.R. L-21462, that the issues of employer-employee relationship between the
University and the Faculty Club, the alleged status of the Faculty Club as a labor union, its majority representation and designation as
bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the
determination of the issues in Case No. 41-IPA, and, therefore, the motion to withdraw the petition for certification election should not
have been granted upon the ground that the issues in the first case were absorbed in the second case.

We believe that these contentions of the University in Case G.R. No. L-21462 have been sufficiently covered by the discussion in this
decision of the main issues raised in the principal case, which is Case G.R. No. L-21278. After all, the University wanted CIR Case
1183-MC dismissed, and the withdrawal of the petition for certification election had in a way produced the situation desired by the
University. After considering the arguments adduced by the University in support of its petition for certiorari by way of appeal in
Case G.R. No. L-21278, We hold that the CIR did not commit any error when it granted the withdrawal of the petition for certification
election in Case No. 1183-MC. The principal case before the CIR is Case No. 41-IPA and all the questions relating to the labor
disputes between the University and the Faculty Club may be threshed out, and decided, in that case.

In Case G.R. No. L-21500 the University appealed from the order of the CIR of March 30, 1963, issued by Judge Bautista, and from
the resolution of the CIR en banc promulgated on June 28, 1963, denying the motion for the reconsideration of that order of March 30,
1963, in CIR Case No. 41-IPA. We have already ruled that the CIR has jurisdiction to issue that order of March 30, 1963, and that
order is valid, and We, therefore, hold that the CIR did not err in issuing that order of March 30, 1963 and in issuing the resolution
promulgated on June 28, 1963 (although dated May 7, 1963) denying the motion to reconsider that order of March 30, 1963.

IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 is
dismissed and the writs prayed for therein are denied. The writ of preliminary injunction issued in Case G.R. No. L-21278 is
dissolved. The orders and resolutions appealed from, in Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases
against the petitioner-appellant Feati University. It is so ordered.

Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, J.P., Sanchez and Castro, JJ., concur.

Reyes, J.B.L., J., concurs but reserves his vote on the teacher's right to strike.
EN BANC

G.R. No. L-21212 September 23, 1966

CITIZENS' LEAGUE OF FREEWORKERS AND/OR BALBINO EPIS, NICOLAS ROJO, ET AL., petitioners,
vs.
HON. MACAPANTON ABBAS, Judge of the Court of First Instance of Davao and TEOFILO GERONIMO and EMERITA
MENDEZ, respondents.

Carlos Dominguez, Jr. for petitioners.

C. S. Nitorreda for respondents.

DIZON, J.:

Petition for certiorari with a prayer for the issuance of a writ of preliminary injunction filed by the Citizens' League of Freeworkers, a
legitimate labor organization, — hereinafter referred to as the Union — and its members against the spouses Teofilo Geronimo and
Emerita Mendez, and the Hon. Macapanton Abbas, as judge of the Court of First Instance of Davao. Its purpose is to set aside the writ
of preliminary injunction issued by the latter in Civil Case No. 3966 and restrain him from proceeding with the case, on the ground
that the controversy involves a labor dispute and is, therefore, within the exclusive jurisdiction of the Court of Industrial Relations.

It appears that on March 11, 1963, respondents-spouses owners and operators of auto-calesas in Davao City, filed a complaint with the
Court of First Instance of Davao (Civil Case No. 3966) to restrain the Union and its members, who were drivers of the spouses in said
business, from interfering with its operation, from committing certain acts complained of in connection therewith, and to recover
damages. The complaint alleged that the defendants named therein used to lease the auto-calesas of the spouses on a daily rental basis;
that, unable to get the spouses to recognize said defendants as employees instead of lessees and to bargain with it on that basis, the
Union declared a strike on February 20, 1963 and since then had paralyzed plaintiffs' business operations through threats, intimidation
and violence. The complaint also prayed for the issuance of a writ of preliminary injunction ex-parte restraining defendants therein
from committing said acts of violence and intimidation during the pendency of the case.

On March 11, 1963 the respondent judge granted the writ prayed for, while deferring action on petitioners' motion to dissolve said writ
to March 20 of the same year.

Meanwhile, on March 12, 1963, petitioners filed a complaint for unfair labor practice against the respondents-spouses with the Court
of Industrial Relations on the ground, among others, of the latter's refusal to bargain with them. 1awphîl.nèt

On March 18, 1963, petitioners filed a motion to declare the writ of preliminary injunction void on the ground that the same had
expired by virtue of Section 9 (d) of Republic Act 875. In his order of March 21, 1963, however, the respondent judge denied said
motion on the ground that there was no employer-employee relationship between respondents-spouses and the individual petitioners
herein and that, consequently, the Rules of Court and not Republic Act No. 875 applied to the matter of injunction. Thereupon the
petition under consideration was filed.

In the case of Isabelo Doce vs. Workmen's Compensation Commission, et al. (G.R. No. L-9417, December 22, 1958), upon a similar if
not an altogether identical set of facts, We held:

This case falls squarely within our ruling in National Labor Union v. Dinglasan, 52 O.G., No. 4, 1933, wherein this Court
held that a driver of a jeep who operates the same under the boundary system is considered an employee within the meaning
of the law and as such the case comes under the jurisdiction of the Court of Industrial Relations. In that case, Benedicto
Dinglasan was the owner and operator of TPU jeepneys which were driven by petitioner under verbal contracts that they will
pay P7.50 for 10 hours use under the so called "boundary system." The drivers did not receive salaries or wages from the
owner. Their day's earnings were the excess over the P7.50 they paid for the use of the jeepneys. In the event that they did not
earn more, the owner did not have to pay them anything. In holding that the employer-employee relationship existed between
the owner of the jeepneys and the drivers even if the latter worked under the boundary system, this Court said:

"The only features that would make the relationship of lessor and lessee between the respondent, owner of the jeeps,
and the drivers, members of the petitioner union, are the fact that he does not pay them any fixed wage but their
compensation is the excess of the total amount of fares earned or collected by them over and above the amount of
P7.50 which they agreed to pay to the respondent, and the fact that the gasoline burned by the jeeps is for the
account of the drivers. These two features are not, however, sufficient to withdraw the relationship, between them
from that of employer-employee, because the estimated earnings for fares must be over and above the amount they
agreed to pay to the respondent for a ten-hour shift or ten-hour a day operation of the jeeps. Not having any interest
in the business because they did not invest anything in the acquisition of the jeeps and did not participate in the
 management thereof, their service as drivers of the jeeps being their only contribution to the business, the
relationship of lessor and lessee cannot be sustained."

Even assuming, arguendo, that the respondent court had jurisdiction to issue the abovementioned writ of preliminary injunction in
Civil Case No. 3966 at the time it was issued, We are of the opinion, and so hold, that it erred in denying petitioners' motion to set
aside said writ upon expiration of the period of thirty days from its issuance, upon the wrong ground that there was no labor dispute
between the parties and that, therefore, the provisions of Republic Act No. 875 did not apply to the case. As stated heretofore, there
was a labor dispute between the parties from the beginning.

Moreover, upon the filing of the unfair labor practice case on March 12, 1963, the Court of Industrial Relations acquired complete
jurisdiction over the labor dispute and the least that could be done in Civil Case No. 3966 is either to dismiss it or suspend proceedings
therein until the final resolution of the former.

Wherefore, judgment is hereby rendered setting aside the writ of preliminary injunction issued by the respondent judge in Civil Case
No. 3966 of the Court of First Instance of Davao, with costs.
FIRST DIVISION

OSCAR VILLAMARIA, JR. G.R. No. 165881

Petitioner,

Present:

PANGANIBAN, C.J.,

Chairperson,

- versus - YNARES-SANTIAGO,

AUSTRIA-MARTINEZ.

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

COURT OF APPEALS and Promulgated:

JERRY V. BUSTAMANTE,

Respondents. April 19, 2006

x-----------------------------------------------------------------------------------------x

DECISION

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari under Rule 65 of the Revised Rules of Court assailing the Decision[1] and
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 78720 which set aside the Resolution[3] of the National Labor Relations
Commission (NLRC) in NCR-30-08-03247-00, which in turn affirmed the Decision[4] of the Labor Arbiter dismissing the complaint
filed by respondent Jerry V. Bustamante.
 Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in assembling passenger
jeepneys with a public utility franchise to operate along the Baclaran-Sucat route. By 1995, Villamaria stopped assembling jeepneys
and retained only nine, four of which he operated by employing drivers on a boundary basis. One of those drivers was respondent
Bustamante who drove the jeepney with Plate No. PVU-660. Bustamante remitted P450.00 a day to Villamaria as boundary and kept
the residue of his daily earnings as compensation for driving the vehicle. In August 1997, Villamaria verbally agreed to sell the
jeepney to Bustamante under the boundary-hulog scheme, where Bustamante would remit to Villarama P550.00 a day for a period of
four years; Bustamante would then become the owner of the vehicle and continue to drive the same under Villamarias franchise. It
was also agreed that Bustamante would make a downpayment of P10,000.00.

On August 7, 1997, Villamaria executed a contract entitled Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary-Hulog[5] over the passenger jeepney with Plate No. PVU-660, Chassis No. EVER95-38168-C and Motor No. SL-
26647. The parties agreed that if Bustamante failed to pay the boundary-hulog for three days, Villamaria Motors would hold on to the
vehicle until Bustamante paid his arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily boundary-
hulog for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to return the vehicle to
Villamaria Motors.

Under the Kasunduan, Bustamante was prohibited from driving the vehicle without prior authority from Villamaria
Motors. Thus, Bustamante was authorized to operate the vehicle to transport passengers only and not for other purposes. He was also
required to display an identification card in front of the windshield of the vehicle; in case of failure to do so, any fine that may be
imposed by government authorities would be charged against his account. Bustamante further obliged himself to pay for the cost of
replacing any parts of the vehicle that would be lost or damaged due to his negligence. In case the vehicle sustained serious damage,
Bustamante was obliged to notify Villamaria Motors before commencing repairs. Bustamante was not allowed to wear slippers, short
pants or undershirts while driving. He was required to be polite and respectful towards the passengers. He was also obliged to notify
Villamaria Motors in case the vehicle was leased for two or more days and was required to attend any meetings which may be called
from time to time. Aside from the boundary-hulog, Bustamante was also obliged to pay for the annual registration fees of the vehicle
and the premium for the vehicles comprehensive insurance. Bustamante promised to strictly comply with the rules and regulations
imposed by Villamaria for the upkeep and maintenance of the jeepney.

Bustamante continued driving the jeepney under the supervision and control of Villamaria. As agreed upon, he made daily remittances
of P550.00 in payment of the purchase price of the vehicle. Bustamante failed to pay for the annual registration fees of the vehicle, but
Villamaria allowed him to continue driving the jeepney.

In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. This prompted Villamaria to serve a Paalala,[6] reminding them that under the Kasunduan, failure to pay
the daily boundary-hulog for one week, would mean their respective jeepneys would be returned to him without any complaints. He
warned the drivers that the Kasunduan would henceforth be strictly enforced and urged them to comply with their obligation to avoid
litigation.

On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and barred the latter from driving the vehicle.

On August 15, 2000, Bustamante filed a Complaint[7] for Illegal Dismissal against Villamaria and his wife Teresita. In his
Position Paper,[8] Bustamante alleged that he was employed by Villamaria in July 1996 under the boundary system, where he was
required to remit P450.00 a day. After one year of continuously working for them, the spouses Villamaria presented
the Kasunduan for his signature, with the assurance that he (Bustamante) would own the jeepney by March 2001 after paying P550.00
in daily installments and that he would thereafter continue driving the vehicle along the same route under the same franchise. He
further narrated that in July 2000, he informed the Villamaria spouses that the surplus engine of the jeepney needed to be replaced, and
was assured that it would be done. However, he was later arrested and his drivers license was confiscated because apparently, the
replacement engine that was installed was taken from a stolen vehicle. Due to negotiations with the apprehending authorities, the
jeepney was not impounded. The Villamaria spouses took the jeepney from him on July 24, 2000, and he was no longer allowed to
drive the vehicle since then unless he paid them P70,000.00.
 Bustamante prayed that judgment be rendered in his favor, thus:

WHEREFORE, in the light of the foregoing, it is most respectfully prayed that judgment be rendered
ordering the respondents, jointly and severally, the following:

1. Reinstate complainant to his former position without loss of seniority rights and execute a Deed of Sale
in favor of the complainant relative to the PUJ with Plate No. PVU-660;

2. Ordering the respondents to pay backwages in the amount of P400.00 a day and other benefits computed
from July 24, 2000 up to the time of his actual reinstatement;

3. Ordering respondents to return the amount of P10,000.00 and P180,000.00 for the expenses incurred by
the complainant in the repair and maintenance of the subject jeep;

4. Ordering the respondents to refund the amount of One Hundred (P100.00) Pesos per day counted
from August 7, 1997 up to June 2000 or a total of P91,200.00;

5. To pay moral and exemplary damages of not less than P200,000.00;

6. Attorneys fee[s] of not less than 10% of the monetary award.

Other just and equitable reliefs under the premises are also being prayed for. [9]

In their Position Paper,[10] the spouses Villamaria admitted the existence of the Kasunduan, but alleged that Bustamante failed to pay
the P10,000.00 downpayment and the vehicles annual registration fees. They further alleged that Bustamante eventually failed to
remit the requisite boundary-hulog of P550.00 a day, which prompted them to issue the Paalaala. Instead of complying with his
obligations, Bustamante stopped making his remittances despite his daily trips and even brought the jeepney to the province without
permission. Worse, the jeepney figured in an accident and its license plate was confiscated; Bustamante even abandoned the vehicle
in a gasoline station in Sucat, Paraaque City for two weeks. When the security guard at the gasoline station requested that the vehicle
be retrieved and Teresita Villamaria asked Bustamante for the keys, Bustamante told her: Di kunin ninyo. When the vehicle was
finally retrieved, the tires were worn, the alternator was gone, and the battery was no longer working.

Citing the cases of Cathedral School of Technology v. NLRC[11] and Canlubang Security Agency Corporation v. NLRC,[12] the
spouses Villamaria argued that Bustamante was not illegally dismissed since the Kasunduan executed on August 7, 1997 transformed
the employer-employee relationship into that of vendor-vendee. Hence, the spouses concluded, there was no legal basis to hold them
liable for illegal dismissal. They prayed that the case be dismissed for lack of jurisdiction and patent lack of merit.
 In his Reply,[13] Bustamante claimed that Villamaria exercised control and supervision over the conduct of his
employment. He maintained that the rulings of the Court in National Labor Union v. Dinglasan,[14] Magboo v.
Bernardo,[15] and Citizen's League of Free Workers v. Abbas[16] are germane to the issue as they define the nature of the
owner/operator-driver relationship under the boundary system.He further reiterated that it was the Villamaria spouses who presented
the Kasunduan to him and that he conformed thereto only upon their representation that he would own the vehicle after four
years. Moreover, it appeared that the Paalala was duly received by him, as he, together with other drivers, was made to affix his
signature on a blank piece of paper purporting to be an attendance sheet.

On March 15, 2002, the Labor Arbiter rendered judgment [17] in favor of the spouses Villamaria and ordered the complaint dismissed
on the following ratiocination:

Respondents presented the contract of Boundary-Hulog, as well as the PAALALA, to prove their claim that
complainant violated the terms of their contract and afterwards abandoned the vehicle assigned to him. As against
the foregoing, [the] complaints (sic) mere allegations to the contrary cannot prevail.

Not having been illegally dismissed, complainant is not entitled to damages and attorney's fees. [18]

Bustamante appealed the decision to the NLRC,[19] insisting that the Kasunduan did not extinguish the employer-employee
relationship between him and Villamaria. While he did not receive fixed wages, he kept only the excess of the boundary-hulog which
he was required to remit daily to Villamaria under the agreement. Bustamante maintained that he remained an employee because he
was engaged to perform activities which were necessary or desirable to Villamarias trade or business.

The NLRC rendered judgment[20] dismissing the appeal for lack of merit, thus:

WHEREFORE, premises considered, complainant's appeal is hereby DISMISSED for reasons not stated in
the Labor Arbiter's decision but mainly on a jurisdictional issue, there being none over the subject matter of the
controversy.[21]

The NLRC ruled that under the Kasunduan, the juridical relationship between Bustamante and Villamaria was that of vendor
and vendee, hence, the Labor Arbiter had no jurisdiction over the complaint. Bustamante filed a Motion for Reconsideration, which
the NLRC resolved to deny on May 30, 2003.[22]

Bustamante elevated the matter to the CA via Petition for Certiorari, alleging that the NLRC erred

IN DISMISSING PETITIONERS APPEAL FOR REASON NOT STATED IN THE LABOR ARBITERS
DECISION, BUT MAINLY ON JURISDICTIONAL ISSUE;

II

IN DISREGARDING THE LAW AND PREVAILING JURISPRUDENCE WHEN IT DECLARED THAT THE
RELATIONSHIP WHICH WAS ESTABLISHED BETWEEN PETITIONER AND THE PRIVATE
 RESPONDENT WAS DEFINITELY A MATTER WHICH IS BEYOND THE PROTECTIVE MANTLE OF OUR
LABOR LAWS.[23]

Bustamante insisted that despite the Kasunduan, the relationship between him and Villamaria continued to be that of employer-
employee and as such, the Labor Arbiter had jurisdiction over his complaint. He further alleged that it is common knowledge that
operators of passenger jeepneys (including taxis) pay their drivers not on a regular monthly basis but on commission or boundary
basis, or even the boundary-hulog system. Bustamante asserted that he was dismissed from employment without any lawful or just
cause and without due notice.

For his part, Villamaria averred that Bustamante failed to adduce proof of their employer-employee relationship. He further
pointed out that the Dinglasan case pertains to the boundary system and not the boundary-hulog system, hence inapplicable in the
instant case. He argued that upon the execution of the Kasunduan, the juridical tie between him and Bustamante was transformed into
a vendor-vendee relationship.Noting that he was engaged in the manufacture and sale of jeepneys and not in the business of
transporting passengers for consideration, Villamaria contended that the daily fees which Bustmante paid were actually periodic
installments for the the vehicle and were not the same fees as understood in the boundary system. He added that the boundary-
hulog plan was basically a scheme to help the driver-buyer earn money and eventually pay for the unit in full, and for the owner to
profit not from the daily earnings of the driver-buyer but from the purchase price of the unit sold. Villamaria further asserted that the
apparently restrictive conditions in the Kasunduan did not mean that the means and method of driver-buyers conduct was controlled,
but were mere ways to preserve the vehicle for the benefit of both parties: Villamaria would be able to collect the agreed purchase
price, while Bustamante would be assured that the vehicle would still be in good running condition even after four years. Moreover,
the right of vendor to impose certain conditions on the buyer should be respected until full ownership of the property is vested on the
latter. Villamaria insisted that the parallel circumstances obtaining in Singer Sewing Machine Company v. Drilon[24]has analogous
application to the instant issue.

In its Decision[25] dated August 30, 2004, the CA reversed and set aside the NLRC decision. The fallo of the decision reads:

UPON THE VIEW WE TAKE IN THIS CASE, THUS, the impugned resolutions of the NLRC must
be, as they are hereby are, REVERSED AND SET ASIDE, and judgment entered in favor of petitioner:

1. Sentencing private respondent Oscar Villamaria, Jr. to pay petitioner Jerry Bustamante
separation pay computed from the time of his employment up to the time of termination based on
the prevailing minimum wage at the time of termination; and,

2. Condemning private respondent Oscar Villamaria, Jr. to pay petitioner Jerry

Bustamante back wages computed from the time of his dismissal up to March 2001 based on the
prevailing minimum wage at the time of his dismissal.

Without Costs.

SO ORDERED.[26]
 The appellate court ruled that the Labor Arbiter had jurisdiction over Bustamantes complaint. Under the Kasunduan, the
relationship between him and Villamaria was dual: that of vendor-vendee and employer-employee. The CA ratiocinated that
Villamarias exercise of control over Bustamantes conduct in operating the jeepney is inconsistent with the formers claim that he was
not engaged in the transportation business. There was no evidence that petitioner was allowed to let some other person drive the
jeepney.

The CA further held that, while the power to dismiss was not mentioned in the Kasunduan, it did not mean that Villamaria
could not exercise it. It explained that the existence of an employment relationship did not depend on how the worker was paid but on
the presence or absence of control over the means and method of the employees work. In this case, Villamarias directives (to drive
carefully, wear an identification card, don decent attire, park the vehicle in his garage, and to inform him about provincial trips, etc.)
was a means to control the way in which Bustamante was to go about his work. In view of Villamarias supervision and control as
employer, the fact that the boundary represented installment payments of the purchase price on the jeepney did not remove the parties
employer-employee relationship.

While the appellate court recognized that a weeks default in paying the boundary-hulog constituted an additional cause for
terminating Bustamantes employment, it held that the latter was illegally dismissed. According to the CA, assuming that Bustamante
failed to make the required payments as claimed by Villamaria, the latter nevertheless failed to take steps to recover the unit and
waited for Bustamante to abandon it. It also pointed out that Villamaria neither submitted any police report to support his claim that
the vehicle figured in a mishap nor presented the affidavit of the gas station guard to substantiate the claim that Bustamante abandoned
the unit.

Villamaria received a copy of the decision on September 8, 2004, and filed, on September 17, 2004, a motion for
reconsideration thereof. The CA denied the motion in a Resolution[27] dated November 2, 2004, and Villamaria received a copy
thereof on November 8, 2004.

Villamaria, now petitioner, seeks relief from this Court via petition for review on certiorari under Rule 65 of the Rules of Court,
alleging that the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in reversing the decision of the
Labor Arbiter and the NLRC. He claims that the CA erred in ruling that the juridical relationship between him and respondent under
the Kasunduan was a combination of employer-employee and vendor-vendee relationships. The terms and conditions of
the Kasunduan clearly state that he and respondent Bustamante had entered into a conditional deed of sale over the jeepney; as such,
their employer-employee relationship had been transformed into that of vendor-vendee. Petitioner insists that he had the right to
reserve his title on the jeepney until after the purchase price thereof had been paid in full.

In his Comment on the petition, respondent avers that the appropriate remedy of petitioner was an appeal via a petition for review
on certiorari under Rule 45 of the Rules of Court and not a special civil action of certiorari under Rule 65. He argues that petitioner
failed to establish that the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in its decision, as the
said ruling is in accord with law and the evidence on record.

Respondent further asserts that the Kasunduan presented to him by petitioner which provides for a boundary-hulog scheme
was a devious circumvention of the Labor Code of the Philippines. Respondent insists that his juridical relationship with petitioner is
that of employer-employee because he was engaged to perform activities which were necessary or desirable in the usual business of
petitioner, his employer.

In his Reply, petitioner avers that the Rules of Procedure should be liberally construed in his favor; hence, it behooves the Court to
resolve the merits of his petition.
We agree with respondents contention that the remedy of petitioner from the CA decision was to file a petition for review
on certiorari under Rule 45 of the Rules of Court and not the independent action of certiorari under Rule 65. Petitioner had 15 days
from receipt of the CA resolution denying his motion for the reconsideration within which to file the petition under Rule 45.[28] But
instead of doing so, he filed a petition for certiorari under Rule 65 on November 22, 2004, which did not, however, suspend the
running of the 15-day reglementary period; consequently, the CA decision became final and executory upon the lapse of the
reglementary period for appeal. Thus, on this procedural lapse, the instant petition stands to be dismissed. [29]

It must be stressed that the recourse to a special civil action under Rule 65 of the Rules of Court is proscribed by the remedy of appeal
under Rule 45. As the Court elaborated in Tomas Claudio Memorial College, Inc. v. Court of Appeals:[30]

We agree that the remedy of the aggrieved party from a decision or final resolution of the CA is to file a petition for
review on certiorari under Rule 45 of the Rules of Court, as amended, on questions of facts or issues of law within
fifteen days from notice of the said resolution. Otherwise, the decision of the CA shall become final and executory.
The remedy under Rule 45 of the Rules of Court is a mode of appeal to this Court from the decision of the CA. It is
a continuation of the appellate process over the original case. A review is not a matter of right but is a matter of
judicial discretion. The aggrieved party may, however, assail the decision of the CA via a petition
for certiorari under Rule 65 of the Rules of Court within sixty days from notice of the decision of the CA or its
resolution denying the motion for reconsideration of the same. This is based on the premise that in issuing the
assailed decision and resolution, the CA acted with grave abuse of discretion, amounting to excess or lack of
jurisdiction and there is no plain, speedy and adequate remedy in the ordinary course of law. A remedy is considered
plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effect of the judgment and the
acts of the lower court.

The aggrieved party is proscribed from filing a petition for certiorari if appeal is available, for the remedies of
appeal and certiorari are mutually exclusive and not alternative or successive. The aggrieved party is, likewise,
barred from filing a petition for certiorari if the remedy of appeal is lost through his negligence. A petition
for certiorari is an original action and does not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against the public respondent from further
proceeding. A petition for certiorari must be based on jurisdictional grounds because, as long as the respondent
court acted within its jurisdiction, any error committed by it will amount to nothing more than an error of judgment
which may be corrected or reviewed only by appeal.[31]

However, we have also ruled that a petition for certiorari under Rule 65 may be considered as filed under Rule 45,
conformably with the principle that rules of procedure are to be construed liberally, provided that the petition is filed within the
reglementary period under Section 2, Rule 45 of the Rules of Court, and where valid and compelling circumstances warrant that the
petition be resolved on its merits.[32] In this case, the petition was filed within the reglementary period and petitioner has raised an
issue of substance: whether the existence of a boundary-hulog agreement negates the employer-employee relationship between the
vendor and vendee, and, as a corollary, whether the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such case.

We resolve these issues in the affirmative.

The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency of the government
has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and the
character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs. [33] A prayer or
demand for relief is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or change the legal
effect of what is alleged.[34] In determining which body has jurisdiction over a case, the better policy is to consider not only the status
or relationship of the parties but also the nature of the action that is the subject of their controversy. [35]

Article 217 of the Labor Code, as amended, vests on the Labor Arbiter exclusive original jurisdiction only over the
following:
 x x x (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work, and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;

5. Cases arising from violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and

maternity benefits, all other claims, arising from employer-employee relationship, including
those of persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective bargaining agreements, and those
arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said
agreements.

In the foregoing cases, an employer-employee relationship is an indispensable jurisdictional requisite.[36] The jurisdiction of
Labor Arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor Code, other labor statutes or their collective bargaining
agreement.[37] Not every dispute between an employer and employee involves matters that only the Labor Arbiter and the NLRC can
resolve in the exercise of their adjudicatory or quasi-judicial powers. Actions between employers and employees where the employer-
employee relationship is merely incidental is within the exclusive original jurisdiction of the regular courts. [38] When the principal
relief is to be granted under labor legislation or a collective bargaining agreement, the case falls within the exclusive jurisdiction of the
Labor Arbiter and the NLRC even though a claim for damages might be asserted as an incident to such claim. [39]

We agree with the ruling of the CA that, under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical
relationship was created between petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not
extinguish the employer-employee relationship of the parties extant before the execution of said deed.
 As early as 1956, the Court ruled in National Labor Union v. Dinglasan[40] that the jeepney owner/operator-driver
relationship under the boundary system is that of employer-employee and not lessor-lessee. This doctrine was affirmed, under similar
factual settings, in Magboo v. Bernardo[41] and Lantaco, Sr. v. Llamas,[42] and was analogously applied to govern the relationships
between auto-calesa owner/operator and driver,[43] bus owner/operator and conductor,[44] and taxi owner/operator and driver.[45]

The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to primarily
govern the compensation of the driver, that is, the latters daily earnings are remitted to the owner/operator less the excess of the
boundary which represents the drivers compensation. Under this system, the owner/operator exercises control and supervision over the
driver. It is unlike in lease of chattels where the lessor loses complete control over the chattel leased but the lessee is still ultimately
responsible for the consequences of its use. The management of the business is still in the hands of the owner/operator, who, being the
holder of the certificate of public convenience, must see to it that the driver follows the route prescribed by the franchising and
regulatory authority, and the rules promulgated with regard to the business operations. The fact that the driver does not receive fixed
wages but only the excess of the boundary given to the owner/operator is not sufficient to change the relationship between
them. Indubitably, the driver performs activities which are usually necessary or desirable in the usual business or trade of the
owner/operator.[46]

Under the Kasunduan, respondent was required to remit P550.00 daily to petitioner, an amount which represented the
boundary of petitioner as well as respondents partial payment (hulog) of the purchase price of the jeepney.
Respondent was entitled to keep the excess of his daily earnings as his daily wage. Thus, the daily remittances also had a dual
purpose: that of petitioners boundary and respondents partial payment (hulog) for the vehicle. This dual purpose was expressly stated
in the Kasunduan.The well-settled rule is that an obligation is not novated by an instrument that expressly recognizes the old one,
changes only the terms of payment, and adds other obligations not incompatible with the old provisions or where the new contract
merely supplements the previous one. [47] The two obligations of the respondent to remit to petitioner the boundary-hulog can stand
together.

In resolving an issue based on contract, this Court must first examine the contract itself, keeping in mind that when the terms
of the agreement are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall
prevail.[48]The intention of the contracting parties should be ascertained by looking at the words used to project their intention, that
is, all the words, not just a particular word or two or more words standing alone. The various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. [49] The parts and
clauses must be interpreted in relation to one another to give effect to the whole. The legal effect of a contract is to be determined from
the whole read together.[50]

Under the Kasunduan, petitioner retained supervision and control over the conduct of the respondent as driver of the jeepney,
thus:

Ang mga patakaran, kaugnay ng bilihang ito sa pamamagitan ng boundary hulog ay ang mga
sumusunod:

1. Pangangalagaan at pag-iingatan ng TAUHAN NG IKALAWANG PANIG ang sasakyan ipinagkatiwala

sa kanya ng TAUHAN NG UNANG PANIG.

2. Na ang sasakyan nabanggit ay gagamitin lamang ng TAUHAN NG IKALAWANG PANIG sa

paghahanapbuhay bilang pampasada o pangangalakal sa malinis at maayos na pamamaraan.
 3. Na ang sasakyan nabanggit ay hindi gagamitin ng TAUHAN NG IKALAWANG PANIG sa mga bagay
na makapagdudulot ng kahihiyan, kasiraan o pananagutan sa TAUHAN NG UNANG PANIG.

4. Na hindi ito mamanehohin ng hindi awtorisado ng opisina ng UNANG PANIG.

5. Na ang TAUHAN NG IKALAWANG PANIG ay kinakailangang maglagay ng ID Card sa harap ng

windshield upang sa pamamagitan nito ay madaliang malaman kung ang nagmamaneho ay awtorisado ng
VILLAMARIA MOTORS o hindi.

6. Na sasagutin ng TAUHAN NG IKALAWANG PANIG ang [halaga ng] multa kung sakaling mahuli ang
sasakyang ito na hindi nakakabit ang ID card sa wastong lugar o anuman kasalanan o kapabayaan.

7. Na sasagutin din ng TAUHAN NG IKALAWANG PANIG ang materyales o piyesa na papalitan ng

nasira o nawala ito dahil sa kanyang kapabayaan.

8. Kailangan sa VILLAMARIA MOTORS pa rin ang garahe habang hinuhulugan pa rin ng TAUHAN NG
IKALAWANG PANIG ang nasabing sasakyan.

9. Na kung magkaroon ng mabigat na kasiraan ang sasakyang ipinagkaloob ng TAUHAN NG UNANG

PANIG, ang TAUHAN NG IKALAWANG PANIG ay obligadong itawag ito muna sa VILLAMARIA MOTORS bago
ipagawa sa alin mang Motor Shop na awtorisado ng VILLAMARIA MOTORS.

10. Na hindi pahihintulutan ng TAUHAN NG IKALAWANG PANIG sa panahon ng pamamasada na ang

nagmamaneho ay naka-tsinelas, naka short pants at nakasando lamang. Dapat ang nagmamaneho ay laging nasa
maayos ang kasuotan upang igalang ng mga pasahero.

11. Na ang TAUHAN NG IKALAWANG PANIG o ang awtorisado niyang driver ay magpapakita ng
magandang asal sa mga pasaheros at hindi dapat magsasalita ng masama kung sakali man may pasaherong
pilosopo upang maiwasan ang anumang kaguluhan na maaaring kasangkutan.

12. Na kung sakaling hindi makapagbigay ng BOUNDARY HULOG ang TAUHAN NG IKALAWANG
PANIG sa loob ng tatlong (3) araw ay ang opisina ng VILLAMARIA MOTORS ang may karapatang mangasiwa ng
nasabing sasakyan hanggang matugunan ang lahat ng
responsibilidad. Ang halagang dapat bayaran sa opisina ay may karagdagang multa ng P50.00 sa araw-araw na
ito ay nasa pangangasiwa ng VILLAMARIA MOTORS.

13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi makapagbigay ng BOUNDARY HULOG
sa loob ng isang linggo ay nangangahulugan na ang kasunduang ito ay wala ng bisa at kusang ibabalik ng
TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG UNANG PANIG.
 14. Sasagutin ng TAUHAN NG IKALAWANG PANIG ang bayad sa rehistro, comprehensive insurance
taon-taon at kahit anong uri ng aksidente habang ito ay hinuhulugan pa sa TAUHAN NG UNANG PANIG.

15. Na ang TAUHAN NG IKALAWANG PANIG ay obligadong dumalo sa pangkalahatang pagpupulong

ng VILLAMARIA MOTORS sa tuwing tatawag ang mga tagapangasiwa nito upang maipaabot ang anumang
mungkahi sa ikasusulong ng samahan.

16. Na ang TAUHAN NG IKALAWANG PANIG ay makikiisa sa lahat ng mga patakaran na magkakaroon
ng pagbabago o karagdagan sa mga darating na panahon at hindi magiging hadlang sa lahat ng mga balakin ng
VILLAMARIA MOTORS sa lalo pang ipagtatagumpay at ikakatibay ng Samahan.

17. Na ang TAUHAN NG IKALAWANG PANIG ay hindi magiging buwaya sa pasahero upang hindi
kainisan ng kapwa driver at maiwasan ang pagkakasangkot sa anumang gulo.

18. Ang nasabing sasakyan ay hindi kalilimutang siyasatin ang kalagayan lalo na sa umaga bago
pumasada, at sa hapon o gabi naman ay sisikapin mapanatili ang kalinisan nito.

19. Na kung sakaling ang nasabing sasakyan ay maaarkila at aabutin ng dalawa o higit pang araw sa
lalawigan ay dapat lamang na ipagbigay alam muna ito sa VILLAMARIA MOTORS upang maiwasan ang mga
anumang suliranin.

20. Na ang TAUHAN NG IKALAWANG PANIG ay iiwasan ang pakikipag-unahan sa kaninumang

sasakyan upang maiwasan ang aksidente.

21. Na kung ang TAUHAN NG IKALAWANG PANIG ay mayroon sasabihin sa VILLAMARIA MOTORS
mabuti man or masama ay iparating agad ito sa kinauukulan at iwasan na iparating ito kung [kani-kanino]
lamang upang maiwasan ang anumang usapin. Magsadya agad sa opisina ng VILLAMARIA MOTORS.

22. Ang mga nasasaad sa KASUNDUAN ito ay buong galang at puso kong sinasang-ayunan at buong
sikap na pangangalagaan ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan at gagamitin lamang ito
sa paghahanapbuhay at wala nang iba pa. [51]

The parties expressly agreed that petitioner, as vendor, and respondent, as vendee, entered into a contract to sell the jeepney
on a daily installment basis of P550.00 payable in four years and that petitioner would thereafter become its owner. A contract is one
of conditional sale, oftentimes referred to as contract to sell, if the ownership or title over the
property sold is retained by the vendor, and is not passed to the vendee unless and until there is full payment of the purchase price
and/or upon faithful compliance with the other terms and conditions that may lawfully be stipulated. [52] Such payment or satisfaction
of other preconditions, as the case may be, is a positive suspensive condition, the failure of which is not a breach of contract, casual or
serious, but simply an event that would prevent the obligation of the vendor to convey title from acquiring binding force. [53] Stated
differently, the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future and
uncertain event so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had
never existed.[54] The vendor may extrajudicially terminate the operation of the contract, refuse conveyance, and retain the sums or
installments already received, where such rights are expressly provided for.[55]

Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although its material possession was vested
in respondent as its driver. In case respondent failed to make his P550.00 daily installment payment for a week, the agreement would
be of no force and effect and respondent would have to return the jeepney to petitioner; the employer-employee relationship would
likewise be terminated unless petitioner would allow respondent to continue driving the jeepney on a boundary basis of P550.00 daily
despite the termination of their vendor-vendee relationship.

The juridical relationship of employer-employee between petitioner and respondent was not negated by the foregoing
stipulation in the Kasunduan, considering that petitioner retained control of respondents conduct as driver of the vehicle. As correctly
ruled by the CA:

The exercise of control by private respondent over petitioners conduct in operating the jeepney he was
driving is inconsistent with private respondents claim that he is, or was, not engaged in the transportation business;
that, even if petitioner was allowed to let some other person drive the unit, it was not shown that he did so; that the
existence of an employment relation is not dependent on how the worker is paid but on the presence or absence of
control over the means and method of the work; that the amount earned in excess of the boundary hulog is
equivalent to wages; and that the fact that the power of dismissal was not mentioned in the Kasunduan did not mean
that private respondent never exercised such power, or could not exercise such power.

Moreover, requiring petitioner to drive the unit for commercial use, or to wear an identification card, or to
don a decent attire, or to park the vehicle in Villamaria Motors garage, or to inform Villamaria Motors about the fact
that the unit would be going out to the province for two days of more, or to drive the unit carefully, etc. necessarily
related to control over the means by which the petitioner was to go about his work; that the ruling applicable here is
not Singer Sewing Machine but National Labor Union since the latter case involved jeepney owners/operators and
jeepney drivers, and that the fact that the boundary here represented installment payment of the purchase price on
the jeepney did not withdraw the relationship from that of employer-employee, in view of the overt presence of
supervision and control by the employer.[56]

Neither is such juridical relationship negated by petitioners claim that the terms and conditions in the Kasunduan relative to
respondents behavior and deportment as driver was for his and respondents benefit: to insure that respondent would be able to pay the
requisite daily installment of P550.00, and that the vehicle would still be in good condition despite the lapse of four years. What is
primordial is that petitioner retained control over the conduct of the respondent as driver of the jeepney.

Indeed, petitioner, as the owner of the vehicle and the holder of the franchise, is entitled to exercise supervision and control
over the respondent, by seeing to it that the route provided in his franchise, and the rules and regulations of the Land Transportation
Regulatory Board are duly complied with. Moreover, in a business establishment, an identification card is usually provided not just as
a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.[57]

As respondents employer, it was the burden of petitioner to prove that respondents termination from employment was for a
lawful or just cause, or, at the very least, that respondent failed to make his daily remittances of P550.00 as boundary. However,
petitioner failed to do so. As correctly ruled by the appellate court:
 It is basic of course that termination of employment must be effected in accordance with law. The just and
authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor
Code.

Parenthetically, given the peculiarity of the situation of the parties here, the default in the remittance of the
boundary hulog for one week or longer may be considered an additional cause for termination of employment. The
reason is because the Kasunduan would be of no force and effect in the event that the purchaser failed to remit the
boundary hulog for one week. The Kasunduan in this case pertinently stipulates:

13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi makapagbigay ng BOUNDARY

HULOG sa loob ng isang linggo ay NANGANGAHULUGAN na ang kasunduang ito ay wala ng bisa at
kusang ibabalik ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG
UNANG PANIG na wala ng paghahabol pa.

Moreover, well-settled is the rule that, the employer has the burden of proving that the dismissal of an employee is
for a just cause. The failure of the employer to discharge this burden means that the dismissal is not justified and that
the employee is entitled to reinstatement and back wages.

In the case at bench, private respondent in his position paper before the Labor Arbiter, alleged that
petitioner failed to pay the miscellaneous fee of P10,000.00 and the yearly registration of the unit; that petitioner
also stopped remitting the boundary hulog, prompting him (private respondent) to issue a Paalala, which petitioner
however ignored; that petitioner even brought the unit to his (petitioners) province without informing him (private
respondent) about it; and that petitioner eventually abandoned the vehicle at a gasoline station after figuring in an
accident. But private respondent failed to substantiate these allegations with solid, sufficient proof. Notably, private
respondents allegation viz, that he retrieved the vehicle from the gas station, where petitioner abandoned it,
contradicted his statement in the Paalala that he would enforce the provision (in the Kasunduan) to the effect that
default in the remittance of the boundary hulog for one week would result in the forfeiture of the
unit. The Paalala reads as follows:

Sa lahat ng mga kumukuha ng sasakyan

Sa pamamagitan ng BOUNDARY HULOG

Nais ko pong ipaalala sa inyo ang Kasunduan na inyong pinirmahan particular na ang paragrapo 13 na nagsasaad
na kung hindi kayo makapagbigay ng Boundary Hulog sa loob ng isang linggo ay kusa ninyong ibabalik and
nasabing sasakyan na inyong hinuhulugan ng wala ng paghahabol pa.

Mula po sa araw ng inyong pagkatanggap ng Paalala na ito ay akin na pong ipatutupad ang nasabing Kasunduan
kayat aking pinaaalala sa inyong lahat na tuparin natin ang nakalagay sa kasunduan upang maiwasan natin ito.

Hinihiling ko na sumunod kayo sa hinihingi ng paalalang ito upang hindi na tayo makaabot pa sa korte kung
sakaling hindi ninyo isasauli ang inyong sasakyan na hinuhulugan na ang mga magagastos ay kayo pa ang
magbabayad sapagkat ang hindi ninyo pagtupad sa kasunduan ang naging dahilan ng pagsampa ng kaso.
 Sumasainyo

Attendance: 8/27/99

(The Signatures appearing herein

include (sic) that of petitioners) (Sgd.)

OSCAR VILLAMARIA, JR.

If it were true that petitioner did not remit the boundary hulog for one week or more, why did private respondent not
forthwith take steps to recover the unit, and why did he have to wait for petitioner to abandon it?

On another point, private respondent did not submit any police report to support his claim that petitioner really
figured in a vehicular mishap. Neither did he present the affidavit of the guard from the gas station to substantiate
his claim that petitioner abandoned the unit there.[58]

Petitioners claim that he opted not to terminate the employment of respondent because of magnanimity is negated by his
(petitioners) own evidence that he took the jeepney from the respondent only on July 24, 2000.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP
No. 78720 is AFFIRMED. Costs against petitioner.

SO ORDERED.
SECOND DIVISION

[G.R. No. 142293. February 27, 2003]

VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT[1] TRUCKING
CORPORATION, petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, respondents.

DECISION

QUISUMBING, J.:

This petition for review seeks the reversal of the decision[2] of the Court of Appeals dated February 29, 2000, in CA-G.R. SP No.
52671, affirming with modification the decision[3] of the National Labor Relations Commission promulgated on June 20, 1996 in
NLRC NCR CA No. 010526-96. Petitioners also pray for the reinstatement of the decision [4] of the Labor Arbiter in NLRC NCR Case
No. 00-09-06717-94.

Culled from the records are the following facts of this case:

Sometime in 1958, private respondent Jaime Sahot[5] started working as a truck helper for petitioners family-owned trucking
business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business, renamed T. Paulino Trucking
Service, later 6Bs Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994. Throughout all these
changes in names and for 36 years, private respondent continuously served the trucking business of petitioners.

In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from various
ailments. Particularly causing him pain was his left thigh, which greatly affected the performance of his task as a driver. He inquired
about his medical and retirement benefits with the Social Security System (SSS) on April 25, 1994, but discovered that his premium
payments had not been remitted by his employer.

Sahot had filed a week-long leave sometime in May 1994. On May 27th, he was medically examined and treated for EOR,
presleyopia, hypertensive retinopathy G II (Annexes G-5 and G-3, pp. 48, 104, respectively),[6] HPM, UTI, Osteoarthritis (Annex G-4,
p. 105),[7] and heart enlargement (Annex G, p. 107).[8] On said grounds, Belen Paulino of the SBT Trucking Service management told
him to file a formal request for extension of his leave. At the end of his week-long absence, Sahot applied for extension of his leave
for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to terminate his employment should he
refuse to go back to work.

At this point, Sahot found himself in a dilemma. He was facing dismissal if he refused to work, But he could not retire on
pension because petitioners never paid his correct SSS premiums. The fact remained he could no longer work as his left thigh hurt
abominably. Petitioners ended his dilemma. They carried out their threat and dismissed him from work, effective June 30, 1994. He
ended up sick, jobless and penniless.

On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, docketed as
NLRC NCR Case No. 00-09-06717-94. He prayed for the recovery of separation pay and attorneys fees against Vicente Sy and
Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein
petitioners.

For their part, petitioners admitted they had a trucking business in the 1950s but denied employing helpers and drivers. They
contend that private respondent was not illegally dismissed as a driver because he was in fact petitioners industrial partner. They add
that it was not until the year 1994, when SBT Trucking Corporation was established, and only then did respondent Sahot become an
employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation.

Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on leave and was not able to report for work for
almost seven days.On June 1, 1994, Sahot asked permission to extend his leave of absence until June 30, 1994. It appeared that from
the expiration of his leave, private respondent never reported back to work nor did he file an extension of his leave. Instead, he filed
the complaint for illegal dismissal against the trucking company and its owners.

Petitioners add that due to Sahots refusal to work after the expiration of his authorized leave of absence, he should be deemed to
have voluntarily resigned from his work. They contended that Sahot had all the time to extend his leave or at least inform petitioners
of his health condition. Lastly, they cited NLRC Case No. RE-4997-76, entitled Manuelito Jimenez et al. vs. T. Paulino Trucking
Service, as a defense in view of the alleged similarity in the factual milieu and issues of said case to that of Sahots, hence they are
in pari material and Sahots complaint ought also to be dismissed.
 The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos, ruled that there was no illegal dismissal in
Sahots case. Private respondent had failed to report to work. Moreover, said the Labor Arbiter, petitioners and private respondent were
industrial partners before January 1994. The Labor Arbiter concluded by ordering petitioners to pay financial assistance of P15,000 to
Sahot for having served the company as a regular employee since January 1994 only.

On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that private
respondent was an employee, not an industrial partner, since the start. Private respondent Sahot did not abandon his job but his
employment was terminated on account of his illness, pursuant to Article 284 [9] of the Labor Code. Accordingly, the NLRC ordered
petitioners to pay private respondent separation pay in the amount of P60,320.00, at the rate of P2,080.00 per year for 29 years of
service.

Petitioners assailed the decision of the NLRC before the Court of Appeals. In its decision dated February 29, 2000, the appellate
court affirmed with modification the judgment of the NLRC. It held that private respondent was indeed an employee of petitioners
since 1958. It also increased the amount of separation pay awarded to private respondent to P74,880, computed at the rate of P2,080
per year for 36 years of service from 1958 to 1994. It decreed:

WHEREFORE, the assailed decision is hereby AFFIRMED with MODIFICATION. SB Trucking Corporation is hereby directed to
pay complainant Jaime Sahot the sum of SEVENTY-FOUR THOUSAND EIGHT HUNDRED EIGHTY (P74,880.00) PESOS as and
for his separation pay.[10]

Hence, the instant petition anchored on the following contentions:

RESPONDENT COURT OF APPEALS IN PROMULGATING THE QUESTION[ED] DECISION AFFIRMING WITH

MODIFICATION THE DECISION OF NATIONAL LABOR RELATIONS COMMISSION DECIDED NOT IN ACCORD WITH
LAW AND PUT AT NAUGHT ARTICLE 402 OF THE CIVIL CODE. [11]

II

RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT RULING THAT THE NATIONAL LABOR
RELATIONS COMMISSION IS BOUND BY THE FACTUAL FINDINGS OF THE LABOR ARBITER AS THE LATTER WAS
IN A BETTER POSITION TO OBSERVE THE DEMEANOR AND DEPORTMENT OF THE WITNESSES IN THE CASE OF
ASSOCIATION OF INDEPENDENT UNIONS IN THE PHILIPPINES VERSUS NATIONAL CAPITAL REGION (305 SCRA
233).[12]

III

PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT TRUCKING CORPORATION. [13]

Three issues are to be resolved: (1) Whether or not an employer-employee relationship existed between petitioners and
respondent Sahot; (2) Whether or not there was valid dismissal; and (3) Whether or not respondent Sahot is entitled to separation pay.

Crucial to the resolution of this case is the determination of the first issue. Before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established.[14]

Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which found that respondent Sahot was not an
employee but was in fact, petitioners industrial partner.[15] It is contended that it was the Labor Arbiter who heard the case and had the
opportunity to observe the demeanor and deportment of the parties. The same conclusion, aver petitioners, is supported by substantial
evidence.[16] Moreover, it is argued that the findings of fact of the Labor Arbiter was wrongly overturned by the NLRC when the latter
made the following pronouncement:

We agree with complainant that there was error committed by the Labor Arbiter when he concluded that complainant was an industrial
partner prior to 1994. A computation of the age of complainant shows that he was only twenty-three (23) years when he started
working with respondent as truck helper. How can we entertain in our mind that a twenty-three (23) year old man, working as a truck
helper, be considered an industrial partner. Hence we rule that complainant was only an employee, not a partner of respondents from
the time complainant started working for respondent. [17]

Because the Court of Appeals also found that an employer-employee relationship existed, petitioners aver that the appellate
courts decision gives an imprimatur to the illegal finding and conclusion of the NLRC.
 Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written agreement, no
proof that he received a share in petitioners profits, nor was there anything to show he had any participation with respect to the
running of the business.[18]

The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to
the means and methods to accomplish it.[19]

As found by the appellate court, petitioners owned and operated a trucking business since the 1950s and by their own allegations,
they determined private respondents wages and rest day.[20] Records of the case show that private respondent actually engaged in work
as an employee. During the entire course of his employment he did not have the freedom to determine where he would go, what he
would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his
wages. Indeed, said the CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but
under the latters control.

Article 1767[21] of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute
money, property or industry to a common fund, with the intention of dividing the profits among themselves. [22] Not one of these
circumstances is present in this case. No written agreement exists to prove the partnership between the parties. Private respondent did
not contribute money, property or industry for the purpose of engaging in the supposed business. There is no proof that he was
receiving a share in the profits as a matter of course, during the period when the trucking business was under operation. Neither is
there any proof that he had actively participated in the management, administration and adoption of policies of the business. Thus, the
NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was an industrial partner from 1958
to 1994.

On this point, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime Sahot was not an industrial
partner but an employee of petitioners from 1958 to 1994. The existence of an employer-employee relationship is ultimately a
question of fact[23] and the findings thereon by the NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality
when supported by substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.[24]

Time and again this Court has said that if doubt exists between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. [25] Here, we entertain no doubt. Private respondent since the beginning was an
employee of, not an industrial partner in, the trucking business.

Coming now to the second issue, was private respondent validly dismissed by petitioners?

Petitioners contend that it was private respondent who refused to go back to work. The decision of the Labor Arbiter pointed out
that during the conciliation proceedings, petitioners requested respondent Sahot to report back for work. However, in the same
proceedings, Sahot stated that he was no longer fit to continue working, and instead he demanded separation pay. Petitioners then
retorted that if Sahot did not like to work as a driver anymore, then he could be given a job that was less strenuous, such as working as
a checker. However, Sahot declined that suggestion. Based on the foregoing recitals, petitioners assert that it is clear that Sahot was
not dismissed but it was of his own volition that he did not report for work anymore.

In his decision, the Labor Arbiter concluded that:

While it may be true that respondents insisted that complainant continue working with respondents despite his alleged illness, there is
no direct evidence that will prove that complainants illness prevents or incapacitates him from performing the function of a driver. The
fact remains that complainant suddenly stopped working due to boredom or otherwise when he refused to work as a checker which
certainly is a much less strenuous job than a driver. [26]

But dealing the Labor Arbiter a reversal on this score the NLRC, concurred in by the Court of Appeals, held that:

While it was very obvious that complainant did not have any intention to report back to work due to his illness which incapacitated
him to perform his job, such intention cannot be construed to be an abandonment. Instead, the same should have been considered as
one of those falling under the just causes of terminating an employment. The insistence of respondent in making complainant work did
not change the scenario.

It is worthy to note that respondent is engaged in the trucking business where physical strength is of utmost requirement (sic).
Complainant started working with respondent as truck helper at age twenty-three (23), then as truck driver since 1965. Complainant
was already fifty-nine (59) when the complaint was filed and suffering from various illness triggered by his work and age.
x x x[27]

In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause
and validly made.[28] Article 277(b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether the employer admits or does not admit the dismissal. [29] For an
employees dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process.[30]

Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, viz:

Art. 284. Disease as a ground for termination- An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or prejudicial to his health as well as the health of
his co-employees: xxx

However, in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing
Rules of the Labor Code requires:

Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued employment is prohibited by
law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a
certification by competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer
shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health. (Italics supplied).

As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC,[31] the requirement for a medical certificate under Article
284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employees illness and thus defeat the public policy in the protection of labor.

In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahots dismissal was
effected. In the same case of Sevillana vs. I.T. (International) Corp., we ruled:

Since the burden of proving the validity of the dismissal of the employee rests on the employer, the latter should likewise bear the
burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the required
certification by a competent public health authority, this Court has ruled against the validity of the employees dismissal. It is therefore
incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed, or if
dismissed, that the dismissal was not illegal; otherwise, the dismissal would be unjustified. This Court will not sanction a dismissal
premised on mere conjectures and suspicions, the evidence must be substantial and not arbitrary and must be founded on clearly
established facts sufficient to warrant his separation from work.[32]

In addition, we must likewise determine if the procedural aspect of due process had been complied with by the employer.

From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by the
management of the trucking company. The employer is required to furnish an employee with two written notices before the latter is
dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the
equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense. [33]These, the petitioners failed to do, even only for record purposes.
What management did was to threaten the employee with dismissal, then actually implement the threat when the occasion presented
itself because of private respondents painful left thigh.

All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahots dismissal is tainted
with invalidity.

On the last issue, as held by the Court of Appeals, respondent Jaime Sahot is entitled to separation pay. The law is clear on the
matter. An employee who is terminated because of disease is entitled to separation pay equivalent to at least one month salary or to
one-half month salary for every year of service, whichever is greater xxx. [34] Following the formula set in Art. 284 of the Labor Code,
his separation pay was computed by the appellate court at P2,080 times 36 years (1958 to 1994) or P74,880. We agree with the
computation, after noting that his last monthly salary was P4,160.00 so that one-half thereof is P2,080.00. Finding no reversible error
nor grave abuse of discretion on the part of appellate court, we are constrained to sustain its decision. To avoid further delay in the
payment due the separated worker, whose claim was filed way back in 1994, this decision is immediately executory. Otherwise, six
percent (6%) interest per annum should be charged thereon, for any delay, pursuant to provisions of the Civil Code.

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated February 29, 2000 is AFFIRMED.
Petitioners must pay private respondent Jaime Sahot his separation pay for 36 years of service at the rate of one-half monthly pay for
every year of service, amounting to P74,880.00, with interest of six per centum (6%) per annum from finality of this decision until
fully paid.

Costs against petitioners.

SO ORDERED.
FIRST DIVISION

[G.R. No. 113542. February 24, 1998]

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his capacity as union
president, petitioner, vs. UNDERSECRETARY BIENVENIDO E. LAGUESMA and CORFARM GRAINS,
INC., respondents.

[G.R. No. 114911. February 24, 1998]

CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR.,

president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC. and/or
TEODY C. RAPISORA and HERMINIO RABANG, respondents.

DECISION

PANGANIBAN, J.:

The Court reiterates some fundamental labor doctrines: (1) this Court may review factual determinations where the findings of
the med-arbiter conflict with those of the undersecretary of labor; (2) an employer-employee relationship may be established by
substantial evidence; (3) procedural due process is satisfied by the grant of an opportunity to be heard and an actual adversarial-type
trial is not required; (4) the NLRC commits grave abuse of discretion when it remands a case to the labor arbiter in spite of ample
pieces of evidence on record which are sufficient to decide the case directly; and (5) where illegal dismissal is proven, the workers are
entitled to back wages and other similar benefits without deductions or conditions.

Statement of the Case

These doctrines are used by the Court in resolving these consolidated petitions for certiorari under Rule 65, challenging the
resolutions of Undersecretary Bienvenido Laguesma and the National Labor Relations Commission.

First Case

In G.R. No. 113542, hereafter referred to as the First Case, Petitioner Caurdanetaan Piece Workers Union/Association (CPWU)
prays for the nullification and reversal of Undersecretary Laguesmas Order dated January 4, 1994 in OS-MA-A-8-119-93 (RO100-
9207-RU-001), which granted Respondent Corfarms motion for reconsideration and dismissed petitioners prayer for certification
election. The dispositive portion of the assailed Order reads as follows:[1]

WHEREFORE, the questioned Order is hereby set aside and a new one issued dismissing the petition for certification
election for lack of merit.

In his earlier Order dated September 7, 1993, Laguesma affirmed Med-Arbiter Sinamar E. Limos order of March 18, 1993 which
disposed as follows:[2]

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the above-entitled petition is hereby granted. Consequently,
the motion to dismiss filed by Corfarm Grains, Inc. is denied.

Let a certification election be conducted among the rank-and-file employees of Corfarm Grains, Inc., within ten (10) days
from receipt hereof, with the following choices:

1. Caurdanetaan Piece Workers Union;

2. No Union

A pre-election conference is hereby set on March 29, 1993 at 2:00 o clock in the afternoon at the DOLE, Dagupan District
Office, Mayombo District, Dagupan City to thresh out the mechanics of the Certification Election. Employer Corfarm
Grains, Inc. is hereby directed to present its employment records for the period covering January to June 1992 evidencing
payment of salaries of its employees.

Let the parties be notified accordingly.

 Aggrieved by Respondent Laguesmas subsequent Order dated January 27, 1994 [3] denying its motion for reconsideration,
petitioner filed this recourse before this Court.

Second Case

In G.R. No. 114911, hereafter referred to as the Second Case, petitioner assails the Resolution promulgated on February 16, 1994
in NLRC CA No. L-001109[4] by the National Labor Relations Commission (Respondent NLRC), [5] the dispositive portion of which
reads:[6]

WHEREFORE, the Decision of the Labor Arbiter dated 14 September 1993 is hereby SET ASIDE. Let the records of the
case be REMANDED to the Arbitration Branch of origin for immediate appropriate proceedings.

The labor arbiters decision that was reversed by Respondent NLRC disposed as follows:[7]

WHEREFORE, judgment is hereby rendered as follows:

1. Declaring individual complainants dismissal illegal;

2. Declaring respondent guilty of unfair labor practice;

3. Ordering respondent to pay the 92[8] complainants the following:

a) 13th month pay limited to three years in the amount of P4,788.00 each;

b) service incentive leave pay in the amount of P855.00 each for three years;

c) underpaid wages covering the period June 1989 to June 1992 which amount to P47,040.00 each;

d) backwages reckoned from June 1992, the date of dismissal[,] to September 1993, the date of promulgation of
the decision or a period of 14 months, in the amount of P22,344.00 each;

e) refund of P12.00/day deduction limited to three years which amounts to P12,096 each; and

f) to pay the complainants P1,000.00 each as damages.

4. To reinstate the complainants to their former position[s] immediately.

All other claims are hereby dismissed for lack of merit.

In a Resolution promulgated on March 28, 1994, Respondent NLRC denied petitioners motion for reconsideration. [9]

The Facts

In his Consolidated Memorandum, the solicitor general recited the following pertinent facts, which we find amply supported by
the records:[10]

Petitioner union has ninety-two (92) members who worked as cargador at the warehouse and ricemills of private respondent
[referring to Respondent Corfarm] at Umingan, Pangasinan since 1982. As cargadores, they loaded, unloaded and piled
sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks for delivery to different
places. They were paid by private respondent on a piece rate basis. When private respondent denied some benefits to these
cargadores, the latter organized petitioner union. Upon learning of its formation, private respondent barred its members
from working with them and replaced [them] with non-members of the union sometime in the middle of 1992.

On July 9, 1992, petitioner filed [a petition] for certification election before the Regional Office No. I of the Department of
Labor and Employment, San Fernando, La Union docketed as RO100-9207-RU-001.

While this petition for certification election was pending, petitioner also filed on November 16, 1992, a complaint for
illegal dismissal, unfair labor practice, refund of illegal deductions, payment of wage differentials, various pecuniary
benefits provided by laws, damages, legal interest, reinstatement and attorneys fees, against private respondent before the
Regional Arbitration Branch No. 1 of Dagupan City, docketed as NLRC RAB Case No. 01-117-0184-92.
 On November 24, 1992, Labor Arbiter Ricardo Olairez in NLRC Case No. Sub-Rab 01-117-0184-92, directed the parties to
submit position paper on or before December 14, 1992, and to appear for hearing on the said date. Only the complainant
petitioner submitted its position paper on December 3, 1992.

Likewise in the scheduled hearing on December 14, 1992, private respondent did not appear[;] thus Labor Arbiter Olairez
allowed the president of petitioner union Juanito Costales to testify and present its evidence ex-parte.

On December 16 1992, another notice was sent to the parties to appear on [the] January 7, 1993 hearing by Labor Arbiter
Emiliano de Asis.

Before the scheduled hearing on January 7, 1993, complainant petitioner filed a motion to amend complaint and to admit
amended complaint.It also filed the following:

1. Affidavit of Juanito Costales, Jr., dated November 24, 1992;

2. Joint affidavit of Ricardo Aban, Armando Casing, Benjamin Corpuz, Danny Margadejas, Fidel Fortunato,
Henry de los Reyes, Anthony de Luna, Warlito Arguilles, Dominador Aguda, Marcelino Cayuda, Jr.,
Jaime Costales and Juanito Mendenilla dated December 30, 1992;

3. Joint affidavit of Juanito Costales and Armando Casing dated January 7, 1993;

4. Affidavit signed by individual union members.

On March 18, 1993, Med-Arbiter Sinamar E. Limos issued an Order granting the petition for certification election earlier
filed.

Meanwhile, Labor Arbiter Rolando D. Gambito in the illegal dismissal case issued the May 20, 1993 Order, the dispositive
portion [of] which reads:

WHEREFORE, respondents are hereby ordered to submit their position paper, together with their
documentary evidence, if any, within TEN (10) days from receipt of the order, otherwise we will be constrained
to resolve this case based on available evidence on record.

On September 7, 1993, public respondent Laguesma issued a Resolution denying the appeal filed by private respondent
against the order of Med-Arbiter Limos granting the petition for certification election.

Acting on said denial, private respondent filed a motion for reconsideration which was granted in an Order dated January 4,
1994 by public respondent Laguesma dismissing the petition for certification election for lack of employer-employee
relationship.

Petitioner in turn filed a motion for reconsideration of the January 4, 1994, Order but it was denied by public respondent
Laguesma in his January 27, 1994 Order which reaffirmed the dismissal of petition for certification election.

Thus, the union filed its first petition for certiorari assailing the Orders of January 4 and 27, 1994 of public respondent
Laguesma dismissing the petition for certification election. The said petition is captioned as Caurdanetaan Piece Workers
Union, petitioner, vs. Hon. Bienvenido Laguesma, et al., respondents, docketed as G.R. No. 113542 and raffled to the
Second Division of this Honorable Court.

On September 14, 1993, Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal of petitioners members
illegal. On appeal by both parties, Respondent NLRC -- as earlier stated -- set aside the appealed decision and remanded the case to
the labor arbiter for further proceedings. Petitioners motion for reconsideration was later denied.

The solicitor general, who was supposed to represent both public respondents, joined petitioner and filed a Manifestation and
Motion (In Lieu of Comment) dated July 25, 1994, praying that the petition in the First Case be granted and that judgment be rendered
annulling[11] the assailed Orders of Respondent Laguesma. The Republics counsel likewise filed another Manifestation and Motion (In
Lieu of Comment) dated October 4, 1994 in the Second Case, praying that judgment be rendered annulling the resolution of Public
Respondent NLRC dated February 16, 1994 and March 28, 1994 and order[ing] public respondent to proceed with the case instead of
remanding the same to the labor arbiter of origin. [12]

In a Resolution dated March 29, 1995,[13] this Court ordered the consolidation of the two cases.[14]
Public Respondents Rulings

In the First Case

Public Respondent Laguesma premised the dismissal of the petition for certification election on the absence of an employer-
employee relationship between petitioners members and private respondent. Professing reliance on the control test in determining
employer-employee relationship, his Order dated January 4, 1994 [15] explained:

It is settled in this jurisdiction that the most important factor in determining the existence of employer-employee
relationship is the control test or the question of whether or not the supposed employer exercises control over the means and
methods by which the work is to be done. In the instant case, it is not disputed that movant does not exercise any degree of
control over how the loading or unloading of cavans of palays to or from the trucks, to or from the rice mills. Movants only
concern is that said cavans of palay are loaded/unloaded. Absent therefore, the power to control not only the end to be
achieved but also the means to be used in reaching such end, no employer-employee relationship could be said to have been
established. We also noted that some of petitioners members including its president, Juanito Costales, Jr., admitted in
separate sworn statements that they offer and actually perform loading and unloading work for various rice mills in
Pangasinan and that the performance of said work depends on the availability of work in said mills. They also categorically
stated that there is no employer-employee relationship between petitioner and movant. To our mind, said declarations being
made against interest deserve much evidentiary weight. Considering therefore, the foregoing, we have no alternative but to
dismiss the petition for lack of employer-employee relationship.

In the Second Case

On the other hand, Respondent NLRC ordered the remand of the case to the arbitration branch for further proceedings because
the issues at hand need further threshing out. Stressing the principle that allegations must be proved by competent and credible
evidence, it held:[16]

There is no question that under the Rules of the Commission, complaints may be resolved on the basis of the Position
Papers submitted by the parties and that the parties may be deemed to have waived their right to present evidence after they
have been given an opportunity to do so. These procedural rules, however should be read in conjunction with the time[-
]honored principle that allegations must be proved and established by competent and credible evidence. In other words,
mere allegations would not suffice despite the absence of evidence to the contrary.

In subject case, complainants-appellants allegations that they are laborers of respondents-appellants receiving P45.00 per
days work of eight hours (p. 2, Amended Position Paper dated December 14, 1992, p. 31 Records; p. 2 Amended Complaint
dated 16 December 1992, p. 70, Records) appears to be in conflict with their earlier assertions that they are paid on the
basis of the number of cavans of palay moved, piled, hauled and unloaded from trucks or haulers multiplied by P0.12 [per]
sack or cavan. And for the days earning respondents used to be obliged to pay P57.00 per days earning -- (p. 2, Position
Paper dated 24 November 1992; p. 17, Records).

Similarly attached to the records is a narrative report of [the] DOLE inspector where it was mentioned that Juanito Costales,
Jr., is the owner of Carcado Contracting Services and is not an employee of Corefarm [sic] Grains (Narrative Report dated
August 4, 1992, p. 10 Records).

Another reason why subject case should be remanded to the Labor Arbiter below is the fact that the personality of
complainant union has been raised in issue before the proper forum and adverse decision on the matter will definitely affect
the whole proceedings.

Furthermore, records show that an Amended Complaint was filed on December 23, 1992. This amended complaint made no
mention of the affidavits of Juanito Costales, Jr. and the 92 other workers which documents were filed in January
1993. Likewise, the amended complaint contains but a general statement that the 92 workers of Corefarm [sic] Grains have
been employed since 1982 which was adopted by the Labor Arbiter below in his decision notwithstanding the fact that a
number of these workers started working with respondent after 1982. Some of whom worked with the company in 1990
(Joint Affidavit dated 7 January 1993, pp. 96-98, Records). Notwithstanding this fact, the Labor Arbiter in the decision
under consideration allowed refund of alleged deduction for a period of three years. In the same manner, payment of salary
differential was also granted.

Indeed the issues at hand need further threshing out. Under the Rules, the Labor Arbiter is authorized to thresh out issues
(sec. 4, Rule V).As it is, we are not convinced by the conclusions of the Labor Arbiter.

The ends of justice would better be served if all parties are granted further opportunity to ventilate their respective
positions.
The Issues

In its Consolidated Memorandum dated September 19, 1995 filed before us, petitioner raises the following grounds in support of
its petition:[17]

1. Grave abuse of discretion or acting in excess of jurisdiction, which is equivalent to lack of jurisdiction on the part of
public respondent in setting aside the labor arbiters decision and in remanding this case to the office of origin
for further proceedings is not necessary when in fact the mandatory requirements of due process have been
observed by the labor arbiter in rendering decision on the case;

2. Remand of the case to office of origin for further proceedings on matters already passed upon properly by the labor
arbiter is contrary to the rule of speedy labor justice and the [sic] social justice and to afford protection to labor
policy of the Philippine Constitution, which is a command that should not be disregarded by the courts in
resolving labor cases;

3. Remand of the case to the labor arbiter would only prolong social unrest and the suffering of injurious effects of
illegal dismissal by the 92 illegally dismissed workers[;] hence, said remand of the case without justification
constitutes an oppressive act committed by public respondent.

Simply put, the issues are as follows:

1. Whether Respondent Laguesma acted with grave abuse of discretion in ordering the dismissal of the petition for
certification election

2 Whether Respondent NLRC acted with grave abuse of discretion in remanding the illegal dismissal case to the labor
arbiter for further proceedings.

The present controversy hinges on whether an employer-employee relationship between the CPWU members and Respondent
Corfarm has been established by substantial evidence.

The Courts Ruling

The two petitions are meritorious.

Main Issue: Employer-Employee Relationship

First Case: Certification Election

Petitioner contends that Respondent Laguesma committed grave abuse of discretion in dismissing the petition for certification
election by relying on private respondents bare allegation, in its motion for reconsideration, of lack of employer-employee
relationship.[18] According to petitioner, Respondent Laguesma cannot reverse his Decision in the absence of a concomitant change in
his factual findings.[19] Petitioner insists that all its members were employees of private respondent, viz.:[20]

The 92 workers, who are all union members of petitioner herein, have been rendering actual manual services as cargadores
in the warehouse and rice mills of private respondent, performing activities usually related to or desirable by [sic] the
business or trade of private respondent who is engaged in the buy and sell of palay as well as warehousing of said
commodity and milling the same for sale to customers in the form of milled rice. The 92 workers have performed their
activities for the last ten (10) years prior to their having been illegally dismissed from employment on June 18, 1992 or
thereabouts.

Petitioner adds that many of its members received Christmas bonuses from private respondent.[21]

On the other hand, Respondent Corfarm describes the contentions of petitioner as

off-tangent, if not irrelevant. --

First, the authority of the DOLE Secretary to decide appeals in representation cases is undeniable (see e.g., Sections 9 and
10 of Rule V, Book V, of the Implementing Rules and Regulations of the Labor Code; also Art. 259, appeal from
certification election orders, labor code).Second, petitioner completely misses the point that the granting and denial of a
motion for reconsideration involves the exercise of discretion.As submitted by the Public Respondent in its Comment,
 among the ends to which a Motion for Reconsideration is addressed, one is precisely to convince the court that its ruling is
erroneous and improper, contrary to law or the evidence, x x x (Emphasis found in the original.)

Corfarm insists that the challenged Order of Respondent Laguesma dated January 4, 1994 rests on solid findings of fact which
should be accorded respect and finality.[22] It attacks the petitioners allegation -- that it has 92 workers who worked as cargador at its
warehouses -- as gratuitous and not supported by any evidence x x x [because] as late as this time of day in the litigation of this
case, who exactly are those 92 workers cannot be known from the records.[23] (Emphasis in original.)

Private respondent further argues that RJL Martinez Fishing Corp. vs. NLRC,[24] cited by the solicitor general, has a factual
situation different from the case at bar. Waiting time, unlike that in RJL Martinez Fishing Corp., does not obtain here.[25] Likewise
allegedly inapplicable are the rulings in Villavilla vs. Court of Appeals[26] and in Brotherhood Labor Unity Movement vs. Zamora.[27]

Respondent Corfarm denies that it had the power of control, rationalizing that petitioners members were street-hired workers
engaged from time to time to do loading and unloading work x x x[;] [t]here [was] no superintendent-in-charge x x x to give orders x x
x[;] [and] there [were] no gate passes issued, nor tools, equipment and paraphernalia issued by Corfarm for loading/unloading x x
x.[28] It attributes error to the solicitor generals reliance on Article 280 [29] of the Labor Code. Citing Brent School, Inc. vs.
Zamora,[30] private respondent asserts that a literal application of such article will result in absurdity, where petitioners members will
be regular employees not only of respondents but also of several other rice mills, where they were allegedly also under
service. Finally, Corfarm submits that the OSGs position is negated by the fact that petitioners members contracted for loading and
unloading services with respondent company when such work was available and when they felt like it x x x.[31]

We rule for petitioners. Section 5, Rule 133 of the Rules of Court mandates that in cases filed before administrative or quasi-
judicial bodies, like the Department of Labor, a fact may be established by substantial evidence, i.e. that amount of evidence which a
reasonable mind might accept as adequate to justify a conclusion. [32] Also fundamental is the rule granting not only respect but even
finality to factual findings of the Department of Labor, if supported by substantial evidence. Such findings are binding upon this
Court, unless petitioner is able to show that the secretary of labor (or the undersecretary acting in his place) has arbitrarily disregarded
or misapprehended evidence before him to such an extent as to compel a contrary conclusion if such evidence were properly
appreciated. This is rooted in the principle that this Court is not a trier of facts, and that the determinations made by administrative
bodies on matters falling within their respective fields of specialization or expertise are accorded respect. [33] Also well-settled is the
doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the
labor authorities shall be accorded not only respect but even finality when supported by substantial evidence.[34] Finally,
in certiorari proceedings under Rule 65, this Court does not, as a rule, evaluate the sufficiency of evidence upon which the labor
officials based their determinations. The inquiry is essentially limited to whether they acted without or in excess of jurisdiction or with
grave abuse of discretion.[35] However, this doctrine is not absolute.Where the labor officers findings are contrary to those of the med-
arbiter, the Court -- in the exercise of its equity jurisdiction -- may wade into and reevaluate such findings,[36] which we now embark
on in this case.[37]

To determine the existence of an employer-employee relation, this Court has consistently applied the four-fold test which has the
following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control -- the last
being the most important element.[38]

Our examination of the case records indubitably shows the presence of an employer-employee relationship. Relying on the
evidence adduced by the petitioners, Respondent Laguesma himself affirmed the presence of such connection. Thus, in his Order
dated September 7, 1993, he astutely held:[39]

Anent the first issue, we find the annexes submitted by the respondent company not enough to prove that herein petitioner
is indeed an independent contractor. The existence of an independent contractor relationship is generally established by the
following criteria. The contractor is carrying on an independent business; [the] nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the
control and supervision over the workers; payment of the contractors workers; the control and the supervision over the
workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and laborers, and the
mode, manner and terms of payment. [Brotherhood Labor Unity Movement of the Philippines vs. Zamora, 147 SCRA 49
(198) [sic] ].

None of the above criteria exists in the case at bar. The absence of a written contract which specifies the performance of a
specified piece of work, the nature and extent of the work and the term and duration of the relationship between herein
petitioner and respondent company belies the latters [sic] allegation that the former is indeed and [sic] independent
contractor.

Also, respondent failed to show by clear and convincing proof that herein respondent has the substantial capital or
investment to qualify as an independent contractor under the law. The premises, tools, equipments [sic] and paraphernalia
are all supplied by respondent company. It is only the manpower or labor force which the alleged contractor supplies,
 suggesting the existence of a labor only contracting scheme which is prohibited by law. Further, if herein petitioner is
indeed an independent contractor, it should have offered its services to other companies and not to work [sic] exclusively
for the respondent company. It is therefore, clear that the alleged J.P. Costales, Jr. Cargador Services cannot be considered
as an independent contractor as defined by law.

In his subsequent order, Respondent Laguesma inexplicably reversed his above ruling and held that there was no employer-
employee relationship on the ground that Respondent Corfarm exercised no power of control over the alleged employees.

It may be asked, why the sudden change of mind on the part of Respondent Laguesma? No additional pieces of evidence were
adduced and no existing ones were identified by Laguesma to support such strange reversal. The unblemished fact is that private
respondent was the recruiter and employer of petitioners members.

Shoppers Gain Supermart vs. NLRC[40] provides the standard to determine whether a worker is an independent contractor:

The applicable law is not Article 280 of the Labor Code which is cited by petitioners, but Art. 106, which provides:

Art. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for
the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any,
shall be paid in accordance with the provisions of this Code.

xxxxxxxxx

xxxxxxxxx

There is labor-only contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly
employed by him. (emphasis supplied)

In accordance with the above provision, petitioner corporation is deemed the direct employer of the private respondents and thus liable
for all benefits to which such workers are entitled, like wages, separation benefits and so forth. There is no denying the fact that
private respondents work as merchandisers, cashiers, baggers, check-out personnel, sales ladies, warehousemen and so forth were
directly related, necessary and vital to the day-to-day operations of the supermarket; their jobs involved normal and regular functions
in the ordinary business of the petitioner corporation. Given the nature of their functions and responsibilities, it is improbable that
petitioner did not exercise direct control over their work. Moreover, there is no evidence--as in fact, petitioners do not even allege--
that aside from supplying the manpower, the labor agencies have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others.

It is undeniable that petitioners members worked as cargadores for private respondent. They loaded, unloaded and piled sacks
of palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work is directly related, necessary and
vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much less prove, that petitioners members have substantial
capital or investment in the form of tools, equipment, machineries, [and] work premises, among others. Furthermore, said respondent
did not contradict petitioners allegation that it paid wages directly to these workers without the intervention of any third-party
independent contractor. It also wielded the power of dismissal over petitioners; in fact, its exercise of this power was the progenitor of
the Second Case. Clearly, the workers are not independent contractors.

Applying Article 280[41] of the Labor Code, we hold that the CPWU members were regular employees of private
respondent. Their tasks were essential in the usual business of private respondent.

As we have ruled in an earlier case, the question of whether an employer-employee relationship exists in a certain situation has
bedevilled the courts. Businessmen, with the aid of lawyers, have tried to avoid or sidestep such relationship, because that
juridical vinculum engenders obligations connected with workmens compensation, social security, medicare, minimum wage,
termination pay and unionism.[42] All too familiarly, Respondent Corfarm sought refuge from these obligations. However, the records
of this case clearly support the existence of the juridical vinculum.

RJL Martinez Fishing Corporation,[43] cited by the solicitor general, is relevant because petitioners members were also made to
wait for loading and unloading of cavans of palay to and from the storage areas and to and from the milling areas. [44] This waiting time
does not denigrate the regular employment of petitioners members. As ruled in that case:[45]
 x x x Besides, the continuity of employment is not the determining factor, but rather whether the work of the laborer is part
of the regular business or occupation of the employer.(fn: Article 281, Labor Code, as amended; Philippine Fishing Boat
Officers and Engineer[s] Union vs. Court of Industrial Relations, 112 SCRA 159 (1982). We are thus in accord with the
findings of respondent NLRC in this regard.

Although it may be that private respondents alternated their employment on different vessels when they were not assigned
to petitioners boats, that did not affect their employee status. The evidence also establishes that petitioners had a fleet of
fishing vessels with about 65 ship captains, and as private respondents contended, when they finished with one vessel they
were instructed to wait for the next. As respondent NLRC had found:

We further find that the employer-employee relationship between the parties herein is not co-terminous with each
loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose,
they have a fleet of fishing vessels. Under this situation, respondents activity of catching fish is a continuous
process and could hardly be considered as seasonal in nature. So that the activities performed by herein
complainants, i.e. unloading the catch of tuna fish from respondents vessels and then loading the same to
refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the
employment of complainants a regular one, in the sense that it does not depend on any specific project or seasonal
activity. (fn: NLRC Decision, p. 94, Rollo.)

Alleged Admission of Lack of

Employer-Employee Relationship

Respondent Corfarm argues that some of petitioners members including its president, Juanito P. Costales, Jr.[,] admitted that
they work for various rice mills in Pangasinan and that there is no employer-employee relations between them and private
respondents. It adds that the solicitor general, by arguing that there was an employer-employee relationship, attempts to substitute
[his] judgment [with] that of public respondentundersecretary x x x who found such admissions against self-interest on the part of
petitioners members x x x.[46]

These arguments are negligible. The alleged admissions cannot be taken against petitioners cause. First, the contents of the
admissions are highly suspect. The records reveal that the admissions of Juanito Costales, Jr., [47] Carlito Costales[48] and Juanito
Medenilla[49] were in the form of affidavits[50] of adhesion which were identical in content, differentiated only by the typewritten
names and the signatures of the workers. Second, only three of the workers executed such affidavits. Clearly, the admissions in such
affidavits cannot work against petitioner unions cause. Such pro forma and identical affidavits do not prove lack of employer-
employee relationship against all members of petitioner. Third, the employer-employee relationship is clearly proven by substantial
evidence. Corfarm sorely failed to show that petitioners members were independent contractors. We rule that no particular form of
proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the
relationship. If only documentary evidence would be required to demonstrate that relationship, no scheming employer would ever be
brought before the bar of justice.[51] Fourth, and in any event, the alleged admissions of the three workers that they worked with other
rice mills do not work against them. Assuming arguendo that they did work with other rice mills, this was required by the imperative
of meeting their basic needs.[52]

The employer-employee relationship having been duly established, the holding of a certification election necessarily follows. It
bears stressing that there should be no unnecessary obstacle to the holding of such election, [53] for it is a statutory policy that should
not be circumvented.[54] We have held that, in the absence of a legal impediment, the holding of a certification election is the most
democratic method of determining the employees choice of their bargaining representative. It is the best means to settle controversies
and disputes involving union representation. Indeed, it is the keystone of industrial democracy.[55]

Second Case: Illegal Dismissal

Petitioner assails the NLRC for setting aside the labor arbiters decision and remanding the case for further
proceedings. Petitioner argues that the order of remand will only prolong the agony of the 92 union members and their families for
living or existing without jobs and earnings to give them support. Further, petitioner contends:[56]

The Labor Arbiter had rendered a decision (Annex D, Petition) on September 14, 1993 in favor of petitioner based on the
available records of the case after giving more than ample opportunities to private respondents herein to submit their
position paper and other pleadings alleging their evidences [sic] against the causes of action of petitioner alleged in the
complaint for illegal dismissal, unfair labor practice, non-payment of various benefits granted by existing laws during their
employment, illegal deductions or diminution of their underpaid daily wages, non-payment of wage increases and other
causes of action pleaded by the complainant or herein petitioner.
 In short, Labor Arbiter Rolando Gambito rendered his decision based on the records of the case including evidence
available on record and after observing due process of law.

To support his opposition against the remand of the case, petitioner recites the chronological events of the case, viz::[57]

In the case at bar, private respondents were notified earlier in the latter part of 1992 regarding the pendency of the
complaint for illegal dismissal, unfair labor practice, damages, etc., but said respondents did not appear during the initial
hearing of the case [before] Labor Arbiter Ricardo Olairez, then the Arbiter handling the case. The case was re-set for
hearing at some other dates. On April 22, 1993, Atty. Alfonso C. Bince, Jr. appeared as counsel for respondents at Dagupan
City. Atty. Bince committed to the Labor Arbiter that the former will file the position paper for his clients (Corfarm Grains,
Inc., et al.) within ten (10) days from April 22, 1993, but still private respondents Position Paper was not filed.

On May 20, 1993, Labor Arbiter Rolando Gambito, who took over the case for illegal dismissal, etc. filed by
petitioner, issued an order to private respondents directing the latter (respondents) to submit their Position Paper together
with THEIR DOCUMENTARY EXHIBITS, if any, within 10 days from receipt of the order. Still, private respondents
counsel failed to submit private respondents Position Paper relative to the petitioners complaint for illegal dismissal, unfair
labor practice, etc. which is involved in G.R. No. 114911 pending action by this Honorable Court.

Thus, the Labor Arbiter rendered his decision on the case in favor of petitioner and/or the 92 illegally dismissed workers
based on the position paper filed by the latter and available records of the case. (Emphasis in original.)

On the other hand, Respondent Corfarm submits that the labor arbiters decision should be set aside not only for lack of
competent and credible evidence but also for lack of procedural due process. Corfarm further contends that in spite of the pendency of
its motions to cross-examine petitioners witnesses and to suspend proceedings, the labor arbiter ordered the submission of its position
paper and documentary evidence within ten (10) days. [58] Respondent Corfarm insists:[59]

Indeed, although proceedings before a Labor Arbiter are supposed to be non-litigious and the technicalities in the courts of
law need not be strictly applied, the proceedings should nevertheless be subject to the requirements of due process as
provided in Section 7, Rule 7 of the NLRC Rules of Procedure. (See also Phil. Telegraph and Telephone Corp. vs. NLRC,
183 SCRA 451).

We agree with petitioner. Private respondent was not denied procedural due process, and the labor arbiters decision was based on
competent, credible and substantial evidence.

Procedural Due Process Observed

Private respondent had been duly informed of the pendency of the illegal dismissal case, but it chose not to participate therein
without any known justifiable cause. The labor arbiter sent notices of hearing or arbitration to the parties, requiring them to submit
position papers at 1:30 p.m. on November 14, 1992. [60] Respondent Corfarm did not attend the hearing. According to Respondent
NLRC, there was no proof that Respondent Corfarm received such notice. In any case, petitioner filed a Motion to Admit Amended
Complaint on December 23, 1992. Again, another notice for hearing or arbitration on January 7, 1993 was sent to the parties. [61] This
was received by petitioners counsel as evidenced by the registry return receipt duly signed by private respondents counsel, Atty.
Alfonso Bince, Jr. It was only on January 28, 1993, however, that Atty. Bince entered his appearance as counsel for Respondent
Corfarm.[62] On May 10, 1993, Corfarm was again given a new period of ten (10) days within which to submit its position paper and
documentary evidence; otherwise, [the labor arbiter] will be constrained to resolve this case based on available evidence on
record.[63] As evidenced by a registry return receipt, a copy of said directive was received by respondents counsel on May 25,
1993. Still and all, Corfarm failed to file its position paper. Clearly, private respondent was given an opportunity to present its
evidence, but it failed or refused to avail itself of this opportunity without any legal reason. Due process is not violated where a person
is given the opportunity to be heard, but chooses not to give his side of the case.[64]

Labor Arbiters Decision Based

on Credible, Competent and Substantial Evidence

Contrary to the conclusions of the NLRC and the arguments of private respondent, the findings of the labor arbiter on the
question of illegal dismissal were based on credible, competent and substantial evidence.

It is to be borne in mind that proceedings before labor agencies merely require the parties to submit their respective affidavits
and position papers.Adversarial trial is addressed to the sound discretion of the labor arbiter. To establish a cause of action, only
substantial evidence is necessary, i.e., such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other minds equally reasonable might conceivably opine otherwise. [65] As ruled in Manalo vs. Roldan-Confesor:[66]
 Clear and convincing proof is x x x more than mere preponderance, but not to extent of such certainty as is required beyond
reasonable doubt as in criminal cases x x x (fn: Blacks Law Dictionary, 5th Ed., p. 227, citing Fred C. Walker Agency,
Inc. v. Lucas, 215 Va. 535, 211 S.E. 2d 88, 92) while substantial evidence x x x consists of more than a mere scintilla of
evidence but may be somewhat less than a preponderance x x x x (fn: Ibid., p. 1281, citing Marker v. Finch, D.C. Del., 322
F. Supp. 905, 910) Consequently, in the hierarchy of evidentiary values, We find proof beyond reasonable doubt at the
highest level, followed by clear and convincing evidence, preponderance of evidence, and substantial evidence, in that
order.

Evidence to determine the validity of petitioners claims, which the labor arbiter relied upon, was available to Respondent
NLRC. These pieces of evidence are in the case records, as aptly pointed out by the solicitor general: [67]

[Regarding] the quoted second sentence of public respondent NLRCs Resolution that allegations must be proved and
established by competent evidence, and that mere allegations would not suffice despite the absence of evidence to the
contrary, suffice it to say that there is ample evidence on record to support the Labor Arbiters decision, to wit: 1) Narrative
report of DOLE inspector Crisanto Rey Dingle noting some violation of underpayment of minimum wage and
underpayment of 13th month pay (page 10, record); 2) affidavit of union officers and individual union members, stating
their various claims (page 80-195, Record). Despite such evidence and an opportunity afforded to private respondent to
present its evidence and position paper as borne out by the notice of hearing issued by Labor Arbiter Olairez dated
November 14, 1992, with advice to the parties to submit their position paper (p. 14 Record) and the Order issued by Labor
Arbiter Gambito dated May 20, 1993; requiring private respondents to submit their position paper, together with their
documentary evidence (p. 247, record), private respondent failed to submit its position paper and countervailing evidence
which should have met squarely the allegations and evidence adduced by the petitioner. Thus, in the absence of private
respondents position paper and countervailing evidence, the Labor Arbiter cannot be faulted in deciding the case based on
the available evidence on record.

It must be stressed that labor laws mandate the speedy administration of justice, with least attention to technicalities but without
sacrificing the fundamental requisites of due process. In this light, the NLRC, like the labor arbiter, is authorized to decide cases based
on the position papers and other documents submitted, without resorting to the technical rules of evidence.[68] Verily, Respondent
NLRC noted several documentary evidence sufficient to arrive at a just decision. Indeed, the evidence on record clearly supports the
conclusion of the labor arbiter that the petitioners were employees of respondent, and that they were illegally dismissed. [69]

The NLRC points to conflicts and inconsistencies in the evidence on record. We are not convinced. These alleged inconsistencies
are too flimsy and too tenuous to preclude a just decision. The finding that Juanito Costales, Jr. was an employee of respondent was
allegedly inconsistent with his admission that he was the owner of Carcado Contracting Services. As earlier observed, the
inconsistency is irrelevant. Juan Costales, Jr. was an employee of Corfarm. Owning this alleged outfit is not inconsistent with such
employment. The NLRC also questioned the amount of the employees compensation. In one instance, the workers stated that they
were receiving P45.00 per days work of eight hours. In another, they claimed that they were paid P0.12 per sack or cavan. These
allegedly differ from their allegation that Corfarm used to be obliged to pay P57.00 per days earning. The alleged inconsistencies are
more apparent than real. Records reveal that the P57 was the promised compensation; however, there was an unauthorized deduction
of P12; thus, the amount of P45 per day.[70] The claim of P0.12 per sack or cavan is the basic computation of how workers or haulers
earn their wage for the day.[71] In any event, the alleged inconsistencies do not affect or diminish the established fact that petitioners
members were regular employees who were illegally dismissed.

Why Respondent NLRC refused to rule directly on the appeal escapes us. The remand of a case or an issue to the labor arbiter
for further proceedings is unnecessary, considering that the NLRC was in a position to resolve the dispute based on the records before
it and particularly where the ends of justice would be served thereby. [72] Remanding the case would needlessly delay the resolution of
the case which has been pending since 1992.[73] As already observed, the evidence on record clearly supports the findings of the labor
arbiter.

Pursuant to the doctrine that this Court has a duty to settle, whenever possible, the entire controversy in a single proceeding,
leaving no root or branch to bear the seeds of future litigation, we now resolve all issues. [74]

It is axiomatic that in illegal dismissal cases, the employer always has the burden of proof, [75] and his failure to discharge this
duty results in a finding that the dismissal was unjustified. [76] Having defaulted from filing its position paper, Respondent Corfarm is
deemed to have waived its right to present evidence and counter the allegations of petitioners members.

In the same light, we sustain the labor arbiters holding in respect of unfair labor practice. [77] As ruled by Labor Arbiter Rolando
D. Gambito:[78]

The last issue: Instead of sitting down with the individual complainants or the union officers to discuss their demands,
respondents resorted to mass lay-off of all the members of the union and replaced them with outsiders. This is clearly a case
of union busting which Art. 248 of the Labor Code prohibits. Art. 248 provides that It shall be unlawful for an employer to
 commit any of the following unfair labor practice (a) To interfere with, restrain or coerce employees in the exercise of their
right to self-organization; (b) x x x (c) To contract out service or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to self-organization.

In view of recent jurisprudence,[79] we are correcting some items in the labor arbiters decision. The thirteenth month pay awarded
should be computed for each year of service from the time each employee was hired up to the date of his actual reinstatement. The
same computation applies to the award of the service incentive leave [80] and underpaid wages. Each employee is to be paid the
remaining underpaid wages from the date of his or her hiring in accordance with the then prevailing wage legislations. Likewise, a
refund of P12 shall be computed for each day of service of each employee, to be reckoned from the date such employee was
hired. The damages awarded should be sustained because the employer acted in bad faith. [81] Back wages are to be computed from the
date of dismissal up to the date of actual reinstatement without any deductions or conditions. This is in consonance with Fernandez, et
al. vs. National Labor Relations Commission:[82]

x x x Accordingly, the award to petitioners of backwages for three years should be modified in accordance with Article 279
of the Labor Code, as amended by R.A. 6715, by giving them full backwages without conditions and limitations, the
dismissals having occurred after the effectivity of the amendatory law on March 21, 1989. Thus, the Court held
in Bustamante:

The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the deduction of earnings elsewhere rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to full backwages as meaning exactly that,
i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the
period of his illegal dismissal.

WHEREFORE, both petitions are GRANTED. In G.R. No. 113542, Respondent Laguesmas Orders dated January 4, 1994 and
January 27, 1994 are REVERSED and SET ASIDE; whereas his Order dated September 7, 1993 is REINSTATED. In G.R. No. 114911,
Respondent NLRCs Resolutions promulgated on February 16, 1994 and March 28, 1994 are likewise REVERSED AND SET
ASIDE. The Labor Arbiters decision dated September 14, 1993 is reinstated with MODIFICATIONS as set out in this
Decision. Respondent NLRC is ORDERED to COMPUTE the monetary benefits awarded in accordance with this Decision and to
submit its compliance thereon within thirty days from notice of this Decision.

SO ORDERED.
FIRST DIVISION

[G.R. No. 120969. January 22, 1998]

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (SECOND DIVISION) composed of Presiding Commissioner RAUL T. AQUINO, Commissioner
ROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and
VIVA FILMS, respondents.

DECISION

DAVIDE, JR., J.:

By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek to annul the 10 February
1995 Decision[1] of the National Labor Relations Commission (hereafter NLRC), and its 6 April 1995 Resolution [2] denying the
motion to reconsider the former in NLRC-NCR-CA No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-
Case No. 00-07-03994-92.

The parties present conflicting sets of facts.

Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989 as part of the
filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary
of P400.00, which was increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with a weekly
salary of P475.00, which was increased to P593.00 in September 1991.

Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member of the shooting
crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to P475.00 on 21 December 1991.[3]

Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the
cameraman, returning the equipment to Viva Films warehouse, assisting in the fixing of the lighting system, and performing other
tasks that the cameraman and/or director may assign.[4]

Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario, to facilitate their request
that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed
petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As
petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he
reported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was
returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents
terminated his services on 20 July 1992.[5] Petitioners thus sued for illegal dismissal[6] before the Labor Arbiter.

On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of Viva Productions, Inc., and
that it is primarily engaged in the distribution and exhibition of movies -- but not in the business of making movies; in the same vein,
private respondent Vic del Rosario is merely an executive producer, i.e., the financier who invests a certain sum of money for the
production of movies distributed and exhibited by VIVA. [7]

Private respondents assert that they contract persons called producers -- also referred to as associate producers[8] -- to produce or
make movies for private respondents; and contend that petitioners are project employees of the associate producers who, in turn, act as
independent contractors.As such, there is no employer-employee relationship between petitioners and private respondents.

Private respondents further contend that it was the associate producer of the film Mahirap Maging Pogi, who hired petitioner
Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that Maraguinot was released upon payment of his
last salary, as his services were no longer needed. Anent petitioner Enero, he was hired for the movie entitled Sigaw ng Puso, later re-
titled Narito ang Puso. He went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the
movie had already been completed.[9]

After considering both versions of the facts, the Labor Arbiter found as follows:

On the first issue, this Office rules that complainants are the employees of the respondents. The producer cannot be considered as an
independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere agent of the real employer,
the herein respondents. Respondents even failed to name and specify who are the producers. Also, it is an admitted fact that the
complainants received their salaries from the respondents. The case cited by the respondents, Rosario Brothers, Inc. vs. Ople, 131
SCRA 72 does not apply in this case.

It is very clear also that complainants are doing activities which are necessary and essential to the business of the respondents, that of
movie-making. Complainant Maraguinot worked as an electrician while complainant Enero worked as a crew [member]. [10]

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:

WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed.

Respondents are hereby ordered to reinstate complainants to their former positions without loss [of] seniority rights and pay their
backwages starting July 21, 1992 to December 31, 1993 temporarily computed in the amount of P38,000.00 for complainant Paulino
Enero and P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.

Respondents are ordered to pay also attorneys fees equivalent to ten (10%) and/or P8,400.00 on top of the award.[11]

Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its decision[12] of 10 February 1995,
the NLRC found the following circumstances of petitioners work clearly established:

1. Complainants [petitioners herein] were hired for specific movie projects and their employment was co-terminus with each movie
project the completion/termination of which are pre-determined, such fact being made known to complainants at the time of their
engagement.

xxx

2. Each shooting unit works on one movie project at a time. And the work of the shooting units, which work independently from each
other, are not continuous in nature but depends on the availability of movie projects.

3. As a consequence of the non-continuous work of the shooting units, the total working hours logged by complainants in a month
show extreme variations... For instance, complainant Maraguinot worked for only 1.45 hours in June 1991 but logged a total
of 183.25 hours in January 1992. Complainant Enero logged a total of only 31.57 hours in September 1991 but worked
for 183.35 hours the next month, October 1991.

4. Further shown by respondents is the irregular work schedule of complainants on a daily basis. Complainant Maraguinot was
supposed to report on 05 August 1991 but reported only on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10
September 1991 and his next scheduled working day was 28 September 1991, a gap of 18 days.

5. The extremely irregular working days and hours of complainants work explain the lump sum payment for complainants services for
each movie project. Hence, complainants were paid a standard weekly salary regardless of the number of working days and hours they
logged in. Otherwise, if the principle of no work no pay was strictly applied, complainants earnings for certain weeks would be very
negligible.

6. Respondents also alleged that complainants were not prohibited from working with such movie companies like Regal, Seiko and
FPJ Productions whenever they are not working for the independent movie producers engaged by respondents... This allegation was
never rebutted by complainants and should be deemed admitted.

The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together, indicated that complainants
(herein petitioners) were project employees.

After their motion for reconsideration was denied by the NLRC in its Resolution [13] of 6 April 1995, petitioners filed the instant
petition, claiming that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in: (1) finding that
petitioners were project employees; (2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor
Arbiter.

To support their claim that they were regular (and not project) employees of private respondents, petitioners cited their
performance of activities that were necessary or desirable in the usual trade or business of private respondents and added that their
work was continuous, i.e., after one project was completed they were assigned to another project. Petitioners thus considered
themselves part of a work pool from which private respondents drew workers for assignment to different projects. Petitioners
lamented that there was no basis for the NLRCs conclusion that they were project employees, while the associate producers were
independent contractors; and thus reasoned that as regular employees, their dismissal was illegal since the same was premised on a
false cause, namely, the completion of a project, which was not among the causes for dismissal allowed by the Labor Code.
 Private respondents reiterate their version of the facts and stress that their evidence supports the view that petitioners are project
employees; point to petitioners irregular work load and work schedule; emphasize the NLRCs finding that petitioners never
controverted the allegation that they were not prohibited from working with other movie companies; and ask that the facts be viewed
in the context of the peculiar characteristics of the movie industry.

The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise questions of fact,
particularly, the NLRCs finding that petitioners were project employees, a finding supported by substantial evidence; and submits that
petitioners reliance on Article 280 of the Labor Code to support their contention that they should be deemed regular employees is
misplaced, as said section merely distinguishes between two types of employees, i.e., regular employees and casual employees, for
purposes of determining the right of an employee to certain benefits.

The OSG likewise rejects petitioners contention that since they were hired not for one project, but for a series of projects, they
should be deemed regular employees. Citing Mamansag v. NLRC,[14] the OSG asserts that what matters is that there was a time-frame
for each movie project made known to petitioners at the time of their hiring. In closing, the OSG disagrees with petitioners claim that
the NLRCs classification of the movie producers as independent contractors had no basis in fact and in law, since, on the contrary, the
NLRC took pains in explaining its basis for its decision.

As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we rule that a special civil
action for certiorariunder Rule 65 of the Rules of Court is the proper remedy for one who complains that the NLRC acted in total
disregard of evidence material to or decisive of the controversy.[15] In the instant case, petitioners allege that the NLRCs conclusions
have no basis in fact and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.

The judicious resolution of this case hinges upon, first, the determination of whether an employer-employee relationship existed
between petitioners and private respondents or any one of private respondents. If there was none, then this petition has no merit;
conversely, if the relationship existed, then petitioners could have been unjustly dismissed.

A related question is whether private respondents are engaged in the business of making motion pictures. Del Rosario is
necessarily engaged in such business as he finances the production of movies. VIVA, on the other hand, alleges that it does not make
movies, but merely distributes and exhibits motion pictures. There being no further proof to this effect, we cannot rely on this self-
serving denial. At any rate, and as will be discussed below, private respondents evidence even supports the view that VIVA is engaged
in the business of making movies.

We now turn to the critical issues. Private respondents insist that petitioners are project employees of associate producers who, in
turn, act as independent contractors. It is settled that the contracting out of labor is allowed only in case of job contracting. Section 8,
Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in this wise:

Sec. 8. Job contracting. -- There is job contracting permissible under the Code if the following conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and
other materials which are necessary in the conduct of his business.

Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion
pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment,
machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none
of these. Private respondents evidence reveals that the movie-making equipment are supplied to the producers and owned by
VIVA. These include generators,[16] cables and wooden platforms,[17]cameras and shooting equipment;[18] in fact, VIVA likewise owns
the trucks used to transport the equipment.[19] It is thus clear that the associate producer merely leases the equipment from
VIVA.[20] Indeed, private respondents Formal Offer of Documentary Evidence stated one of the purposes of Exhibit 148 as:

To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish their films. [21]

While the purpose of Exhibits 149, 149-A and 149-B was:

[T]o prove that the movies of Viva Films were contracted out to the different independent Producers who rented Shooting Unit No. 3
with a fixed budget and time-frame of at least 30 shooting days or 45 days whichever comes first. [22]

Private respondents further narrated that VIVAs generators broke down during petitioners last movie project, which forced the
associate producer concerned to rent generators, equipment and crew from another company. [23] This only shows that the associate
producer did not have substantial capital nor investment in the form of tools, equipment and other materials necessary for making a
movie. Private respondents in effect admit that their producers, especially petitioners last producer, are not engaged in permissible job
contracting.

If private respondents insist that their associate producers are labor contractors, then these producers can only be labor-only
contractors, defined by the Labor Code as follows:

Art. 106. Contractor or subcontractor.-- x x x

There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.

A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code:

Sec. 9. Labor-only contracting. -- (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in
labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other
materials; and

(2) The workers recruited and placed by such person are performing activities which are directly related to the principal business
or operations of the employer in which workers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not
the contracting out of labor is permissible in the light of the circumstances of each case and after considering the
operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions
and restrictions to insure the protection and welfare of the workers.

As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary
of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only
contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor
and an employee of VIVA, who recruited crew members from an available group of free-lance workers which includes the
complainants Maraguinot and Enero.[24] And in their Memorandum, private respondents declared that the associate producer hires the
services of... 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and
electrician; (e) clapper; etc....[25] This clearly showed that the associate producers did not supply the workers required by the movie
project.

The relationship between VIVA and its producers or associate producers seems to be that of agency, [26] as the latter make movies
on behalf of VIVA, whose business is to make movies. As such, the employment relationship between petitioners and producers is
actually one between petitioners and VIVA, with the latter being the direct employer.

The employer-employee relationship between petitioners and VIVA can further be established by the control test. While four
elements are usually considered in determining the existence of an employment relationship, namely: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct,
the most important element is the employers control of the employees conduct, not only as to the result of the work to be done but also
as to the means and methods to accomplish the same.[27]These four elements are present here. In their position paper submitted to the
Labor Arbiter, private respondents narrated the following circumstances:

[T]he PRODUCER has to work within the limits of the budget he is given by the company, for as long as the ultimate finish[ed]
product is acceptable to the company...

To ensure that quality films are produced by the PRODUCER who is an independent contractor, the company likewise employs a
Supervising PRODUCER, a Project accountant and a Shooting unit supervisor. The Companys Supervising PRODUCER is Mr. Eric
Cuatico, the Project accountant varies from time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.
The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive Producer to monitor the progress of the
PRODUCERs work accomplishment. He is there usually in the field doing the rounds of inspection to see if there is any problem that
the PRODUCER is encountering and to assist in threshing out the same so that the film project will be finished on schedule. He
supervises about 3 to 7 movie projects simultaneously [at] any given time by coordinating with each film PRODUCER. The Project
Accountant on the other hand assists the PRODUCER in monitoring the actual expenses incurred because the company wants to
insure that any additional budget requested by the PRODUCER is really justified and warranted especially when there is a change of
original plans to suit the tast[e] of the company on how a certain scene must be presented to make the film more interesting and more
commercially viable. (emphasis ours)

VIVAs control is evident in its mandate that the end result must be a quality film acceptable to the company. The means and
methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without
exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company;
and the Supervising Producer, the eyes and ears of VIVA and del Rosario, intervenes in the movie-making process by assisting the
associate producer in solving problems encountered in making the film.

It may not be validly argued then that petitioners are actually subject to the movie directors control, and not VIVAs
direction. The director merely instructs petitioners on how to better comply with VIVAs requirements to ensure that a quality film is
completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the
activities of rank-and-file employees with control ultimately resting on the employer.

Moreover, appointment slips [28] issued to all crew members state:

During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules
and regulations promulgated by your superiors and by Top Management.

The words superiors and Top Management can only refer to the superiors and Top Management of VIVA. By commanding crew
members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVAs control over
petitioners.

Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. A
sample appointment slip offered by private respondents to prove that members of the shooting crew except the driver are project
employees of the Independent Producers[29] reads as follows:

VIVA PRODUCTIONS, INC.

16 Sct. Albano St.

Diliman, Quezon City

PEDRO NICOLAS Date: June 15, 1992

__________________

APPOINTMENT SLIP

You are hereby appointed as SOUNDMAN for the film project entitled MANAMBIT. This appointment shall be effective upon the
commencement of the said project and shall continue to be effective until the completion of the same.

For your services you shall receive the daily/weekly/monthly compensation of P812.50.

During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules
and regulations promulgated by your superiors and by Top Management.

Very truly yours,

(an illegible signature)

CONFORME:

___________________
Name of appointee

Signed in the presence of:

_____________________

Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew
members; moreover, it is VIVAs corporate name which appears on the heading of the appointment slip. What likewise tells against
VIVA is that it paid petitioners salaries as evidenced by vouchers, containing VIVAs letterhead, for that purpose. [30]

All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is
that petitioners are employees only of VIVA.

The next issue is whether petitioners were illegally dismissed. Private respondents contend that petitioners were project
employees whose employment was automatically terminated with the completion of their respective projects. Petitioners assert that
they were regular employees who were illegally dismissed.

It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool; [31] and,
while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view of
VIVAs conduct.

A project employee or a member of a work pool may acquire the status of a regular employee when the following concur:

1) There is a continuous rehiring of project employees even after cessation of a project; [32] and

2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or trade of the
employer.[33]

However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a
badge of regular employment.[34]

In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in
at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three
(23) projects.[35] Moreover, as petitioners tasks involved, among other chores, the loading, unloading and arranging of movie
equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films warehouse, and assisting in
the fixing of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business
or trade of the employer. As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the
work performed and its relation to the scheme of the particular business or trade in its entirety. [36]

A recent pronouncement of this Court anent project or work pool employees who had attained the status of regular employees
proves most instructive:

The denial by petitioners of the existence of a work pool in the company because their projects were not continuous is amply belied by
petitioners themselves who admit that: xxx

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during
temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily
applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling
labor at the expense of capital and at the same time enables the workers to attain the status of regular employees. Clearly, the
continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly indicative that
private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects.

In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point out that the workers
were not regularly maintained in the payroll and were free to offer their services to other companies when there were no on-going
projects. This argument however cannot defeat the workers status of regularity. We apply by analogy the case of Industrial-
Commercial-Agricultural Workers Organization v. CIR [16 SCRA 562, 567-68 (1966)] which deals with regular seasonal
employees. There we held: xxx

Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work. Of course, no
compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the start of a
new one is regular and expected by both parties to the labor relations. Similar to the case of regular seasonal employees, the
employment relation is not severed by merely being suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees
are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. Thus we
cannot affirm the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment
denote project employment.[37] (underscoring supplied)

While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department Order No.
19[38] regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles to industries
other than the construction industry.[39] Neither may it be argued that a substantial distinction exists between the projects undertaken in
the construction industry and the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with a
foreseeable suspension of work.

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project
employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and
sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition
of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by
the employer of project or work pool employees who perform tasks necessary or desirable to the employers usual business or
trade. Let it not be said that this decision coddles labor, for as Lao has ruled, project or work pool employees who have gained the
status of regular employees are subject to the no work-no pay principle, to repeat:

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during
temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily
applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling
labor at the expense of capital and at the same time enables the workers to attain the status of regular employees.

The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, [40] but, we
stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a
project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold
today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and
jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool
employees who have already gained the status of regular employees by the employers conduct.

In closing then, as petitioners had already gained the status of regular employees, their dismissal was unwarranted, for the cause
invoked by private respondents for petitioners dismissal, viz., completion of project, was not, as to them, a valid cause for dismissal
under Article 282 of the Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss of seniority
rights and other benefits that may have accrued. [41] Nevertheless, following the principles of suspension of work and no pay between
the end of one project and the start of a new one, in computing petitioners back wages, the amounts corresponding to what could have
been earned during the periods from the date petitioners were dismissed until their reinstatement when petitioners respective Shooting
Units were not undertaking any movie projects, should be deducted.

Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in effect. Pursuant to Section 34
thereof which amended Section 279 of the Labor Code of the Philippines and Bustamante v. NLRC,[42] petitioners are entitled to
receive full back wages from the date of their dismissal up to the time of their reinstatement, without deducting whatever earnings
derived elsewhere during the period of illegal dismissal, subject, however, to the above observations.

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC
NCR CA No. 006195-94 dated 10 February 1995, as well as its Resolution dated 6 April 1995, are hereby ANNULLED and SET
ASIDE for having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-07-
03994-92 is REINSTATED, subject, however, to the modification above mentioned in the computation of back wages.

No pronouncement as to costs.

SO ORDERED.
THIRD DIVISION

G.R. No. 129076 November 25, 1998

ORLANDO FARMS GROWERS ASSOCIATION/GLICERIO AÑOVER, petitioner,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), ANTONIO PAQUIT,
ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO, REBECCA MOREN, MARCELINA HONTIVEROS,
MARTIN ORDONO, TITO ORDONO, FE ORDONO, ERNIE COLON, EUSTIQUIO GELDO, DANNY SAM, JOEL
PIAMONTE, FEDERICO PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN, JR. and
BERNARDO OPERIO, respondents.

ROMERO, J.:

It is a settled doctrine that an employer-employee relationship can be deduced from the existence of the following elements: (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.

The principal issue to be resolved in the instant petition is whether or not an unregistered association may be an employer independent
of the respective members it represents.

The evidence reveals the ensuing facts:

Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Añover as its President, is an association of landowners
engaged in the production of export quality bananas located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole
purpose of dealing collectively with Stanfilco on matters concerning technical services, canal maintenance, irrigation and pest control,
among others. Respondents, on the other hand, were hired as farm workers by several member-landowners but; nonetheless, were
made to perform functions as packers and harvesters in the plantation of petitioner association.

After respondents were dismissed on various dates from January 8, 1993 to July 30, 1994, several complaints were filed against
petitioner for illegal dismissal and monetary benefits. Based on similar grounds, the same were consolidated in the office of Labor
Arbiter Newton R. Sancho who, in a decision dated September 6, 1995, ordered their reinstatement, viz:

WHEREFORE, judgment is hereby rendered declaring the dismissal of the 20 above-named complainants
ILLEGAL, and ordering respondents Orlando Farms Growers Association/Glicerio Anover to REINSTATE them
immediately to their former or equivalent positions, and to PAY individual complainants their respective backwages
and other benefits (wage differentials, 13th month pay and holiday pay) appearing opposite their names above set
forth, including moral damages and attorney's fees, in the total amount of P1,047,720.92 only.

All other claims are dismissed for lack of merit.

As becoming a collective association, respondents liabilities to complainants are joint and solidary, with its
responsible officers.

The case of Loran Paquit and Lovilla Dorlones1 is dropped for having been amicably settled.

In case of appeal, backwages and other benefits shall accrue but in no case exceeding 3 years, without any
qualification or deduction.

SO ORDERED. 2

On appeal, the National Labor Relations Commission (NLRC) affirmed the same in toto in a decision dated December 26, 1996. Its
motion for reconsideration having been denied on February 25, 1997, petitioner filed the instant petition for certiorari.

Petitioner alleged that the NLRC erred in finding that respondents were its employees and not of the individual landowners which fact
can easily be deduced from the payments made by the latter of respondent's Social Security System (SSS) contributions. Moreover, it
could have never exercised the power of control over them with regard to the manner and method by which the work was to be
accomplished, which authority remain vested with the landowners despite becoming members thereof.

The arguments adduced before us do not warrant the nullification of the findings made by the Labor Arbiter and the NLRC as the
determination of the existence of an employer-employee relationship between the party-litigants, being a question of fact, is amply
supported by substantial evidence, as can be gathered from a perfunctory reading, not only of the pleadings submitted, but from the
assailed decision, as well. Thus, the authority of this Court to review the findings of the NLRC is limited to allegations of lack of
jurisdiction or grave abuse of discretion.

The contention that petitioner, being an unregistered association and having been formed solely to serve as an effective medium for
dealing collectively with Stanfilco, does not exist in law and, therefore, cannot be considered an employer, is misleading. This
assertion can easily be dismissed by reference to Article 212 (e) of the Labor Code, as amended, which defines an employer as any
person acting in the interest of an employer, directly or indirectly. Following a careful scrutiny of the said provision, the Court
concludes that the law does not require an employer to be registered before he may come within the purview of the Labor Code,
consistent with the established rule in statutory construction that when the law does not distinguish, we should not distinguish. To do
otherwise would bring about a situation whereby employees are denied, not only redress of their grievances, but, more importantly,
the protection and benefits accorded to them by law if their employer happens to be an unregistered association.

To reiterate, as held in the case of Filipinas Broadcasting Network, Inc. v. NLRC, 3 the following are generally considered in the
determination of the existence of an employer-employee relationship; (1) the manner of selection and engagement; (2) the payment of
wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control; of these four,
the last one being the most important.

In the instant case, the following circumstances which support the existence of employer-employee relations cannot be denied. During
the subsistence of the association, several circulars and memoranda were issued concerning, among other things, absences without
formal request, loitering in the work area and disciplinary measures with which every worker is enjoined to comply. Furthermore, the
employees were issued identification cards which the Court, in the case of Domasig v. NLRC,4 construed, not only as a security
measure but mainly to identify the holder as a bonafide employee of the firm. However, what makes the relationship explicit is
the power of the petitioner to enter into compromise agreements involving money claims filed by three of its employees,
namely: Lorna Paquit, Lovella Dorlones and Jasmine Espanola. If petitioner's disclaimer were to be believed, what benefit
would accrue to it in settling an employer-employee dispute to which it allegedly lay no claim?

In spite of the overwhelming evidence sufficient to justify a conclusion that respondents were indeed employees of petitioner,
the latter, nevertheless, maintain the preposterous claim that the ID card, circulars and memoranda were issued merely to
facilitate the efficient use of common resources, as well as to promote uniform rules in the work establishment. On this score,
we defer to the observations made by the NLRC when it ruled that, while the original purpose of the formation of the
association was merely to provide the landowners a unified voice in dealing with Stanfilco, petitioner however exceeded its
avowed intentions when its subsequent actions reenforced only too clearly its admitted role of employer. As reiterated all too
often, factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect,
even finality, and will not be disturbed for as long as such findings are supported by substantial evidence. 5

Prescinding from the foregoing, we now address the issue of whether or not petitioner had a valid ground to dismiss
respondents from their respective employment.

It is settled that in termination disputes, the employer bears the burden of proving that the dismissal is for just cause, failing
which it would mean that the dismissal is not justified and the employer is entitled to reinstatement. 6 The dismissal of
employees must be made within the parameters of the law and pursuant to the basic tenets of equity, justice and fair
play.7 In Brahm Industries, Inc. v. NLRC,8 the Court explained that there are two (2) facets of valid termination of
employment; (a) the legality of the act of dismissal, i.e., the dismissal must be under any of the just causes provided under Art.
2829 of the Labor Code; and (b) the legality of the manner of dismissal, which means that there must be observance of the
requirements of due process, otherwise known as the two-notice rule. Thus, "the employer is required to furnish the employee
with a written notice containing a statement of the cause for termination and to afford said employee ample opportunity to be
heard and to defend himself with the assistance of his representative, if he so desires. The employer is also required to notify
the worker in writing of the decision to dismiss him, stating clearly the reasons therefore." 10

In the instant case, petitioner severed employment relations when it whimsically dismissed the respondents in utter disregard
of the safeguards underscored in the Constitution, as well as in the Labor Code. Petitioner failed to controvert the allegation
that it was responsible for the dismissal of the employees. Instead of denying the same or otherwise imputing liability on its
member-landowner by naming the employees allegedly in his employ, petitioner was silent on the issue and harped on the non-
existence of employer-employee relationship between the parties, which contention we find to be tangential. However related
the issue might seem, it would have been more relevant for the petitioner to have presented ample evidence before the NLRC
and this Court to justify its exoneration from liability. Having failed in this respect, we deem it fatal to its defense.
For having been dismissed without a valid cause and for non-observance of the due process requirement, respondents,
consistent with recent jurisprudence laid down in the case of Bustamante v. NLRC, 11 are entitled to receive full backwages
from the date of their dismissal up to the time of their reinstatement. The order, therefore, of the labor arbiter limiting
backwages to a period of three (3) years in the event of an appeal, is erroneous.

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the National Labor Relations
Commission dated September 6, 1995 is AFFIRMED subject to the deletion of the award of moral damages and attorney's
fees. The Court, however, is remanding this case to Labor Arbiter Newton R. Sancho to specify in the dispositive portion of his
decision the names of the respondents and the amount that each is entitled to.

SO ORDERED.
FIRST DIVISION

G.R. No. L-53515 February 8, 1989

SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,

vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.

Lorenzo F. Miravite for petitioner.

Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GRIÑO-AQUINO, J.:

This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor Case No. AJML-069-79,
approving the private respondent's marketing scheme, known as the "Complementary Distribution System" (CDS) and dismissing the
petitioner labor union's complaint for unfair labor practice.

On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31, 1981) was entered into by petitioner
San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of Article IV
of which provided as follows:

Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113, Rollo.)

In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution System" (CDS) whereby
its beer products were offered for sale directly to wholesalers through San Miguel's sales offices.

The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of strike on the
ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen were assigned specific territories
within which to sell their stocks of beer, and wholesalers had to buy beer products from them, not from the company. It was alleged
that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the introduction of the
CDS would reduce the take-home pay of the salesmen and their truck helpers for the company would be unfairly competing with
them.

The complaint filed by the petitioner against the respondent company raised two issues: (1) whether the CDS violates the collective
bargaining agreement, and (2) whether it is an indirect way of busting the union.

In its order of February 28, 1980, the Minister of Labor found:

... We see nothing in the record as to suggest that the unilateral action of the employer in inaugurating the new sales
scheme was designed to discourage union organization or diminish its influence, but rather it is undisputable that the
establishment of such scheme was part of its overall plan to improve efficiency and economy and at the same time
gain profit to the highest. While it may be admitted that the introduction of new sales plan somewhat disturbed the
present set-up, the change however was too insignificant as to convince this Office to interpret that the innovation
interferred with the worker's right to self-organization.

Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a prejudgment of the plan's
viability and effectiveness. It is like saying that the plan will not work out to the workers' [benefit] and therefore
management must adopt a new system of marketing. But what the petitioner failed to consider is the fact that
corollary to the adoption of the assailed marketing technique is the effort of the company to compensate whatever
loss the workers may suffer because of the new plan over and above than what has been provided in the collective
bargaining agreement. To us, this is one indication that the action of the management is devoid of any anti-union
hues. (pp. 24-25, Rollo.)

The dispositive part of the Minister's Order reads:

 WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery Sales Force
Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an additional three (3) months
back adjustment commissions over and above the adjusted commission under the complementary distribution
system. (p. 26, Rollo.)

The petition has no merit.

Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives:

Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools
to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of work. ... (NLU vs. Insular La Yebana Co.,
2 SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law,
1985 Ed., p. 44.) (Emphasis ours.)

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed towards that goal. In
Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:

... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs
to achieve its purpose cannot be denied.

So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not
for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will
uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment Workers, 26
SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate the members of its sales
force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to
make up for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to bust their
union.

WHEREFORE, the petition for certiorari is dismissed for lack of merit.

SO ORDERED.
SECOND DIVISION

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and
NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruz for private respondent.

DECISION

REGALADO, J p:

The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article
212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III of
the same Code, and hence are not entitled to overtime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the
Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on
April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO
Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor,
Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift
Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor,
Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel
Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day
Maintenance Supervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department
heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and
recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions
and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent
union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same
manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of
Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were
made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for
purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE
Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-
and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company
COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work.

On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO.
6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at
the NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a
complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article
100 of the Labor Code.

On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to —
1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of
the P100.00 special allowance which was implemented on June 11, 1988; and

2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the
overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being
paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped
from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom,
considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no
way for the individual supervisors to express their collective response thereto prior to the formation of the union; and the comparative
computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of
what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement,
therefore, amounted to a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission
(NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees,
as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent
NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and
final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they
do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to
carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public
respondent dated August 30, 1991. 4

Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave
abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who
are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits due
to rank-and-file employees together with those due to supervisors under the JE Program.

We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue.

The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday
pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory
employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the
Labor Code.

It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article
212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest
of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in
nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered
rank-and-file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter
are not managerial employees, adopted the definition stated in the aforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime,
rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under
Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the
Rules to Implement the Labor Code, to wit:

"Art. 82 Coverage. — The provisions of this title 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.
"As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis
supplied.)

xxx xxx xxx

'Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if they qualify for exemption under the
condition set forth herein:

xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions, namely:

(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.

(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:

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

(2) Customarily and regularly exercise discretion and independent judgment;

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of 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 20 percent of their hours worked in a work-week to activities which are not directly and closely related to
the performance of the work described in paragraphs (1), (2), and above."

It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial
positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and,
hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the
provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the
meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the
Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions,
certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working
conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff,
hence they are not entitled thereto.

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. Out of its concern for those with less privileges in life, this Court
has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however,
has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine. 5

This is one such case where we are inclined to tip the scales of justice in favor of the employer.

The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the
particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work
performed, rather than the title of the employee's position. 6

Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice
and the peculiar circumstances obtaining herein mandate a deviation from the rule.
A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory
employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in
planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and
objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective
departments. More specifically, their duties and functions include, among others, the following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning
complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their
development/advancement;

5) represents the superintendent or the department when appointed and authorized by the former;

6) coordinates and communicates with other inter and intra department supervisors when necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees,
recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed
abnormality within the refinery;

10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and

11) performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably
qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to
Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of
their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist
the managerial employee whose primary duty consist of the management of a department of the establishment in which they are
employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience,
or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20%
of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work
hereinbefore described.

Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as
officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled
to overtime, rest day and holiday.

The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine
the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are
supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their
functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code,
is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory
employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made
along that line and its corresponding conceptual criteria.

II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members
has ripened into a contractual obligation.

A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees such
as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their
basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as
supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification
made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated
August 16, 1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as
'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday
and restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their
organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be
said to occupy the same positions." 9

It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed
before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union
were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they
could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on
the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer
practice, which cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a
long period of time, and must be shown to have been consistent and deliberate. 10

The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the
benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar,
respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure
generosity.

B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under
levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they
occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE
Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is
defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and
usually accompanied by an increase in salary. 12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain
exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth
therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements
imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their
former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the
sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and
fairness, get the best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in
good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted
implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members
of respondent union of the benefits they used to receive.

Not so long ago, on this particular score, we had the occasion to hold that:

". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This
flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its
business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special
laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or
spite." 13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19,
1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave
abuse of discretion, and the basic complaint of private respondent union is DISMISSED.
EN BANC

G.R. No. L-18353 July 31, 1963

SAN MIGUEL BREWERY, INC., petitioner,

vs.
DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents.

Paredes, Poblador, Cruz and Nazareno for petitioner.

Delfin N. Mercader for respondents.

BAUTISTA ANGELO, J.:

On January 27, 1955, the Democratic Labor Association filed complaint against the San Miguel Brewery, Inc. embodying 12 demands
for the betterment of the conditions of employment of its members. The company filed its answer to the complaint specifically
denying its material averments and answering the demands point by point. The company asked for the dismissal of the complaint.

At the hearing held sometime in September, 1955, the union manifested its desire to confine its claim to its demands for overtime,
night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service rendered during Sundays and
holidays, or on its claim for additional separation pay and sick and vacation leave compensation.1äwphï1.ñët

After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was commissioned to receive the evidence,
rendered decision expressing his disposition with regard to the points embodied in the complaint on which evidence was presented.
Specifically, the disposition insofar as those points covered by this petition for review are concerned, is as follows:

1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-Hour Labor Law apply to the
employees concerned for those working in the field or engaged in the sale of the company's products outside its premises and
consequently they should be paid the extra compensation accorded them by said law in addition to the monthly salary and
commission earned by them, regardless of the meal allowance given to employees who work up to late at night.

2. As to employees who work at night, Judge Bautista decreed that they be paid their corresponding salary differentials for
work done at night prior to January 1, 1949 with the present qualification: 25% on the basis of their salary to those who work
from 6:00 to 12:00 p.m., and 75% to those who work from 12:01 to 6:00 in the morning.

3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that the employees concerned be paid
an additional compensation of 25% as provided for in Commonwealth Act No. 444 even if they had been paid a
compensation on monthly salary basis.

The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of accumulated vacation and
sick leave and attorney's fees, as well as the award of additional separation pay, were either dismissed, denied, or set aside.

Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the decision of the court a quo with
few exceptions, the San Miguel Brewery, Inc. interposed the present petition for review.

Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that outside or field sales personnel
are entitled to the benefits of the Eight-Hour Labor Law, the pertinent facts are as follows:

After the morning roll call, the employees leave the plant of the company to go on their respective sales routes either at 7:00 a.m. for
soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a daily time record. The company never require them to start their
work as outside sales personnel earlier than the above schedule.

The sales routes are so planned that they can be completed within 8 hours at most, or that the employees could make their sales on
their routes within such number of hours variable in the sense that sometimes they can be completed in less than 8 hours, sometimes 6
to 7 hours, or more. The moment these outside or field employees leave the plant and while in their sales routes they are on their own,
and often times when the sales are completed, or when making short trip deliveries only, they go back to the plant, load again, and
make another round of sales. These employees receive monthly salaries and sales commissions in variable amounts. The amount of
compensation they receive is uncertain depending upon their individual efforts or industry. Besides the monthly salary, they are paid
sales commission that range from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month, at the rate of P0.01 to
P0.01-½ per case.
It is contended that since the employees concerned are paid a commission on the sales they make outside of the required 8 hours
besides the fixed salary that is paid to them, the Court of Industrial Relations erred in ordering that they be paid an overtime
compensation as required by the Eight-Hour Labor Law for the reason that the commission they are paid already takes the place of
such overtime compensation. Indeed, it is claimed, overtime compensation is an additional pay for work or services rendered in excess
of 8 hours a day by an employee, and if the employee is already given extra compensation for labor performed in excess of 8 hours a
day, he is not covered by the law. His situation, the company contends, can be likened to an employee who is paid on piece-work,
"pakiao", or commission basis, which is expressly excluded from the operation of the Eight-Hour Labor Law.1

We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an employee or laborer is
paid on a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work beyond the requisite
period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no application when the employee or
laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time employed. The philosophy behind this
exemption is that his earnings in the form of commission based on the gross receipts of the day. His participation depends upon his
industry so that the more hours he employs in the work the greater are his gross returns and the higher his commission. This
philosophy is better explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, as follows:

The reasons for excluding an outside salesman are fairly apparent. Such 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.

True it is that the employees concerned are paid a fixed salary for their month of service, such as Benjamin Sevilla, a salesman, P215;
Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro Empleo, truck helpers, P125 each, and sometimes they work in
excess of the required 8-hour period of work, but for their extra work they are paid a commission which is in lieu of the extra
compensation to which they are entitled. The record shows that these employees during the period of their employment were paid
sales commission ranging from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month depending on the volume
of their sales and their rate of commission per case. And so, insofar is the extra work they perform, they can be considered as
employees paid on piece work, "pakiao", or commission basis. The Department of Labor, called upon to implement, the Eight-Hour
Labor Law, is of this opinion when on December 9, 1957 it made the ruling on a query submitted to it, thru the Director of the Bureau
of Labor Standards, to the effect that field sales personnel receiving regular monthly salaries, plus commission, are not subject to the
Eight-Hour Labor Law. Thus, on this point, said official stated:

. . . Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, it is also
the established policy of the Office to consider his commission as payment for the extra time he renders in excess of eight
hours, thereby classifying him as if he were on piecework basis, and therefore, technically speaking, he is not subject to the
Eight-Hour Labor Law.

We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law applies to the employees
composing the outside service force and in ordering that they be paid the corresponding additional compensation.

With regard to the claim for night salary differentials, the industrial court found that claimants Magno Johnson and Jose Sanchez
worked with the respondent company during the period specified by them in their testimony and that watchmen Zoilo Illiga, Inocentes
Prescillas and Daniel Cayuca rendered night duties once every three weeks continuously during the period of the employment and that
they were never given any additional compensation aside from their monthly regular salaries. The court found that the company
started paying night differentials only in January, 1949 but never before that time. And so it ordered that the employees concerned be
paid 25% additional compensation for those who worked from 6:00 to 12:00 p.m. and 75% additional compensation for those who
worked from 12:01 to 6: 00 in the morning. It is now contended that this ruling is erroneous because an award for night shift
differentials cannot be given retroactive effect but can only be entertained from the date of demand which was on January 27, 1953,
citing in support thereof our ruling in Earnshaws Docks & Honolulu Iron Works v. The Court of Industrial Relations, et al., L-8896,
January 25, 1957.

This ruling, however, has no application here for it appears that before the filing of the petition concerning this claim a similar one had
already been filed long ago which had been the subject of negotiations between the union and the company which culminated in a
strike in 1952. Unfortunately, however, the strike fizzled out and the strikers were ordered to return to work with the understanding
that the claim for night salary differentials should be settled in court. It is perhaps for this reason that the court a quo granted this claim
in spite of the objection of the company to the contrary.

The remaining point to be determined refers to the claim for pay for Sundays and holidays for service performed by some claimants
who were watchmen or security guards. It is contended that these employees are not entitled to extra pay for work done during these
days because they are paid on a monthly basis and are given one day off which may take the place of the work they may perform
either on Sunday or any holiday.
We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444 expressly provides that no
person, firm or corporation may compel an employee or laborer to work during Sundays and legal holidays unless he is paid an
additional sum of 25% of his regular compensation. This proviso is mandatory, regardless of the nature of compensation. The only
exception is with regard to public utilities who perform some public service.

WHEREFORE, the decision of the industrial court is hereby modified as follows: the award with regard to extra work performed by
those employed in the outside or field sales force is set aside. The rest of the decision insofar as work performed on Sundays and
holidays covering watchmen and security guards, as well as the award for night salary differentials, is affirmed. No costs.
SECOND DIVISION

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

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

DECISION

CHICO-NAZARIO, J.:

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 13 th month pay and service incentive leave pay) by deleting the award of 13 th 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 respondents pleas for reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination.

Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of
13th month pay and service incentive leave pay against Autobus.

Petitioner, on the other hand, maintained that respondents employment was replete with offenses involving reckless imprudence,
gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants
of arrest pertaining to several incidents wherein respondent was involved.

Furthermore, petitioner avers that in the exercise of its management prerogative, respondents employment was terminated only
after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000.

On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor 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 decision on
28 September 2001, the decretal portion of which reads:

[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:
Section 3. Employers covered. The Decree shall apply to all employers except to:

xxx xxx xxx

e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the
time consumed in the performance thereof. xxx.

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.

WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13 th 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 respondents claim of service incentive leave pay.

RULING OF THE COURT

The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D),
Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five
days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE

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

(d) Field personnel and other employees whose performance is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing
work irrespective of the time consumed in the performance thereof; . . .

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been
delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by
Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as field
personnel. The phrase other employees whose performance is unsupervised by the employer must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be
determined with reasonable certainty.[8]
 The same is true with respect to the phrase those who are engaged on task or contract basis, purely commission basis. Said
phrase should be related with field personnel, applying the rule on ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow.[9] Hence, employees engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field
personnel.

Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave just because he was paid on
purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is a field personnel.

According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. This definition is further elaborated in 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 employees job requires that
he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel.

We are not persuaded. At this point, it is necessary to stress that the definition of a field personnel is not merely concerned with
the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised
by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of
business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order
to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time
and performance are constantly supervised by the employer.

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

It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places
who board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the mandatory once-a-
week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not
there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as
they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot,
there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and
arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under
constant supervision while in the performance of this work. He cannot be considered a field personnel.[11]

We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel
but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioners business. Accordingly,
respondent is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to.

The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period
under Article 291 of the Labor Code is applicable to respondents claim of service incentive leave pay.

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
three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee
shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint. [14]

It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits
granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits
or commute it to its monetary equivalent if not exhausted at the end of the year. [15] Furthermore, if the employee entitled to service
incentive leave does not use or commute the same, he is entitled upon his 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 alsocommutable 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]

Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive
leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of
said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits
and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of
his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or
separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three
(3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his
service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or
upon termination of the employees services, as the case may be.

The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in
the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingmans welfare
should be the primordial and paramount consideration. [18] The policy is to extend the applicability of the decree to a greater number of
employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum
aid and protection to labor.[19]

In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his
employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time
of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that
respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the
payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his
accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the
employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his
money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in
CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.
SO ORDERED.
EN BANC

G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,

vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ PHILIPPINES, INC. (formerly
FILIPRO, INC.), respondents.

Jose C. Espinas for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor in the
computation of benefits from 251 to 261 days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission
(NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees
for holiday pay in the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent
Benigno Vivar, Jr. as voluntary arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:

pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. (Rollo,
p. 31)

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales
representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of
the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. (Rollo, pp. 138-145)

Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their sales
personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee
benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to
November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field
personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should
be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave
pay due to the use of 251 days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as
appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent
arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the
Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P.
Blg. 130.

However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more
jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986.

Hence, this petition.

The petitioner union raises the following issues:

1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and whether or not
the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and sick leave pay.

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

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agritultural employees
who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty."

The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with
reasonable certainty."

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.

The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which
can be determined with reasonable certainty.

The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no
way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and
come back at 4:30 p.m, really spend the hours in between in actual field work.

We concur with the following disquisition by the respondent arbitrator:

The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m.
and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of
purely management prerogative of providing administrative control over such personnel. This does not in any
manner provide a reasonable level of determination on the actual field work of the employees which can be
reasonably ascertained. The theoretical analysis that salesmen and other similarly-situated workers regularly report
for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their field
work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow
their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The period
between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of
which are subject to their individual capacity and industry and which "cannot be determined with reasonable
certainty." This is the reason why effective supervision over field work of salesmen and medical representatives,
truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten
holidays with pay award. (Rollo, pp. 36-37)

Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the Implementing Rules which provides:

Rule IV Holidays with Pay

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

xxx xxx xxx

(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . .
(Emphasis supplied)

While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to
show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel
are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984
(Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor
Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable
certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly supervised by the employer.

The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and performance are
supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the office not later than 8:00 a.m. and
are back in the office not earlier than 4:00 p.m.

Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an employee through
the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984.

The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is
proof that their actual hours of work in the field can be determined with reasonable certainty.

The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection
performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns; and (6)
proper truck maintenance. (Rollo, p. 190).

The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their
actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which
are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of
the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:

The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works
individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within
the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra
compensation. He works away from his employer's place of business, is not subject to the personal supervision of
his employer, and his employer has no way of knowing the number of hours he works per day.

While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field
personnel from holiday pay benefits also applies.

The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the divisor should
be changed from 251 to 261 days to include the additional 10 holidays and the employees should reimburse the amounts overpaid by
Filipro due to the use of 251 days' divisor.

Arbitrator Vivar's rationale for his decision is as follows:

. . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or accelerates the
basis of conversion and computation by ten days. With the inclusion of ten holidays as paid days, the divisor is no
longer 251 but 261 or 262 if election day is counted. This is indeed an extremely difficult legal question of
interpretation which accounts for what is claimed as falling within the concept of "solutio indebti."

When the claim of the Union for payment of ten holidays was granted, there was a consequent need to abandon that
251 divisor. To maintain it would create an impossible situation where the employees would benefit with additional
ten days with pay but would simultaneously enjoy higher benefits by discarding the same ten days for purposes of
computing overtime and night time services and considering sick and vacation leave credits. Therefore,
reimbursement of such overpayment with the use of 251 as divisor arises concomitant with the award of ten holidays
with pay. (Rollo, p. 34)

The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's
salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank Employees Association
v. Ople (supra). In that case, We held:
 It is argued that even without the presumption found in the rules and in the policy instruction, the company practice
indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law.
The petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime
compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year.
If the employees are already paid for all non-working days, the divisor should be 365 and not 251.

In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:

monthly rate x 12 months

———————————

251 days

Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates that holiday
pay is not yet included in the employee's salary, otherwise the divisor should have been 261.

It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of
computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should
also be the same basis for computing the 10 unpaid holidays.

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

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in light of the
Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not paid. When Filipro
shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify its error, if ever there was one but did not do so.
It is now too late to allege payment by mistake.

Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This ruling was
not questioned by the petitioner union as obviously said decision was favorable to it. Technically, therefore, respondent Nestle should
have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not
an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek
modification or reversal of the judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court,
178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394
[1986]). Nevertheless, in order to fully settle the issues so that the execution of the Court's decision in this case may not be needlessly
delayed by another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle.

Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered Bank decision,
promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the Labor Code. Although the
Court does not entirely agree with Nestle, we find its claim meritorious.

In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the
IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the
then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from
holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's provisions on
holiday pay, the aforementioned implementing rule and policy instruction amended them by enlarging the scope of their exclusion.
The Chartered Bank case reiterated the above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption of validity
and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in
compliance with these presumably valid rule and policy instruction.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a
legislative or executive act subsequently declared invalid:

xxx xxx xxx

. . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must
have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed
their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done
while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted
as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the government organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a
determination of [unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, — with respect to particular relations, individual and
corporate, and particular conduct, private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308
US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002
[1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is
the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At
pp. 434-435)

The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting unfairness must be
avoided. It is now almost the end of 1991. To require various companies to reach back to 1975 now and nullify acts done in good faith
is unduly harsh. 1984 is a fairer reckoning period under the facts of this case.

Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of the
implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give holiday pay
benefits to its monthly paid employees, may have been moved to grant other concessions to its employees, especially in the collective
bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among the highest paid in the
industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday
benefits up to 1984 was not in any way attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case
nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case.

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

SO ORDERED.
FIRST DIVISION

[G.R. No. L-63122. February 20, 1984.]

UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner, v. UNIVERSITY OF PANGASINAN And NATIONAL

LABOR RELATIONS COMMISSION, Respondents.

Tanopo, Serafico, Juanitez & Callanta Law Office and Hermogenes S. Decano for Petitioner.

The Solicitor General for Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAWS; PRESIDENTIAL DECREES ON EMERGENCY COST OF LIVING
ALLOWANCE; REQUISITES FOR ENTITLEMENT TO ALLOWANCES PROVIDED THEREUNDER. — The various
Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634, 1678 and 1713, provide on "Allowances of Fulltime Employees . . ." that
"Employees shall be paid in full the required monthly allowance regardless of the number of their regular working days if they incur
no absences during the month. If they incur absences without pay, the amounts corresponding to the absences may be deducted from
the monthly allowance . . ." ; and on "Leave of Absence Without Pay", that "All covered employees shall be entitled to the allowance
provided herein when they are on leave of absence with pay."cralaw virtua1aw library

2. ID.; ID.; ID.; "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE’ CASE AT BAR. — It is beyond dispute that the
petitioner’s members are full-time employees receiving their monthly salaries irrespective of the number of working days or teaching
hours in a month. However, they find themselves in a most peculiar situation whereby they are forced to go on leave during semestral
breaks. These semestral breaks are in the nature of work interruptions beyond the employees’ control. The duration of the semestral
break varies from year to year dependent on a variety of circumstances affecting at times only the private respondent but at other times
all educational institutions in the country. As such, these breaks cannot be considered as absences within the meaning of the law for
which deductions may be made from monthly allowances. The "No work, no pay" principle does not apply in the instant case. The
petitioner’s members received their regular salaries during this period. It is clear from the aforequoted provision of law that it
contemplates a "no work" situation where the employees voluntarily absent themselves. Petitioners, in the case at bar, certainly do not,
ad voluntatem, absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from work. For this
they cannot be faulted nor can they be begrudged that which is due them under the law.

3. ID.; ID.; ID.; EMPLOYEES WHETHER PAID ON MONTHLY OR DAILY BASIS ENTITLED TO DAILY LIVING
ALLOWANCE WHEN PAID THEIR BASIC WAGE. — Respondent’s contention that the "factor receiving a salary alone should not
be the basis of receiving ECOLA", is likewise, without merit. Particular attention is brought to the Implementing Rules and
Regulations of Wage Order No. 1 to wit: "Sec. 5. Allowance for Unworked Days. — a) All covered employees whether paid on a
monthly or daily basis shall be entitled to their daily living allowance when they are paid their basic.." . .

4. ID.; ID.; ID.; PURPOSE OF THE LAW. — The legal principles of "No work, no pay; No pay, no ECOLA" must necessarily give
way to the purpose of the law to augment the income of employees to enable them to cope with the harsh living conditions brought
about by inflation; and to protect employees and their wages against the ravages brought by these conditions. Significantly, it is the
commitment of the State to protect labor and to provide means by which the difficulties faced by the working force may best be
alleviated.

5. ID.; ID.; ID.; PRESIDENTIAL DECREE 451; CONSTRUED. — Respondent overlooks the elemental principle of statutory
construction that the general statements in the whereas clauses cannot prevail over the specific or particular statements in the law itself
which define or limit the purposes of the legislation or proscribe certain acts. True, the whereas clauses of PD 451 provide for salary
and or wage increase and other benefits, however, the same do not delineate the source of such funds and it is only in Section 3 which
provides for the limitations wherein the intention of the framers of the law is clearly outlined. The law is clear. The sixty (60%)
percent incremental proceeds from the tuition increase are to be devoted entirely to wage or salary increases which means increases in
basic salary. The law cannot be construed to include allowances which are benefits over and above the basic salaries of the employees.

6. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF NATIONAL LABOR RELATIONS COMMISSION ARE BINDING
WHEN FULLY SUBSTANTIATED BY EVIDENCE. — As evidenced by the payrolls submitted by them during the period
September 16 to September 30, 1981, the faculty members have been paid for the extra loads. We agree with the respondents that this
issue involves a question of fact properly within the competence of the respondent NLRC to pass upon. The findings of fact of the
respondent Commission are binding on this Court there being no indication of their being unsubstantiated by evidence.

DECISION

GUTIERREZ, JR., J.:

This is a petition for review on certiorari pursuant to Rule 65 of the Rules of Court to annul and to set aside the decision of respondent
National Labor Relations Commission (NLRC) dated October 25, 1982, dismissing the appeal of petitioner in NLRC Case No. RBI-
47-82, entitled "University of Pangasinan Faculty Union, complainant, versus University of Pangasinan, Respondent." chanrobles law
library : red

Petitioner is a labor union composed of faculty members of the respondent University of Pangasinan, an educational institution duly
organized and existing by virtue of the laws of the Philippines.

On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a complaint against the private respondent
with the Arbitration Branch of the NLRC, Dagupan District Office, Dagupan City. The complaint seeks: (a) the payment of
Emergency Cost of Living Allowances (ECOLA) for November 7 to December 5, 1981, a semestral break; (b) salary increases from
the sixty (60%) percent of the incremental proceeds of increased tuition fees; and (c) payment of salaries for suspended extra loads.

The petitioner’s members are full-time professors, instructors, and teachers of respondent University. The teachers in the college level
teach for a normal duration of ten (10) months a school year, divided into two (2) semesters of five (5) months each, excluding the two
(2) months summer vacation. These teachers are paid their salaries on a regular monthly basis.

In November and December, 1981, the petitioner’s members were fully paid their regular monthly salaries. However, from November
7 to December 5, during the semestral break, they were not paid their ECOLA. The private respondent claims that the teachers are not
entitled thereto because the semestral break is not an integral part of the school year and there being no actual services rendered by the
teachers during said period, the principle of "No work, no pay" applies.

During the same school year (1981-1982), the private respondent was authorized by the Ministry of Education and Culture to collect,
as it did collect, from its students a fifteen (15%) percent increase of tuition fees. Petitioner’s members demanded a salary increase
effective the first semester of said schoolyear to be taken from the sixty (60%) percent incremental proceeds of the increased tuition
fees. Private respondent refused, compelling the petitioner to include said demand in the complaint filed in the case at bar. While the
complaint was pending in the arbitration branch, the private respondent granted an across-the-board salary increase of 5.86%.
Nonetheless, the petitioner is still pursuing full distribution of the 60% of the incremental proceeds as mandated by the Presidential
Decree No. 451.

Aside from their regular loads, some of petitioner’s members were given extra loads to handle during the same 1981-1982 schoolyear.
Some of them had extra loads to teach on September 21, 1981, but they were unable to teach as classes in all levels throughout the
country were suspended, although said days was proclaimed by the President of the Philippines as a working holiday. Those with extra
loads to teach on said day claimed they were not paid their salaries for those loads, but the private respondent claims otherwise.

The issue to be resolved in the case at bar are the following:chanrob1es virtual 1aw library

"WHETHER OR NOT PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING THE SEMESTRAL BREAK FROM
NOVEMBER 7 TO DECEMBER 5, 1981 OF THE 1981-82 SCHOOL YEAR.

II
"WHETHER OR NOT 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION FEES SHALL BE DEVOTED
EXCLUSIVELY TO SALARY INCREASE,

III

"WHETHER OR NOT ALLEGED PAYMENT OF SALARIES FOR EXTRA LOADS ON SEPTEMBER 21, 1981 WAS PROVEN
BY SUBSTANTIAL EVIDENCE."cralaw virtua1aw library

Anent the first issue, the various Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634, 1678 and 1713, provide on "Allowances
of Fulltime Employees . . ." that "Employees shall be paid in full the required monthly allowance regardless of the number of their
regular working days if they incur no absences during the month. If they incur absences without pay, the amounts corresponding to the
absences may be deducted from the monthly allowance . . ." ; and on "Leave of Absence Without Pay", that "All covered employees
shall be entitled to the allowance provided herein when they are on leave of absence with pay."cralaw virtua1aw library

It is beyond dispute that the petitioner’s members are full-time employees receiving their monthly salaries irrespective of the number
of working days or teaching hours in a month. However, they find themselves in a most peculiar situation whereby they are forced to
go on leave during semestral breaks. These semestral breaks are in the nature of work interruptions beyond the employees’ control.
The duration of the semestral break varies from year to year dependent on a variety of circumstances affecting at times only the
private respondent but at other times all educational institutions in the country. As such, these breaks cannot be considered as absences
within the meaning of the law for which deductions may be made from monthly allowances. The "No work, no pay" principle does not
apply in the instant case. The petitioner’s members received their regular salaries during this period. It is clear from the aforequoted
provision of law that it contemplates a "no work" situation where the employees voluntarily absent themselves. Petitioners, in the case
at bar, certainly do not, ad voluntatem, absent themselves during semestral breaks. Rather, they are constrained to take mandatory
leave from work. For this they cannot be faulted nor can they be begrudged that which is due them under the law. To a certain extent,
the private respondent can specify dates when no classes would be held. Surely, it was not the intention of the framers of the law to
allow employers to withhold employee benefits by the simple expedient of unilaterally imposing "no work" days and consequently
avoiding compliance with the mandate of the law for those days.chanrobles.com.ph : virtual law library

Respondent’s contention that "the fact of receiving a salary alone should not be the basis of receiving ECOLA", is, likewise, without
merit. Particular attention is brought to the Implementing Rules and Regulations of Wage Order No. 1 to wit.

SECTION 5. Allowance for Unworked Days. —

"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their daily living allowance when they are paid
their basic wage."cralaw virtua1aw library

x x x

This provision, at once refutes the above contention. It is evident that the intention of the law is to grant ECOLA upon the payment of
basic wages. Hence, we have the principle of "No pay, no ECOLA" the converse of which finds application in the case at bar.
Petitioners cannot be considered to be on leave without pay so as not to be entitled to ECOLA, for, as earlier stated, the petitioners
were paid their wages in full for the months of November and December of 1981, notwithstanding the intervening semestral break.
This, in itself, is a tacit recognition of the rather unusual state of affairs in which teachers find themselves. Although said to be on
forced leave, professors and teachers are, nevertheless, burdened with the task of working during a period of time supposedly available
for rest and private matters. There are papers to correct, students to evaluate, deadlines to meet, and periods within which to submit
grading reports. Although they may be considered by the respondent to be on leave, the semestral break could not be used effectively
for the teacher’s own purposes for the nature of a teacher’s job imposes upon him further duties which must be done during the said
period of time. Learning is a never ending process. Teachers and professors must keep abreast of developments all the time. Teachers
cannot also wait for the opening of the next semester to begin their work. Arduous preparation is necessary for the delicate task of
educating our children. Teaching involves not only an application of skill and an imparting of knowledge, but a responsibility which
entails self dedication and sacrifice. The task of teaching ends not with the perceptible efforts of the petitioner’s members but goes
beyond the classroom: a continuum where only the visible labor is relieved by academic intermissions. It would be most unfair for the
private respondent to consider these teachers as employees on leave without pay to suit its purposes and, yet, in the meantime,
continue availing of their services as they prepare for the next semester or complete all of the last semester’s requirements.
Furthermore, we may also by analogy apply the principle enunciated in the Omnibus Rules Implementing the Labor Code to
wit:chanrob1es virtual 1aw library
Sec. 4. Principles in Determining Hours Worked. — The following general principles shall govern in determining whether the time
spent by an employee is considered hours worked for purposes of this Rule:chanrob1es virtual 1aw library

x x x

"(d) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered time
either if the imminence of the resumption of work requires the employee’s presence at the place of work or if the interval is too brief
to be utilized effectively and gainfully in the employee’s own interest." (Emphasis supplied).

The petitioner’s members in the case at bar, are exactly in such a situation. The semestral break scheduled is an interruption beyond
petitioner’s control and it cannot be used "effectively nor gainfully in the employee’s interest’. Thus, the semestral break may also be
considered as "hours worked." For this, the teachers are paid regular salaries and, for this, they should be entitled to ECOLA. Not only
do the teachers continue to work during this short recess but much less do they cease to live for which the cost of living allowance is
intended. The legal principles of "No work, no pay; No pay, no ECOLA" must necessarily give way to the purpose of the law to
augment the income of employees to enable them to cope with the harsh living conditions brought about by inflation; and to protect
employees and their wages against the ravages brought by these conditions. Significantly, it is the commitment of the State to protect
labor and to provide means by which the difficulties faced by the working force may best be alleviated. To submit to the respondents’
interpretation of the no work, no pay policy is to defeat this noble purpose. The Constitution and the law mandate
otherwise.chanrobles.com:cralaw:red

With regard to the second issue, we are called upon to interpret and apply Section 3 of Presidential Decree 451 to wit:chanrob1es
virtual 1aw library

SEC. 3. Limitations. — The increase in tuition or other school fees or other charges as well as the new fees or charges authorized
under the next preceding section shall be subject to the following conditions:jgc:chanrobles.com.ph

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

x x x

This Court had the occasion to rule squarely on this point in the very recent case entitled, University of the East v. University of the
East Faculty Association, 117 SCRA 554. We held that:jgc:chanrobles.com.ph

"In effect, the problem posed before Us is whether or not the reference in Section 3(a) to ‘increase in salaries or wages of the faculty
and all other employees of the schools concerned’ as the first purpose to which the incremental proceeds from authorized increases to
tuition fees may be devoted, may be construed to include allowances and benefits. In the negative, which is the position of
respondents, it would follow that such allowances must be taken in resources of the school not derived from tuition fees.

"Without delving into the factual issue of whether or not there could be any such other resources, We note that among the items of
second purpose stated in provision in question is return in investment. And the law provides only for a maximum, not a minimum. In
other words, the schools may get a return to investment of not more than 12%, but if circumstances warrant, there is no minimum
fixed by law which they should get.

"On this predicate, We are of the considered view that, if the school happen to have no other resources to grant allowances and
benefits, either mandated by law or secured by collective bargaining, such allowances and benefits should be charged against the
return to investments referred to in the second purpose stated in Section 3(a) of P.D. 451."cralaw virtua1aw library

Private respondent argues that the above interpretation "disregarded the intention and spirit of the law" which intention is clear from
the "whereas" clauses as follows:jgc:chanrobles.com.ph

"It is imperative that private educational institutions upgrade classroom instruction . . . provide salary and or wage increases and other
benefits . . ."cralaw virtua1aw library

Respondent further contends that PD 451 was issued to alleviate the sad plight of private schools, their personnel and all those directly
or indirectly on school income as the decree was aimed —

". . . to upgrade classroom instruction by improving their facilities and bring competent teachers in all levels of education, provide
salary and or wage increases and other benefits to their teaching, administrative, and other personnel to keep up with the increasing
cost of living." (Emphasis supplied)

Respondent overlooks the elemental principle of statutory construction that the general statements in the whereas clauses cannot
prevail over the specific or particular statements in the law itself which define or limit the purposes of the legislation or proscribe
certain acts. True, the whereas clauses of PD 451 provide for salary and or wage increase and other benefits, however, the same do not
delineate the source of such funds and it is only in Section 3 which provides for the limitations wherein the intention of the framers of
the law is clearly outlined. The law is clear. The sixty (60%) percent incremental proceeds from the tuition increase are to be devoted
entirely to wage or salary increases which means increases in basic salary. The law cannot be construed to include allowances which
are benefits over and above the basic salaries of the employees. To charge such benefits to the 60% incremental proceeds would be to
reduce the increase in basic salary provided by law, an increase intended also to help the teachers and other workers tide themselves
and their families over these difficult economic times.chanrobles virtual lawlibrary

This Court is not guilty of usurpation of legislative functions as claimed by the respondents. We expressed the opinion in the
University of the East case that benefits mandated by law and collective bargaining may be charged to the 12% return on investments
within the 40% incremental proceeds of tuition increase. As admitted by respondent, we merely made this statement as a suggestion in
answer to the respondent’s query as to where then, under the law, can such benefits be charged. We were merely interpreting the
meaning of the law within the confines of its provisions. The law provides that 60% should go to wage increases and 40% to
institutional developments, student assistance, extension services, and return on investments (ROI). Under the law, the last item ROI
has flexibility sufficient to accommodate other purposes of the law and the needs of the university. ROI is not set aside for any one
purpose of the university such as profits or returns on investments. The amount may be used to comply with other duties and
obligations imposed by law which the university exercising managerial prerogatives finds cannot under present circumstances, be
funded by other revenue sources. It may be applied to any other collateral purpose of the university or invested elsewhere. Hence, the
framers of the law intended this portion of the increases in tuition fees to be a general fund to cover up for the university’s
miscellaneous expenses and, precisely, for this reason, it was not so delimited. Besides, ROI is a return or profit over and above the
operating expenditures of the university, and still, over and above the profits it may have had prior to the tuition increase. The earning
capacities of private educational institutions are not dependent on the increases in tuition fees allowed by P.D. 451. Accommodation
of the allowances required by law require wise and prudent management of all the university resources together with the incremental
proceeds of tuition increases. Cognizance should be taken of the fact that the private respondent had, before PD 451, managed to grant
all allowances required by law. It cannot now claim that it could not afford the same, considering that additional funds are even
granted them by the law in question. We find no compelling reason, therefore, to deviate from our previous ruling in the University of
the East case even as we take the second hard look at the decision requested by the private Respondent. This case was decided in 1982
when PDs 1614, 1634, 1678, and 1713 which are also the various Presidential Decrees on ECOLA were already in force. PD 451 was
interpreted in the light of these subsequent legislations which bear upon but do not modify nor amend, the same. We need not go
beyond the ruling in the University of the East case.

Coming now to the third issue, the respondents are of the considered view that as evidenced by the payrolls submitted by them during
the period September 16 to September 30, 1981, the faculty members have been paid for the extra loads. We agree with the
respondents that this issue involves a question of fact properly within the competence of the respondent NLRC to pass upon. The
findings of fact of the respondent Commission are binding on this Court there being no indication of their being unsubstantiated by
evidence. We find no grave abuse in the findings of respondent NLRC on this matter to warrant reversal. Assuming arguendo,
however, that the petitioners have not been paid for these extra loads, they are not entitled to payment following the principles of "No
work, no pay." This time, the rule applies. Involved herein is a matter different from the payment of ECOLA under the first issue. We
are now concerned with extra, not regular loads for which the petitioners are paid regular salaries every month regardless of the
number of working days or hours in such a month. Extra loads should be paid for only when actually performed by the employee.
Compensation is based, therefore, on actual work done and on the number of hours and days spent over and beyond their regular hours
of duty. Since there was no work on September 21, 1981, it would now be unfair to grant petitioner’s demand for extra wages on that
day.chanrobles law library : red

Finally, disposing of the respondent’s charge of petitioner’s lack of legal capacity to sue, suffice it to say that this question can no
longer be raised initially on appeal or certiorari. It is quite belated for the private respondent to question the personality of the
petitioner after it had dealt with it as a party in the proceedings below. Furthermore, it was not disputed that the petitioner is a duly
registered labor organization and as such has the legal capacity to sue and be sued. Registration grants it the rights of a legitimate labor
organization and recognition by the respondent University is not necessary for it to institute this action in behalf of its members to
protect their interests and obtain relief from grievances. The issues raised by the petitioner do not involve pure money claims but are
more intricately intertwined with conditions of employment.

WHEREFORE the petition for certiorari is hereby GRANTED. The private respondent is ordered to pay its regular fulltime
teachers/employees emergency cost of living allowances for the semestral break from November 7 to December 5, 1981 and the
undistributed balance of the sixty (60%) percent incremental proceeds from tuition increases for the same schoolyear as outlined
above. The respondent Commission is sustained insofar as it DENIED the payment of salaries for the suspended extra loads on
September 21, 1981.

SO ORDERED.
EN BANC

G.R. No. L-15422 November 30, 1962

NATIONAL DEVELOPMENT COMPANY, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS UNION, respondents.

Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for petitioner.
Eulogio R. Lerum for respondent National Textile Workers Union.
Mariano B. Tuason for respondent Court of Industrial Relations.

REGALA, J.:

This is a case for review from the Court of Industrial Relations. The pertinent facts are the following:

At the National Development Co., a government-owned and controlled corporation, there were four shifts of work. One shift was from
8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m.
In each shift, there was a one-hour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m.
and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.

The records disclose that although there was a one-hour mealtime, petitioner nevertheless credited the workers with eight hours of
work for each shift and paid them for the same number of hours. However, since 1953, whenever workers in one shift were required to
continue working until the next shift, petitioner instead of crediting them with eight hours of overtime work, has been paying them for
six hours only, petitioner that the two hours corresponding to the mealtime periods should not be included in computing
compensation. On the other hand, respondent National Textile Workers Union whose members are employed at the NDC, maintained
the opposite view and asked the Court of Industrial Relations to order the payment of additional overtime pay corresponding to the
mealtime periods.

After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19, 1959, holding that mealtime should be counted in
the determination of overtime work and accordingly ordered petitioner to pay P101,407.96 by way of overtime compensation.
Petitioner filed a motion for reconsideration but the same was dismissed by the CIR en banc on the ground that petitioner failed to
furnish the union a copy of its motion.

Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction over claims for overtime compensation
and, secondary that the CIR did not make "a correct appraisal of the facts, in the light of the evidence" in holding that mealtime
periods should be included in overtime work because workers could not leave their places of work and rest completely during those
hours.

In support of its contention that the CIR lost its jurisdiction over claims for overtime pay upon the enactment of the Industrial Peace
Act (Republic Act No. 875), petitioner cites a number of decisions of this Court. On May 23, 1960, however, We ruled in Price
Stabilization Corp. v. Court of Industrial Relations, et al., G.R. No. L-13206, that

Analyzing these cases, the underlying principle, it will be noted in all of them, though not stated in express terms, is that
where the employer-employee relationship is still existing or is sought to be reestablished because of its wrongful severance,
(as where the employee seeks reinstatement) the Court of Industrial Relations has jurisdiction over all claims arising out of,
or in connection with the employment, such as those related to the Minimum Wage Law and the Eight-Hour Labor Law.
After the termination of their relationship and no reinstatement is sought, such claims become mere money claims, and come
within the jurisdiction of the regular courts,

We are aware that in 2 cases, some statements implying a different view have been made, but we now hold and declare the
principle set forth in the next preceding paragraph as the one governing all cases of this nature.

This has been the constant doctrine of this Court since May 23, 1960. 1

A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v. Manila Railroad Co., et al., G.R. No. L-17905,
May 25, 1962, in which We held that, for such jurisdiction to come into play, the following requisites must be complied with: (a) there
must exist between the parties an employer-employee relationship or the claimant must seek his reinstatement; and (b) the controversy
must relate to a case certified by the President to the CIR as one involving national interest, or must arise either under the Eight-Hour
Labor Law, or under the Minimum Wage Law. In default of any of these circumstances, the claim becomes a mere money claim that
comes under the jurisdiction of the regular courts. Here, petitioner does not deny the existence of an employer-employee relationship
between it and the members of the union. Neither is there any question that the claim is based on the Eight-Hour Labor Law (Com.
Act No. 444, as amended). We therefore rule in favor of the jurisdiction of the CIR over the present claim.

The other issue raised in the appeal is whether or not, on the basis of the evidence, the mealtime breaks should be considered working
time under the following provision of the law;

The legal working day for any person employed by another shall be of not more than eight hours daily. When the work is not
continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall
not be counted. (Sec. 1, Com. Act No. 444, as amended. Emphasis ours.)

It will be noted that, under the law, the idle time that an employee may spend for resting and during which he may leave the spot or
place of work though not the premises2 of his employer, is not counted as working time only where the work is broken or is not
continuous.

The determination as to whether work is continuous or not is mainly one of fact which We shall not review as long as the same is
supported by evidence. (Sec. 15, Com. Act No. 103, as amended, Philippine Newspaper Guild v. Evening News, Inc., 86 Phil. 303).

That is why We brushed aside petitioner's contention in one case that workers who worked under a 6 a.m. to 6 p.m. schedule had
enough "free time" and therefore should not be credited with four hours of overtime and held that the finding of the CIR "that
claimants herein rendered services to the Company from 6:00 a.m. to 6:00 p.m. including Sundays and holidays, . . . implies either that
they were not allowed to leave the spot of their working place, or that they could not rest completely" (Luzon Stevedoring Co., Inc. v.
Luzon Marine Department Union, et al., G.R. No. L-9265, April 29, 1957).

Indeed, it has been said that no general rule can be laid down is to what constitutes compensable work, rather the question is one of
fact depending upon particular circumstances, to be determined by the controverted in cases. (31 Am. Jurisdiction Sec. 626 pp. 878.)

In this case, the CIR's finding that work in the petitioner company was continuous and did not permit employees and laborers to rest
completely is not without basis in evidence and following our earlier rulings, shall not disturb the same. Thus, the CIR found:

While it may be correct to say that it is well-high impossible for an employee to work while he is eating, yet under Section 1
of Com. Act No. 444 such a time for eating can be segregated or deducted from his work, if the same is continuous and the
employee can leave his working place rest completely. The time cards show that the work was continuous and without
interruption. There is also the evidence adduced by the petitioner that the pertinent employees can freely leave their working
place nor rest completely. There is furthermore the aspect that during the period covered the computation the work was on a
24-hour basis and previously stated divided into shifts.

From these facts, the CIR correctly concluded that work in petitioner company was continuous and therefore the mealtime breaks
should be counted as working time for purposes of overtime compensation.

Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m. to 2 p.m. Why cannot it credit them
sixteen hours should they work in two shifts?

There is another reason why this appeal should dismissed and that is that there is no decision by the CIR en bancfrom which petitioner
can appeal to this Court. As already indicated above, the records show that petitioner's motion for reconsideration of the order of
March 19, 1959 was dismissed by the CIR en banc because of petitioner's failure to serve a copy of the same on the union.

Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103, states:

The movant shall file the motion (for reconsideration), in six copies within five (5) days from the date on which he receives
notice of the order or decision, object of the motion for reconsideration, the same to be verified under oath with respect to the
correctness of the allegations of fact, and serving a copy thereof personally or by registered mail, on the adverse party. The
latter may file an answer, in six (6) copies, duly verified under oath. (Emphasis ours.)

In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24, 1955), We sustained the dismissal of a motion for
reconsideration filed outside of the period provided in the rules of the CIR. A motion for reconsideration, a copy of which has not
been served on the adverse party as required by the rules, stands on the same footing. For "in the very nature of things, a motion for
reconsideration against a ruling or decision by one Judge is in effect an appeal to the Court of Industrial Relations, en banc," the
purpose being "to substitute the decision or order of a collegiate court for the ruling or decision of any judge." The provision in
Commonwealth Act No. 103 authorizing the presentation of a motion for reconsideration of a decision or order of the judge to the
CIR, en banc and not direct appeal therefore to this Court, is also in accord with the principal of exhaustion of administrative remedies
before resort can be made to this Court. (Broce, et al., v. The Court of Industrial Relations, et al., G.R. No. L-12367, October 29,
1959).
Petitioner's motion for reconsideration having been dismissed for its failure to serve a copy of the same on the union, there is no
decision of the CIR en banc that petitioner can bring to this Court for review.

WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby affirmed and the appeal is dismissed,
without pronouncement as to costs.

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal concur.
Bengzon, C.J., took no part.
SECOND DIVISION

G.R. No. L-30452 September 30, 1982

MERCURY DRUG CO., INC., petitioner,

vs.
NARDO DAYAO, ET AL., respondents,

Caparas & Ilagan for petitioner.

Gerardo P. Cabo Chan and Elias Banzali for respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of the Court of Industrial Relations dated March 30, 1968 in Case No. 1926-V
and the Resolution of the Court en banc dated July 6, 1968 denying two separate motions for reconsideration filed by petitioners and
respondents.

The factual background of Case No. 1926-V is summarized by the respondent Court of Industrial Relations as follows:

This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo
Dayao and 70 others against Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager, and
Mercury Drug Co., Inc., Employees Association praying, with respect to respondent corporation and its president
and general manager: 1) payment of their unpaid back wages for work done on Sundays and legal holidays plus
25c/c additional compensation from date of their employment up to June 30, 1962; 2) payment of extra
compensation on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former
positions with back salaries; and, as against the respondent union, for its disestablishment and the refund of all
monies it had collected from petitioners.

In separate motions, respondent management and respondent union move to dismiss, the first on the ground that:

I. The petition states no cause of action.

II. This Court has no jurisdiction over the subject of the claims of petitioners Januario Referente and Oscar Echalar.

III. There is another action pending between the same parties, namely, Mercury Drug Co., Inc., and/or Mariano Que
and Nardo Dayao.

while on the other hand, the second alleges that this Court has no jurisdiction over the acts complained of against the respondent
union.

For reasons stated in the Order dated March 24, 1965, two Court resolved the motions to dismiss, as follows:

1. Ground No. 1 of management's motion to dismiss was denied for lack of merit.

2. Its second ground was found meritorious and, accordingly Januario Referente and Oscar Echalar were dropped as
party petitioners in this case.

3. The third ground was denied, holding that there still exists the employer- employee relationship between Nardo
Dayao and the management.

4. With respect to the fourth ground, the Court held that on the basis of section 7-A of C.A. No. 444, as amended by
R.A. No. 1993, 'it can be safely said that,

counting backward the three (3) year prescriptive period from the date of the filing of the instant petition - March 20,
1964 - all-of petitioners' claims have not yet prescribed.'
 5. In so far as respondent union's motion is concerned, the Court held that 'petitioners' cause of action against the
respondent Association should be dismissed without prejudice to the refiling of the same as an unfair labor practice
case.'

Only the respondent management moved to reconsider the Order of March 24, 1965 but the same was denied by the
Court en banc in a resolution dated August 26, 1965. Respondent submitted an answer to the amended petition
which was subsequently amended on January 6, 1966, containing some admissions and some denials of the material
averments of the amended petition. By way of affirmative and special defenses,, respondents alleged that petitioners
have no cause of action against Mariano Que because their employer respondent Mercury Drug Company, Inc., an
existing corporation which has a separate and distinct personality from its incorporators stockholders and/or officer,
that the company being a service enterprise is excluded from the coverage of the Eight Hour Labor Law, as
amended; that no court has the power to set wages, rates of pay, hours of employment, or other conditions of
employment to the extent of disregarding an agreement thereon between the respondent company and the
petitioners, and of fixing night differential wages; that the petitioners were fully paid for services rendered under the
terms and conditions of the individual contracts of employment; that the petition having been verified by only three
of the petitioners without showing that the others authorized the inclusion of their names as petitioners does not
confer jurisdiction to this Court; that there is no employer-employee relationship between management and
petitioner Nardo Dayao and that his claim has been released and/or barred by another action and that petitioners'
claims accuring before March 20, 1961 have prescribed." (Annex "P", pp. 110-112, rollo).

After hearing on the merits, the respondent court rendered its decision. The dispositive portion of the March 30, 1968 decision reads:

IN VIEW OF THE FOREGOING, the Court hereby resolves that:

1. The claim of the petitioners for payment of back wages correspoding to the first four hours work rendered on
every other Sunday and first four hours on legal holidays should be denied for lack of merit.

2. Respondent Mercury Drug Company, Inc.. is hereby ordered to pay the sixty- nine (69) petitioners:

(a) An additional sum equivalent to 25% of their respective basic or regular salaries for services
rendered on Sundays and legal holidays during the period from March 20. 1961 up to June 30,
1962; and

(b) Another additional sum or premium equivalent to 25% of their respective basic or regular
salaries for nighttime services rendered from March 20, 1961 up to June 30, 1962.

3. Petitioners' petition to convert them to monthly employees should be, as it is hereby, denied for lack of merit.

4. Respondent Mariano Que, being an officer and acted only as an agent in behalf of the respondent corporation,
should be absolved from the money claims of herein petitioners whose employer, according to the pleadings and
evidence, is the Mercury Drug Company,, Inc.

To expedite the computation of the money award, the Chief Court Examiner or his authorized representative is
hereby directed to proceed to the office of the respondent corporation at Bambang Street, Sta. Cruz, Manila, the
latter to make available to said employee its records, like time records, payrolls and other pertinent papers, and
compute the money claims awarded in this decision and, upon the completion thereof, to submit his report as soon as
possible for further disposition of the Court.

Not satisfied with the decision, the respondents filed a motion for its reconsideration. The motion for reconsideration, was however,
denied by the Court en banc in its Resolution dated July 6, 1968.

Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition:

RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND
"B", NULL AND VOID AS BEING CONTRARY TO PUBLIC POLICY AND IN SUSTAINING,
ACCORDINGLY, PRIVATE RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL HOLIDAY
PREMIUMS BECAUSE SUCH DECLARATION AND AWARD ARE NOT SUPPORTED BY SUBSTANTIAL
EVIDENCE, THUS INFRINGING UPON THE CARDINAL RIGHTS OF THE PETITIONER; AND ALSO
BECAUSE THE VALIDITY OF SAID t CONTRACTS OF EMPLOYMENT HAS NOT BEEN RAISED.
 II

RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS' CLAIMS FOR NIGHTTIME WORK
PREMIUMS NOT ONLY BECAUSE OF THE DECLARED POLICY ON COLLECTIVE BARGAINING
FREEDOM EX. PRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN SECTION 7 OF
SAID STATUTE, BUT ALSO BECAUSE OF THE WAIVER OF SAID CLAIMS AND THE TOTAL ABSENCE
OF EVIDENCE THEREON.

III

RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE PRIVATE RESPONDENTS WHO
NEITHER GAVE EVIDENCE NOR EVEN APPEARED TO SHOW THEIR INTEREST.

Three issues are discussed by the petitioner in its first assignment of error. The first issue refers to its allegation that the respondent
Court erred in declaring the contracts of employment null and void and contrary to law. This allegation is premised upon the following
finding of the respondent court:

But the Court finds merit in the claim for the payment of additional compensation for work done on Sundays and
holidays. While an employer may compel his employees to perform service on such days, the law nevertheless
imposes upon him the obligation to pay his employees at least 25% additional of their basic or regular salaries.

No person, firm or corporation, business establishment or place of center of labor shall compel an
employee or laborer to work during Sundays and legal holidays unless he is paid an additional
sum of at least twenty-five per centum of his regular remuneration: PROVIDED, HOWEVER,
That this prohibition shall not apply to public utilities performing some public service such as
supplying gas, electricity, power, water, or providing means of transportation or communication.
(Section 4, C. A. No. 444) (Emphasis supplied)

Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as
amended known as the Eight Hour Labor Law, for they do not fall within the category or class of employees or
laborers excluded from its provisions. (Section 2, Ibid.)

The Court is not impressed by the argument that under the contracts of employment the petitioners are not entitled to
such claim for the reason that the same are contrary to law. Payment of extra or additional pay for services rendered
during Sundays and legal holidays is mandated by law. Even assuming that the petitioners had agreed to work on
Sundays and legal holidays without any further consideration than their monthly salaries, they are not barred
nevertheless from claiming what is due them, because such agreement is contrary to public policy and is declared
nun and void by law.

Any agreement or contract between employer and the laborer or employee contrary to the provisions of this Act
shall be null and void ab initio.

Under the cited statutory provision, the petitioners are justified to receive additional amount equivalent to 25% of
their respective basic or regular salaries for work done on Sundays and legal holidays for the period from March 20,
1961 to June 30, 1962. (Decision, pp. 119-120, rollo)

From a perusal of the foregoing statements of the respondent court, it can be seen readily that the petitioner-company based its
arguments in its first assignment of error on the wrong premise. The contracts of employment signed by the private respondents are on
a standard form, an example of which is that of private respondent Nardo Dayao quoted hereunder:

Mercury Drug Co., Inc. 1580 Bambang, Manila

October 30, 1959

Mr. Nardo Dayao

1015 Sta. Catalina
Rizal Ave., Exten.

Dear Mr. Dayao:

 You are hereby appointed as Checker, in the Checking Department of MERCURY DRUG CO., INC., effective July
1, 1959 and you shall receive an annual compensation the amount of Two Thousand four hundred pesos only
(P2,400.00), that includes the additional compensation for work on Sundays and legal holidays.

Your firm being a Service Enterprise, you will be required to perform work every day in a year as follows:

8 Hours work on regular days and-all special Holidays that may be declared but with the 25% additional
compensation;

4 Hours work on every other Sundays of the month;

For any work performed in excess of the hours as above mentioned, you shall be paid 25 % additional compensation per hour.

This appointment may be terminated without notice for cause and without cause upon thirty days written notice.

This supersedes your appointment of July 1, 1959.

Very truly yours,

MERCURY DRUG CO., INC.

(Sgd.) MARIANO QUE General Manager

ACCEPTED WITH FULL CONFORMITY:

(Sgd.) NARDO DAYAO

(EXH. "A" and "l ")
(Decision, pp. 114-115, rollo)

These contracts were not declared by the respondent court null and void in their entirety. The respondent court, on the basis of the
conflicting evidence presented by the parties, in effect: 1) rejected the theory of the petitioner company that the 25% additional
compensation claimed by the private respondents for the four-hour work they rendered during Sundays and legal holidays provided in
their contracts of employment were covered by the private respondents' respective monthly salaries; 2) gave credence to private
respondents', (Nardo Dayao, Ernesto Talampas and Josias Federico) testimonies that the 25% additional compensation was not
included in the private respondents' respective monthly salaries and 3) ruled that any agreement in a contract of employment which
would exclude the 25% additional compensation for work done during Sundays and holidays is null and void as mandated by law.

On the second issue, the petitioner-company reiterated its stand that under the,- respective contracts of employment of the private
respondents, the subject 25 % additional compensation had already been included in the latter's respective monthly salaries. This
contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion and pertinent exhibits. Thus:

Exhibit A shows that for the period of October 30, 1960, the annual compensation of private respondent Nardo
Dayao, including the additional compensation for the work he renders during the first four (4) hours on every other
Sunday and on the eight (8) Legal Holidays at the time was P2,400.00 or P200.00 per month. These amounts did not
represent basic salary only, but they represented the basic daily wage of Nardo Dayao considered to be in the
amount of P7.36 x 305 ordinary working days at the time or in the total amount of P2,144.80. So plus the amount of
P156.40 which is the equivalent of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25% thereof
or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal Holidays of 8 hours each. ...

xxx xxx xxx

That the required minimum 25% Sunday and Legal Holiday additional compensation was paid to and received by
the employees for the work they rendered on every other Sunday and on the eight Legal Holidays for the period
October, 1959 to June 30, 1962 is further corroborated by Exhibits 5, 6, 8, 9 and 9-A and the testimony of Mr.
Jacinto Concepcion thereon. (Brief for the Petitioner, pp. 24, 27).

The aforesaid computations were not given credence by the respondent court. In fact the same computations were not even mentioned
in the court's decision which shows that the court found such computations incredible. The computations, supposedly patterned after
the WAS Interpretative Bulletin No. 2 of the Department Labor demonstrated in Exhibits "6", "7", "8", "9", and "9-A", miserably
failed to show the exact and correct annual salary as stated in the respective contracts of employment of the respondent employees.
The figures arrived at in each case did not tally with the annual salaries on to the employees' contracts of employment, the difference
varying from P1.20 to as much as P14.40 always against the interest of the employees. The petitioner's defense consists of
mathematical computations made after the filing of the case in order to explain a clear attempt to make its employees work without the
extra compensation provided by law on Sundays and legal holidays.

In not giving weight to the evidence of the petitioner company, the respondent court sustained the private respondents' evidence to the
effect that their 25% additional compensation for work done on Sundays and Legal Holidays were not included in their respective
monthly salaries. The private respondents presented evidence through the testimonies of Nardo Dayao, Ernesto Talampas, and Josias
Federico who are themselves among the employees who filed the case for unfair labor practice in the respondent court and are private
respondents herein. The petitioner- company's contention that the respondent court's conclusion on the issue of the 25% additional
compensation for work done on Sundays and legal holidays during the first four hours that the private respondents had to work under
their respective contracts of employment was not supported by substantial evidence is, therefore, unfounded. Much less do We find
any grave abuse of discretion on the part of the respondent court in its interpretation of the employment contract's provision on
salaries. In view of the controlling doctrine that a grave abuse of discretion must be shown in order to warrant our disturbing the
findings of the respondent court, the reversal of the court's endings on this matter is unwarranted. (Sanchez vs. Court of Industrial
Relations, 27 SCRA 490).

The last issue raised in the first assignment of error refers to a procedural matter. The petitioner-company contends that ,-the question
as to whether or not the contracts of employment were null and void was not put in issue, hence, the respondent court pursuant to the
Rules of Court should have refrained from ruling that such contracts of employment were null and void. In this connection We restate
our finding that the respondent court did not declare the contracts of employment null and void in their entirety. Only the
objectionable features violative of law were nullified. But even granting that the Court of Industrial Relations declared the contracts of
employment wholly void, it could do so notwithstanding the procedural objection. In Sanchez u. Court of Industrial Relations,
supra, this Court speaking through then Justice, now Chief Justice Enrique M. Fernando, stated:

xxx xxx xxx

Moreover, petitioners appear to be oblivious of the statutory mandate that respondent Court in the hearing,
investigation and determination of any question or controversy and in the exercise of any of its duties or power is to
act 'according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms
and shall not be bound by any technical rules of legal evidence' informing its mind 'in such manner as it may deem
just and equitable.' Again, this Court has invariably accorded the most hospitable scope to the breadth and amplitude
with which such provision is couched. So it has been from the earliest case decided in 1939 to a 1967 decision.

Two issues are raised in the second assignment of error by the petitioner-company. The first hinges on the
jurisdiction of the respondent court to award additional compensation for nighttime work. Petitioner wants Us to re-
examine Our rulings on the question of nighttime work. It contends that the respondent court has no jurisdiction to
award additional compensation for nighttime work because of the declared policy on freedom of collective
bargaining expressed in Republic Act 875 and the express prohibition in Section 7 of the said statute. A re-
examination of the decisions on nighttime pay differential was the focus of attention in Rheem of the Philippines,
Inc. et al., v. Ferrer, et al (19 SCRA 130). The earliest cases cited by the petitioner-company, Naric v. Naric
Workers Union L-12075, - May 29, 1959 and Philippine Engineers' Syndicate u. Bautista, L-16440, February 29,
196.4, were discussed lengthily. Thus -

xxx xxx xxx

2. On the claim for night differentials, no extended discussion is necessary. To be read as controlling here is
Philippine Engineers' Syndicate, Inc. vs. Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court,
speaking thru Mr. Chief Justice Cesar Bengzon, declared —

Only one issue is raised: whether or not upon the enactment of Republic Act 875, the CIR lost its
jurisdiction over claims for additional compensation for regular night work. Petitioner says that
this Act reduced the jurisdiction of respondent court and limited it to specific cases which this
Court has defined as: ... (1) when the labor dispute affects an industry which is indispensable to
the national interest and is so certified by the President to the industrial court (Sec. 10, Republic
Act 875); (2) when the controversy refers to minimum wage under the Minimum Wage Law
(Republic Act 602); (3) when it involves hours of employment under the Eight-Hour Labor Law
(Commonwealth Act 444) and (4) when it involves an unfair labor practice [Sec. 5(a), Republic
Act 8751', [Paflu, et al. vs. Tan, et al., 52 Off. Gaz, No. 13, 5836].

Petitioner insists that respondents' case falls in none of these categories because as held in two
previous cases, night work is not overtime but regular work; and that respondent court's authority
to try the case cannot be implied from its general jurisdiction and broad powers' under
 Commonwealth Act 103 because Republic Act 875 precisely curbed such powers limiting them to
certain specific litigations, beyond which it is not permitted to act.

We believe petitioner to be in error. Its position collides with our ruling in the Naric case [National Rice & Corn
Corp. (NARIC) vs. NARIC Workers' Union, et al., G.R. No. L-12075, May 29, 1959] where we held;

While it is true that this Court made the above comment in the aforementioned case, it does not
intend to convey the Idea that work done at night cannot also be an overtime work. The comment
only served to emphasize that the demand which the Shell Company made upon its laborers is not
merely overtime work but night work and so there was need to differentiate night work from
daytime work. In fact, the company contended that there was no law that required the payment of
additional compensation for night work unlike an overtime work which is covered by
Commonwealth Act No. 444 (Eight Hour Labor Law). And this Court in that case said that while
there was no law actually requiring payment of additional compensation for night work, the
industrial court has the power to determine the wages that night workers should receive under
Commonwealth Act No. 103, and so it justified the additional compensation in the Shell case for
'hygienic, medical, moral, cultural and sociological reasons.

xxx xxx xxx

True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that the broad powers conferred by
Commonwealth Act 103 on the CIR may have been curtailed by Republic Act 875 which limited them to the four categories therein
expressed in line with the public policy of allowing settlement of industrial disputes via the collective bargaining process; but We find
no cogent reason for concluding that a suit of this nature for extra compensation for night work falls outside the domain of the
industrial court. Withal, the record does not show that the employer-employee relation between the 64 respondents and the petitioner
had ceased.

After the passage of Republic Act 875, this Court has not only upheld the industrial court's assumption of jurisdiction over cases for
salary differentials and overtime pay [Chua Workers Union (NLU) vs. City Automotive Co., et al., G.R. No. L- 11655, April 29, 1959;
Prisco vs. CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for work rendered on Sundays and
holidays and for night work [Nassco vs. Almin, et al., G.R. No. L9055, November 28, 1958; Detective & Protective Bureau, Inc. vs.
Felipe Guevara, et al., G.R. No. L-8738, May 31, 1957] but has also supported such court's ruling that work performed at night should
be paid more than work done at daytime, and that if that work is done beyond the worker's regular hours of duty, he should also be
paid additional compensation for overtime work. [Naric vs. Naric Workers' Union. et al., G. R No. L-12075, May 29, 1959, citing
Shell Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case for extra compensation now falls beyond the powers
of the industrial court to decide, would amount to a further curtailment of the jurisdiction of said court to an extent which may defeat
the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy, et al v-9. CIR, G.R. No. L-17788, May 25,1962]"

The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction over additional compensation for work done
at night by the respondents is without merit.

The other issue raised in the second assignment of error is premised on the petitioner-company's contention that the respondent court's
ruling on the additional compensation for nighttime work is not supported by substantial evidence.

This contention is untenable. Pertinent portions of the respondent court's decision read:

xxx xxx xxx

There is no serious disagreement between the petitioners and respondent management on the facts recited above.
The variance in the evidence is only with respect to the money claims. Witnesses for petitioners declared they
worked on regular days and on every other Sunday and also during all holidays; that for services rendered on
Sundays and holidays they were not paid for the first four (4) hours and what they only received was the overtime
compensation corresponding to the number of hours after or in excess of the first four hours; and that such payment
is being indicated in the overtime pay for work done in excess of eight hours on regular working days. It is also
claimed that their nighttime services could well be seen on their respective daily time records. .. (Emphasis
supplied) (p.116, rollo)

The respondent court's ruling on additional compensation for work done at night is, therefore, not without evidence. Moreover, the
petitioner-company did not deny that the private respondents rendered nighttime work. In fact, no additional evidence was necessary
to prove that the private respondents were entitled to additional compensation for whether or not they were entitled to the same is a
question of law which the respondent court answered correctly. The "waiver rule" is not applicable in the case at bar. Additional
compensation for nighttime work is founded on public policy, hence the same cannot be waived. (Article 6, Civil Code). On this
matter, We believe that the respondent court acted according to justice and equity and the substantial merits of the case, without regard
to technicalities or legal forms and should be sustained.

The third assignment of error is likewise without merit. The fact that only three of the private respondents testified in court does not
adversely affect the interests of the other respondents in the case. The ruling in Dimayuga V. Court of Industrial Relations (G.R. No.
L-0213, May 27, 1957) has been abandoned in later rulings of this Court. In Philippine Land Air-Sea Labor Union (PLASLU) vs. Sy
Indong Company Rice And Corn Mill (11 SCRA 277) We had occasion to re-examine the ruling in Dimayuga We stated:

The latter reversed the decision of the trial Judge as regards the reinstatement with backwages of ... upon the theory
that this is not a class suit; that, consequently, it is necessary and imperative that they should personally testify and
prove the charges in the complaint', and that, having failed to do so, the decision of the trial Judge in their favor is
untenable under the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-0213 (May 27,1957).

We do not share the view taken in the resolution appealed from. As the trial Judge correctly said, in Ms dissent from
said resolution,:

xxx xxx xxx

In the case of Sanchez v. Court of Industrial Relations, supra, this Court stated:

To the reproach against the challenged order in the brief of petitioners in view of only two of the seven claimants
testifying, a statement by this Court in Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would
suffice by way of refutation. Thus: "This Court fully agrees with the respondent that quality and not quantity of
witnesses should be the primordial consideration in the appraisal of evidence.' Barely eight days later, in another
decision, the above statement was given concrete expression. Thus: 'The bases of the awards were not only the
respective affidavits of the claimants but the testimonies of 24 witnesses (because 6 were not given credence by the
court below) who Identified the said 239 claimants. The contention of petitions on this point is therefore unfounded
Moveover in Philippine Land-Air-Sea Labor Union (PLASLU) v. Sy Indong company Rice & Corn Mill, this Court,
through the present Chief Justice rejected as untenable the theory of the Court of Industrial Relations concerning the
imperative needs of all the claimants to testify personality and prove their charges in the complaint. As tersely put:
'We do not share the view taken in the resolution appealed from.

The petitioner's contention that its employees fully understood what they signed when they entered into the contracts of employment
and that they should be bound by their voluntary commitments is anachronistic in this time and age.

The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week and, for some stores, up to very late
at night because of the nature of the pharmaceutical retail business. The respondents knew that they had to work Sundays and holidays
and at night, not as exceptions to the rule but as part of the regular course of employment. Presented with contracts setting their
compensation on an annual basis with an express waiver of extra compensation for work on Sundays and holidays, the workers did not
have much choice. The private respondents were at a disadvantage insofar as the contractual relationship was concerned. Workers in
our country do not have the luxury or freedom of declining job openings or filing resignations even when some terms and conditions
of employment are not only onerous and inequitous but illegal. It is precisely because of this situation that the framers of the
Constitution embodied the provisions on social justice (Section 6, Article 11) and protection to labor (Section 9, Article I I) in the
Declaration of Principles And State Policies.

It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the rights of workers who are placed in
contractually disadvantageous positions and who sign waivers or provisions contrary to law and public policy.

WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from are affirmed with costs against the
petitioner.

SO ORDERED.
G.R. No. L-31341 March 31, 1976

PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and PHILIPPINE AIR LINES SUPERVISORS'
ASSOCIATION (PALSA), petitioners,
vs.
PHILIPPINE AIR INES, INC., respondent.

G.R. No. L-31341-43 March 31, 1976

PHILIPPINE AIR LINES, INC., petitioner,

vs.
PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION, PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION, and
the COURT OF INDUSTRIAL RELATIONS, respondents.

Siguion Reyna, Montecillo, Belo & Ongsiako for Philippines Air lines, Inc.

Laquihon & Legayada for Philippine Air Lines Supervisors' Association (PALEA).

MAKASIAR, J.:

Before US are consolidated petitions to review the Court of industrial Relations en banc resolution dated October 9, 1969 in CIR Case
No. 43-IPA.

In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the date of effectivity of the adjudicated pay differentials due to the
monthly-salaried employees of Philippine Air Lines, Inc.

In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the Court of Industrial Relations of its earlier resolution on
the method employed by the Philippine Air Lines in computing the basic daily and hourly rate of its monthly salaried employees.

On February 14, 1963, the Philippine Air Lines Employees' Association (PALEA) and the Philippine Air Lines Supervisors'
Association (PALSA) — petitioners in G.R. No. L-31341 and respondents in G.R. No. 31343 — commenced an action against the
Philippine Air Lines (PAL) in the Court of Industrial Relations, praying that PAL be ordered to revise its method of computing the
basic daily and hourly rate of its monthly salaried employees, and necessarily, to pay them their accrued sala differentials.

Sought to be revised is PAL's formula in computing wages of its employees:

Monthly salary x 12 365 (No. of calendar = x (Basic dailr rate) days in a year)

x 8 = Basic hourly rate

The unions would like PAL to modify the above formula in this wise:

Monthly salary x 12 No. of actual working = x (Basic daily rate) days

x 8 = Basic hourly rate

On May 23, 1964, the Court of Industrial Relations, through Presiding Judge Jose S. Bautista, issued an order denying the unions'
prayer for a modified wage formula. Pertinent portion of the order reads:

On the issue of rate of pay, PALSA and PALEA seek to change the long standing method in PAL of computing the
basic daily and hourly rate of monthly salaried employees for the purpose of determining overtime pay, Sunday and
legal holiday premium pay, night differential pay, vacation and sick leave pay, to wit, the monthly salary multiplied
by 12 and dividing the product thereof by 365 and then the quotient by 8. PALEA and PALSA claim that the
method of computing the basic daily and hourly rate of monthly salaried employees of PAL prior to the
implementation of the 40-hour week schedule in PAL should be by dividing the monthly salary by 26 working days,
and after the 40-hour week schedule, by dividing the monthly salary by 20 working days, and then dividing the
quotient thereof in each case by 8. From the records, however, it appears that for may years since 1952, and even
previously, PAL has been consistently and regularly determining the basic and hourly rates of monthly salaried
employees by multiplying the monthly salary by 12 momths and dividing the product by 365 days to arive at the
 basic daily rate, and dividing the quotient by 8 to compute the basic hourly rate. There has been no attempt to revise
this formula notwithstanding the various negotiations PAL and with the unions ever since its operations, and it was
only on July 18, 1962, when PALSA, for the first time, proposed that it be changed in accordance with what is now
alleged in the petition. This, however, was a mere proposal by PALSA for the adoption of a new formula; it was not
a demand for the application of a formula claimed to be correct under the law. Under this circumstance, PALSA and
PALEA are estopped from questioning the correctness and propriety of PAL's method of determining the basic
hourly and daily rate of pay of its monthly salaried personnel, and considering the long period of time that elapsed
before they brought their petition, are barred from insisting or demanding a different rate of pay formula.

xxx xxx xxx

Upon the foregoing, the Court, therefore, declares PAL's method of computing the basic daily and hourly rate of its
monthly salaried employees as legal and proper, and denies the petition of PALSA and PALEA.

xxx xxx xxx

(pp. 47-48, 49, rec. G.R. No. L-31343).

On May 30, 1964, complaining unions promptly moved for the reconsideration of the above-sais order (p. 51, rec. G.R. No. L-31343).

On June 9, 1964, the unions filed their memorandum in support of their motion for reconsideration alleging that the questioned order
is (a) contrary to law, and (b) contrary to evidence adduced during the trial (p. 53, ree G.R. No. L-31343).

The unions attributed error to PAL's wage formula, particularly in the use of 365 days as divisor. The unions contended that the use of
365 days as divisor would necessarily include off-days which, under the terms of the collective bargaining agreements entered into
between the parties, were not paid days. This is so since for work done on an off-day, an employee was paid 100% plus 25%, or 100%
plus 37-½ of his regular working hour rate.

On the issue of prescription, the unions pointed out:

With respect to the period of prescription, it is clear that since the claim arises from the written contracts or
collective bargaining agreements between the petitioner unions and the PAL, the action thereon prescribes in ten
years from the time the right of action accrues, in accordance with Article 1144 of the New Civil Code. .... (p. 68,
rec., G.R. No. L-31343).

On June 26, 1964, the Philippine Air Lines answered point by point the unions' memorandum, in a prompt reply.

On October 9, 1969, the Court of Industrial Relations, through Presiding Judge Arsenio I. Martinez, ordered the reversal of its
decision dated May 34, 1964 and sustained the unions' method of age computation.

The industrial court, however, ordered the computation of pay differentials in accordance with the sustained method of computation
effective only July 1, 1957.

Said the Court of Industrial Relations in this regard:

... In this connection, however, it will be noted as previously stated, that this case was considered as an incident of
Case No. 39-IPA, in which the issues involved were related to the respondent PAL of the 40-Hour Week Law (Rep.
Act 1880) from the date of its effectivity July 1, 1957. ...

This Cout therefore belives that in justice and equity and substantial merits of the case, the aforesaid pay
differentials due to the employees involved herein by the application of the correct methods of computation of the
rate of pay should be paid by the respondent also beginning July 1, 1957 (p. 117, rec., G.R. No. L-31343).

From the above resolution, both parties appealed to this COURT. The Philippine Air Lines filed its appeal petition on December 13,
1969, while PALEA filed its petition for review on certiorari on January 3, 1970.

For easy comprehension, WE start with the Philippine Air Lines, Inc. versus Philippine Air Lines Employees Association, Philippine
Air Lines Supervisors Association, and the Court of Industrial Relations, G.R. No. L-31343.
In this appeal PAL emphasizes three assignments of error, to wit:

1. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT
THE METHOD OF COMPUTATION USED BY PAL IN DETERMINING TIIE BASIC DAILY OR HOURLY
RATE OF ITS MONTLY SALARIED EMPLOYEES WHICH IS:

MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN YEAR) = x (BASIC DAILY RATE)

x 8 = BASIC HOURLY RATE 8

IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC UTILITY WHERE THERE IS WORK
EVERYDAY OF THE WEEK FOR MANY YEARS EVEN BEFORE REPUBLIC ACT 602 AND WITH THE
CONSENT AND APPROVAL OF THE EMPLOYEES, CONSISTENT WITH SECTION 19 OF REPUBLIC ACT
602 PROHIBITING REDUCTION OF WAGES FOR OFF DAYS-WHICH WAS SUSTAINED BY THIS
HONORABLE COURT IN AUTOMOTIVE PARTS & EQUIPMENT CO., INC. VS. JOSE B. LINGAD, G.R. NO. L-
26406, OCTOBER 31, 1969 — HAS BEEN TREATING OFFSITE DAYS, 11 AS SATURDAYS, SUNDAYS,
COMPANY OBSERVED HOLIDAYS OR ANY OTHER DESIGNATED HOLIDAYS AS PAID DAYS.

2. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING.
THAT RESPONDENT UNIONS, BY THEIR LONG PERIOD OF CONSENT, ACQUIESCENCE, INACTION
AND ACCEPTANCE OF BENEFITS THEREUNDER, ARE ESTOPPED AND BARRED FROM CLAIMING
THAT PAL'S FORMULA FOR DETERMINING THE BASIC DAILY AND HOURLY RATE OF PAY IS
INCORRECT.

3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS JURISDICTION IN SENTENCING PAL TO
PAY DIFFERENTIALS FOR OVERTIME WORK, NIGHTWORK, HOLIDAY AND SUNDAY PAY FROM
JULY 1, 1957 CONSIDERING THAT UNDER THE THREE-YEAR PRESCRIPTIVE PERIOD PROVIDED IN
SECTION 7-a OF COMMONWEALTH ACT NO. 444, AS AMENDED, THE EIGHT-HOUR LABOR LAW,
RESPONDENT UNIONS, ASSUMING THEY HAD ANY CAUSE OF ACTION, COULD RECOVER ONLY
FROM FEBRUARY 14, 1960 UP TO THE PRESENT, SINCE RESPONDENT UNIONS FILED THEIR ACTION
ONLY ON FEBRUARY 14, 1963.

PAL's maiden argument has a strong tendency to mislead. In an effort to emphasize that off-days are paid and therefore should be
reckoned with in determing the divisor for computing daily and hourly rate, PAL leans heavily on what it considers
as additional payment of 125% or 137 ½%, as the case may be, of an employee's basic hourly rate, given to a worker who worked on
his off-days. PAL would like us to believe that the word "Additional" all but accentuates the existence of a regular basic rate;
otherwise, the 125% or 137½% shall be in addition to what?

The industrial court, however, had this to say:

Moreover, it will be noted that before September 4, 1961, a monthly salaried employee of PAL had to work 304
days only in a year,a nd after said date, he had to work only 258 days in ayear, to be entitled to his equivalent yearly
salary. When he worked on his off-day, he was paid accordingly (125% or 137%), indicating that his off-days were
not with pay. It seems illogical for said employe to be paid 125% or 137 ½% of his basic daily rate, if such off-days
are already wtih pay, as indicated by the company (p. 107, rec., G.R. No. L-31343, emphasis supplied).

WE agree.

There should hardly be any doubt that off-days are not paid days, Precisely, off-days are rest days for the worker. He is not required to
work on such days. This finds support not only in the basic principle in labor that the basis of remuneration or compensation is actual
service rendered, but in the ever pervading labor spirit aimed at humanizing the conditions of hie working man.

Since during his off-days an employee is not compelled to work he cannot, conversely, demand for his corresponding pay. If,
however, a worker works on his off-day, our welfare laws duly reward him with a premium higher than what he would receive when
he works on his regular working day.

Such being the case, the divisor in computing an employee's basic daily rate should be the actual working days in a yar The number of
off-days are not to be counted precisely because on such off-days, an employee is not required to work.
Simple common sense dictates that should an employee opt not to work — which he can legally do — on an off-day, and for such he
gets no pay, he would be unduly robbed of a portion of his legitimate pay if and when in computing his basic daily and hourly rate,
such off-day is deemed subsumed by the divisor. For it is elementary in the fundamental process of division that with a constant
dividend, the bigger your divisor is, the smaller our quotient will be.

It bears emphasis that OUR view above constitutes the rationale behind the landmark ruling, surprisingly, by the same trial Judge Jose
S. Bautista of the Court of Industrial Relations, in National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et
al., (G.R. No. L-18938, August 31, 1964, 11 SCRA 766, 793-794), to which decision WE gave OUR affirmance.

PAL maintains that the NAWASA doctrine should not apply to a public utility like PAL which, from the nature of its operations,
requires a whole-year-round, uninterrupted work by personnel. What PAL apparently forgets is that just like it, NAWASA is also a
public utility which likewise requires its workers to work the whole year round. Moreover, the NAWASA is a government-owned
corporation — to which PAL is akin, it being a government-controlled corporation.

As will later be stated herein, PAL inked with the representative unions of the employees collective bargaining agreements wherein it
bound itself to duly compensate employer working on their off-days. The same situation obtained in the NAWASA case, wherein WE
held:

And in the collective bargaining agreement entered into between the NAWASA and respondent unions it was agreed
that all existing benefits enjoyed by the employees and laborers prior to its effectivity shall remain in force and shall
form part of the agreement, among which certainly is the 25% additional compensation for work on Sundays and
legal holidays theretofore enjoyed by said laborers and employees. It may, therefore, be said that while under
Commonwealth Act No. 444 a public utility is not required to pay additional compensation to its employees and
workers for work done on Sundays and legal holidays, there is, however, no prohibition ofr it to pay such additional
compensation if it voluntarily agrees to do so. The NAWASA committed itself to pay this additional compensation.
It must pay not because of compulsion of law but because of contractual obligation (11 SCRA 766, 776).

The settled NAWASA doctrine should not be disturbed.

PAL also vigorously argues that the unions' longstanding silence with respect, and acquiescence, to PAL's method of computation has
placed them in estoppel to impugn the correctness of the questioned wage formula. PAL furthermore contends that laches has likewise
set in precisely because of stich long-standing inaction.

Our jurisprudence on estoppel is, however, to the effect that:

... (I)t is meet to recall that "mere innocent silence will not work estoppel. There must also be some element of
turpitude or neglignece connected with the silence by which another is misled to his injury" (Civil Code of the
philippines by Tolentino, Vol. IV, p. 600) ... [Beronilla vs. GSISK, G.R. No. L-21723, Nov. 26, 1970, 36 SCRA 44,
46, 55, emphasis supplied].

In the case befor US, it is not denied that PAL's formula of determining daily and hourly rate of pay has been decided and adopted by
it unilaterally without the knowedge and express consent of the employees. It was only later on that the employees came to know of
the formula's irregularity and its being violative of the collective bargaining agreements previously executed by PAL and the unions.
Precisely, PALSA immediately proposed that PAL and the unions. Precisely, PALSA immediately proposed that PAL use the correct
method of computation, which proposa PAL chose to ignore.

Clearly, therefore, the alleged long-standing silence by the PAL employees is in truth and in fact innocent silence,which cannot place
a party in estoppel.

The rationale for this is not difficult to see. The doctrine of estoppel had its origin in equity. As such, its applicability depends, to a
large extent, on the circumstances surrounding a particular case. Where, therefore, the neglect or omission alleged to haveplaced a
party in estoppel cannot be invoked. This was the essence of OUR ruling in the case of Mirasol vs. Municipality of Tabaco (43 Phil.
610, 614). And this, in quintessence, was the compelling reason why in Lodovica vs. Court of Appeals (L-29678, July 18, 1975, 65
SCRA 154, 158), WE held that a party who had no knowledge of or gave no consent to a transaction may not be estopped by it.

Furthermore, jurisprudence likewise fortifies the position that in the interest of public policy, estoppel and laches cannot arrest recover
of evertime compensation. The case of Manila Terminal Co. vs. CIR (G.R. NO. L-9265, April 29, 1957, 91 Phil. 625), is squarely in
point. In this case We intoned.
 The principle of estoppel and laches cannot well be invoked agains the Association. In the first place, it would be
contrary to the spirit of the Eight-Hour Labor Law, under which, as already seen, the laborers cannot waive their
right to extra compensation. In the second place, the law principally obligates the employer to observe it, as much so
that it punishes the employer for its employer for its violation and leaves the employee or laborer is in such a
disadvantageous position as to be naturally reluctant or even apprehensive in asserting any claim which may cause
the employher to devise a way for exercising his right to terminate the employment.

If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or
laborer, who cannot expressly renounce their right to extra compensation under the Eight-Hour Labor Law, may be
compelled to accomplish the same thing by mere silence or lapse of time,thereby frustrating the purpose of the law
by indirection (91 Phil. 625, 633, emphasis supplied).

In another count, the unilateral adoption by PAL of an irregular wage formula being an act against public policy, the doctrine of
estoppel cannot give validity to the same (Auyong Hian vs. Court of Tax Appeals, 59 SCRA 110, 112).

II

G.R. No. L-31341 is an appeal from that portion of the en banc resolution of the Court of Industrial Relations dated October 9, 1969 in
case 43-IPA making the payment of the adjudicated pay differentials effective only from July 1, 1957.

In their lone assignment of error, February 14, 1953, or ten (10) years from the date of the filing of their original complaint; because
the claim for pay differentials is based on written contracts — i.e., the collective bargaining agreements between PAL and the
employees' representative uniuons — and under Article 1144(1) of the Civil Code, actions based on written contracts prescribe in ten
(10) years.

PAL, on the other hand, maintains that the employees' claim for pay differential is"an action to enforce a cause of action under the
Eight-Hour Labor Law (CA No. 444, as amended): (p. 592, rec., G.R. No. L-31341). As such, the applicable provision is Section 7-a
of CA No. 4444, which reads:

Sec. 7-a. Any action to enforce any cause of action under this Act shall be commenced within three years after the
cause of action accrued, otherwise such action shall be forever barred; provided, however, that actions already
commenced before the effecitve date of this Act shall not be affected by the period herein prescribed (As amended
by Rep. Act No. 1993, approved June 22, 1957, emphasis supplied).

Moreover, PAL argues that even assuming that the issue calls for the application of Article 1144(1) of the New Civil Code, a general
law, still in case of conflict, Commonwealth ACt No. 444, as amended, should prevail because the latter is a special law.

WE believe that the present case calls for the application of the Civil Code provisions on the prescriptive period in the filing of actions
based on written contracts. The rason should be fairly obvious. Petitioners' claim fundamentally involves the strict compliance by PAL
of the pvosions on wage computation embodied in the collective bargaining agreements inked between it and the employees
representative unions. These collective bargaining agreements were: the PAS-PALEA collective bargaining agreement of 1952-53; the
PAL-PALEA collective bargaining agreement of 1956-59; the PAL-PALEA collective bargaining agreement of 1959-61 (with Article
VI as supplement); the PAL-PALEA agreement of September 4, 1961; the PAL-ACAP collective bargaining agreement of 1952-54;
the PAL-ACAP collective bargaining agreement of September 6, 1955; the PAL-ACAP collective bargaining agreement of 1959-61;
the PAL-PALSA collective bargaining agreement of 1959-62; and the supplementary PAL-PALSA collective bargaining agreement
(pp. 54-55, rec., G.R. No. L-31343).

The three-year prescribed period fixed in the Eight-Hour Labor Law (CA No. 444, as amended) will apply, if the claim for
differentials for overtime work is solely based on said law, and not on a collective bargaining agreement or any other contract. In the
instant cases, the claim for overtime compensation is not so much because of Commonwealth Act No. 444, as amended, but because
the claim is a demandable right of the employees, by reason of the above-mentioned collective bargaining agreements. That is
precisely why petitioners did not make any reference as to the computation for overtime work under the Eight-Hour Labor Law (Secs.
3 and 4, CA No. 444), and instead inissited that work computation provided in the collective bargaining agreements between the
parties be observed. Since the claim for pay differentials is principally anchored on the written contracts between the litigants, the ten-
year prescriptive period between the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern. (General Insurance and Surety Corp. vs. Republic, L-13873, January 31, 1963, 7 SCRA 4; Heirs of the Deceased Juan
Sindiong vs. Committee on Burnt Areas and Improvements of Cebu, L-15975, April 30, 1964, 10 SCRA 715; Conde vs. Cuenca and
Malaga, L-9405, July 31, 1956; Veluz vs. Veluz, L-23261, July 31, 1968, 24 SCRA 559).

Finally, granting arguendo that there is doubt as to what labor legislation to apply to the grievances of the employees in the cases at
bar, it is OUR view that that legislation which would enhance the plight of the workers should be followed, consonant with the express
pronouncement of the New Civil Code that:
 In case of doubt, all labor legislation and labor contracts should be construed in favor of the safety and decent living
of the laborer (Article 1702).

WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH THE MODIFICATION THAT PAY
DIFFERENTIALS BE PAID EFFECTIVE FEBRUARY 14, 1953. WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN
BOTH CASES.
FIRST DIVISION

ABDULJUAHID R. PIGCAULAN,⃰ G.R. No. 173648

Petitioner,

Present:

- versus - CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,

DEL CASTILLO,

ABAD,⃰ ⃰ and

SECURITY and CREDIT VILLARAMA, JR., JJ.

INVESTIGATION, INC. and/or

RENE AMBY REYES , Promulgated:

Respondents. January 16, 2012

x-------------------------------------------------------------------x

DECISION

DEL CASTILLO, J.:

It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is on the employer that the burden of proving
payment of these claims rests.

This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 85515,
which granted the petition for certiorari filed therewith, set aside the March 23, 2004[3] and June 14, 2004[4] Resolutions of the National Labor
Relations Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan (Pigcaulan)
against respondent Security and Credit Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby Reyes. Likewise assailed is the
June 28, 2006 Resolution[5] denying Canoys and Pigcaulans Motion for Reconsideration.[6]

Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs different clients. Subsequently, however, Canoy
and Pigcaulan filed with the Labor Arbiter separate complaints[7] for underpayment of salaries and non-payment of overtime, holiday, rest day,
service incentive leave and 13th month pays. These complaints were later on consolidated as they involved the same causes of action.

Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting the number of hours served and their wages
for the same. They likewise presented itemized lists of their claims for the corresponding periods served.

Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other benefits under the law; that the salaries
they received were above the statutory minimum wage and the rates provided by the Philippine Association of Detective and Protective Agency
Operators (PADPAO) for security guards; that their holiday pay were already included in the computation of their monthly salaries; that they were
paid additional premium of 30% in addition to their basic salary whenever they were required to work on Sundays and 200% of their salary for work
done on holidays; and, that Canoy and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999. In support thereof, copies
of payroll listings[8]and lists of employees who received their 13th month pay for the periods December 1997 to November 1998 and December 1998
to November 1999[9]were presented. In addition, respondents contended that Canoys and Pigcaulans monetary claims should only be limited to the
past three years of employment pursuant to the rule on prescription of claims.

Ruling of the Labor Arbiter

Giving credence to the itemized computations and representative daily time records submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P.
Asuncion awarded them their monetary claims in his Decision[10] dated June 6, 2002. The Labor Arbiter held that the payroll listings presented by the
respondents did not prove that Canoy and Pigcaulan were duly paid as same were not signed by the latter or by any SCII officer. The 13th month
payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoys and Pigcaulans signatures. Thus, without indicating any
detailed computation of the judgment award, the Labor Arbiter ordered the payment of overtime pay, holiday pay, service incentive leave pay and
proportionate 13th month pay for the year 2000 in favor of Canoy and Pigcaulan, viz:

WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary differentials in the amount
of P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71
for Pigcaulan for service incentive leave pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as
proportionate 13th month pay for the year 2000. The rest of the claims are dismissed for lack of sufficient basis to make an award.

SO ORDERED.[11]

Ruling of the National Labor Relations Commission

Respondents appealed to the NLRC. They alleged that there was no basis

for the awards made because aside from the self-serving itemized computations, no representative daily time record was presented by Canoy and
Pigcaulan. On the contrary, respondents asserted that the payroll listings they submitted should have been given more probative value. To strengthen
their cause, they attached to their Memorandum on Appeal payrolls[12] bearing the individual signatures of Canoy and Pigcaulan to show that the
latter have received their salaries, as well as copies of transmittal letters[13] to the bank to show that the salaries reflected in the payrolls were directly
deposited to the ATM accounts of SCIIs employees.
 The NLRC, however, in a Resolution[14] dated March 23, 2004, dismissed the appeal and held that the evidence show underpayment of
salaries as well as non-payment of service incentive leave benefit. Accordingly, the Labor Arbiters Decision was sustained. The motion for
reconsideration thereto was likewise dismissed by the NLRC in a Resolution[15] dated June 14, 2004.

Ruling of the Court of Appeals

In respondents petition for certiorari with prayer for the issuance of a temporary restraining order and preliminary injunction[16] before the CA, they
attributed grave abuse of discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to salary differentials, service incentive
leave pay and proportionate 13th month pay and in arriving at amounts without providing sufficient bases therefor.

The CA, in its Decision[17] dated February 24, 2006, set aside the rulings of

both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases mentioned in the questioned rulings to support the
conclusions made. Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale:

First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at all events, as far as practicable,
the decision shall embody the detailed and full amount awarded.

Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for being unsigned by Canoy,
when, in fact, said payrolls, particularly the payrolls from 1998 to 1999 indicate the individual signatures of Canoy.

Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by Pigcaulan and Canoy as well as
the laws or jurisprudence that would show that the two are indeed entitled to the salary differential and incentive leave pays.

Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed salaries and benefits despite the
absence of proof that Reyes deliberately or maliciously designed to evade SCIIs alleged financial obligation; hence the Labor
Arbiter ignored that SCII has a corporate personality separate and distinct from Reyes. To justify solidary liability, there must be
an allegation and showing that the officers of the corporation deliberately or maliciously designed to evade the financial
obligation of the corporation.[18]

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a Resolution[19] dated June 28, 2006.

Hence, the present Petition for Review on Certiorari.

Issues
The petition ascribes upon the CA the following errors:

I. The Honorable Court of Appeals erred when it dismissed the complaint on mere alleged failure of the Labor Arbiter
and the NLRC to observe the prescribed form of decision, instead of remanding the case for reformation of the decision to
include the desired detailed computation.

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

III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly due to absence of legal and
factual [bases] despite attendance of substantial evidence in the records.[20]

It is well to note that while the caption of the petition reflects both the names of Canoy and Pigcaulan as petitioners, it appears from its body
that it is being filed solely by Pigcaulan. In fact, the Verification and Certification of Non-Forum Shopping was executed by Pigcaulan alone.

In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound by the rules. And even so, the rules do not
mandate that a detailed computation of how the amount awarded was arrived at should be embodied in the decision. Instead, a statement of the nature
or a description of the amount awarded and the specific figure of the same will suffice. Besides, his and Canoys claims were supported by substantial
evidence in the form of the handwritten detailed computations which the Labor Arbiter termed as representative daily time records, showing that they
were not properly compensated for work rendered. Thus, the CA should have remanded the case instead of outrightly dismissing it.

In their Comment,[21] respondents point out that since it was only Pigcaulan who filed the petition, the CA Decision has already become
final and binding upon Canoy. As to Pigcaulans arguments, respondents submit that they were able to present sufficient evidence to prove payment
of just salaries and benefits, which bits of evidence were unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered
these pieces of evidence and properly appreciated them. Hence, it was correct in dismissing the claims for failure of Canoy and Pigcaulan to
discharge their burden to disprove payment.

Pigcaulan, this time joined by Canoy, asserts in his Reply[22] that his filing of the present petition redounds likewise to Canoys benefit since
their complaints were consolidated below. As such, they maintain that any kind of disposition made in favor or against either of them would
inevitably apply to the other. Hence, the institution of the petition solely by Pigcaulan does not render the assailed Decision final as to
Canoy. Nonetheless, in said reply they appended Canoys affidavit[23] where he verified under oath the contents and allegations of the petition filed by
Pigcaulan and also attested to the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any action or claim in another
court or tribunal involving the same issues. He likewise explains in said affidavit that his absence during the preparation and filing of the petition was
caused by severe financial distress and his failure to inform anyone of his whereabouts.

Our Ruling

The assailed CA Decision is considered final as to Canoy.

We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf. This is very clear from the petitions prefatory
which is phrased as follows:

COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court x x x. (Emphasis
supplied.)

Also, under the heading Parties, only Pigcaulan is mentioned as petitioner and consistent with this, the body of the petition refers only to a petitioner
and never in its plural form petitioners. Aside from the fact that the Verification and Certification of Non-Forum Shopping attached to the petition
was executed by Pigcaulan alone, it was plainly and particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel P.
Grageda, that he is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of these, there is therefore, no doubt, that the petition was brought
only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has already become final and executory as to him.

Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners
therein. Suffice it to state that it would have been different had the said petition been filed in behalf of both Canoy and Pigcaulan. In such a case,
subsequent submission of a verification may be allowed as non-compliance therewith or a defect therein does not necessarily render the pleading, or
the petition as in this case, fatally defective.[24] The court may order its submission or correction, or act on the pleading if the attending circumstances
are such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served thereby. Further, a verification is
deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or are true and correct.[25] However, even if it were so, we note
that Canoy still failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.

The filing of a certificate of non-forum shopping is mandatory so much so

that non-compliance could only be tolerated by special circumstances and compelling reasons.[26] This Court has held that when there are several
petitioners, all of them must execute and sign the certification against forum shopping; otherwise, those who did not sign will be dropped as parties to
the case.[27] True, we held that in some cases, execution by only one of the petitioners on behalf of the other petitioners constitutes substantial
compliance with the rule on the filing of a certificate of non-forum shopping on the ground of common interest or common cause of action or
defense.[28] We, however, find that common interest is not present in the instant petition. To recall, Canoys and Pigcaulans complaints were
consolidated because they both sought the same reliefs against the same respondents. This does not, however, mean that they share a common
interest or defense. The evidence required to substantiate their claims may not be the same. A particular evidence which could sustain Canoys action
may not effectively serve as sufficient to support Pigcaulans claim.

Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any reasonable cause for his failure to join Pigcaulan to
personally sign the Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII, especially so,
if he was indeed suffering from financial distress. However, Canoy failed to advance any justifiable reason why he did not inform anyone of his
whereabouts when he knows that he has a pending case against his former employer. Sadly, his lack of prudence and diligence cannot merit the
courts consideration or sympathy. It must be emphasized at this point that procedural rules should not be ignored simply because their non-
observance may result in prejudice to a partys substantial rights. The Rules of Court should be followed except only for the most persuasive of
reasons.[29]

Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the subsequent pleadings, although apparently
filed under his and Canoys name, as solely filed by the former.

There was no substantial evidence to support the grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13th month pay for the year 2000 in favor of
Canoy and Pigcaulan. The Labor Arbiter relied heavily on the itemized computations they submitted which he considered as representative daily
time records to substantiate the award of salary differentials. The NLRC then sustained the award on the ground that there was substantial evidence
of underpayment of salaries and benefits.

We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations are self-serving, unreliable and
unsubstantial evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way
of verifying the truth of the handwritten entries stated therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by the Labor Arbiter, can hardly be considered as competent evidence to be used as basis to prove that
the two were underpaid of their salaries. We find nothing in the records which could substantially support Pigcaulans contention that he had rendered
service beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete
proof that additional service beyond the normal working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to
Pigcaulan.

Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate
13th month pay for year 2000.

However, with respect to the award for holiday pay, service incentive leave

pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.

Article 94 of the Labor Code provides that:

ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers;

xxxx

While Article 95 of the Labor Code provides:

ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive of five days with pay.

xxxx
 Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work.[30] Likewise, express provision of the
law entitles him to service incentive leave benefit for he rendered service for more than a year already. Furthermore, under Presidential Decree No.
851,[31]he should be paid his 13th month pay. As employer, SCII has the burden of proving that it has paid these benefits to its employees.[32]

SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan received their salaries as well as
benefits which it claimed are already integrated in the employees monthly salaries. However, the documents presented do not prove SCIIs
allegation. SCII failed to show any other concrete proof by means of records, pertinent files or similar documents reflecting that the specific claims
have been paid. With respect to 13th month pay, SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat, the
burden of proving payment of these monetary claims rests on SCII, being the employer. It is a rule that one who pleads payment has the burden of
proving it. Even when the plaintiff alleges non-payment, still the general rule is that the burden rests on the defendant to prove payment, rather than
on the plaintiff to prove non-payment.[33] Since SCII failed to provide convincing proof that it has already settled the claims, Pigcaulan should be paid
his holiday pay, service incentive leave benefits and proportionate 13th month pay for the year 2000.

The CA erred in dismissing the claims instead of remanding the case to the Labor Arbiter
for a detailed computation of the judgment award.

Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary

awards granted. Such failure, however, should not result in prejudice to the substantial rights of the party. While we disallow the grant of overtime
pay and restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service incentive leave pay and
13th month pay for year 2000. Hence, the CA is not correct in dismissing Pigcaulans claims in its entirety.

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

WHEREFORE, the petition is GRANTED. The Decision dated

February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No. 85515 are REVERSED and SET ASIDE.
Petitioner Abduljuahid R. Pigcaulan is hereby declared ENTITLED to holiday pay and service incentive leave pay for the years 1997-2000 and
proportionate 13th month pay for the year 2000.

The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact amount and to make a detailed computation of the
monetary benefits due Abduljuahid R. Pigcaulan which Security and Credit Investigation Inc. should pay without delay.
FIRST DIVISION

G.R. No. L-39387 June 29, 1982

PAMPANGA SUGAR DEVELOPMENT CO., INC., petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS ASSOCIATION, respondents.

MAKASIAR, J.:

Petitioner Pampanga Sugar Development Company, Inc. seeks the reversal of the order dated June 6, 1974 of respondent Court of
Industrial Relations awarding to respondent Sugar Workers Association's (Union) counsel attorney's fees equivalent to 20% of the
judgment in CIR Case No. 4264- ULP and ordering the lower court's Examining Division to compute the wage and fringe benefits
differentials due the 28 individual workers who did not execute quitclaims as well as attorney's fees corresponding to 20% of the
benefits due to 53 workers who entered into agreements waiving their rights and benefits under the decision dated December 4, 1972
in the aforecited case; also, the setting aside of the CIR resolution of September 3, 1974 denying petitioner's motion for
reconsideration of the questioned order (pp. 15 & 57, rec.).

For a better appreciation of this case, certain prefatory facts must be recalled. Sometime in February, 1956, the workers' affiliates of
respondent Union staged a strike against petitioner company. This labor dispute was certified by the President to the Court of
Industrial Relations which was docketed as Case No. 13-IPA. After six years, the said Court issued an order on November 8, 1962
directing petitioner company to reinstate the members of respondent union. On March 12, 1963 some 88 union members were thus
reinstated by petitioner. However, petitioner discriminated against the reemployed workers with respect to wage rates, off-season pay,
cost of living allowance, milling bonus and Christmas bonus by depriving them of aforesaid benefits or by granting to some members
benefits lesser than those given to members of the Pasudeco Workers Union, another labor group in the service of petitioner. By
reason of such denial and/or grant of lower benefits to respondent's members because of their union affiliation and union activities,
respondent filed with the CIR a complaint dated September 10, 1964 for unfair labor practice against petitioner which case was
docketed as Case No. 4264-ULP.

On December 4, 1972, the CIR handed down a decision adjudging herein petitioner guilty of unfair labor practice acts as charged and
finding the same to have been committed, and thereby directing petitioner to cease and desist from further committing the said unfair
labor practice acts and directing petitioner to pay wage differentials to certain workers and fringe benefits as would be found due and
payable to them and to readmitted seasonal and casual members of respondent union totalling 88 with the exception of 7 workers.

In a resolution dated May 28, 1973, the CIR denied petitioner's motion for reconsideration of aforesaid decision filed on December 14,
1972. Petitioner appealed the above decision and resolution to this Court on June 15, 1973 praying in its petition for the nullification
of said decision and motion for being contrary to law, and for the rendition of a new judgment dismissing CIR Case No. 4264-ULP.

This Court, in its resolution of July 31, 1973, denied the said petition for review (docketed as G.R. No. L-36994) for lack of merit.
Petitioner then moved for reconsideration of aforesaid denial which was denied on October 4, 1973 for lack of merit. Said resolution
denying the motion for reconsideration thus became final and executory on October 12, 1973.

With the finality of the December 4, 1972 decision having been settled, respondent Union filed with the CIR a motion for computation
of final judgment and a petition for attorney's lien both dated October 17, 1973 (pp. 47 & 50, rec.).

Petitioner company filed its answer to motion for computation of final judgment and the petition for attorney's lien under date of
November 20, 1973 (p. 52, rec.).

The CIR, acting on the aforesaid motions of respondent Union, issued its order of June 6, 1974 approving and granting to respondent's
counsel, Atty. Ignacio Lacsina, attorney's fees equivalent to 20% of the total amount of final judgment or whatever recovery or
settlement is made and directing its Examining Division to compute the wage and fringe benefits differentials due the 28 individual
workers who did not waive or quitclaim their rights established by the decision of December 4, 1972 as well as the attorney's fees
equivalent to 20% of the total wage and fringe benefits differentials due the fifty-three (53) individual workers who executed
agreements with the company waiving and quitclaiming their rights, benefits and privileges under the aforesaid decision (pp. 15 & 57,
rec.).

Petitioner moved for reconsideration of aforecited order on June 26, 1974 and on July 5, 1974, the arguments supporting said motion
for reconsideration followed (pp. 63 & 65, rec.).
Respondent Union then filed its motion to strike out the motion for reconsideration dated July 23, 1974 (p. 72, rec.). In a resolution of
September 3, 1974, respondent lower court denied petitioner's motion for reconsideration.

Thus, this appeal from the subject order and resolution of the CIR.

Petitioner alleges the following assignment of errors:

1. The Court of Industrial Relations erred in awarding attorney's fees to the union's counsel equivalent to 20% of the total amount of
final judgment or whatever recovery or settlement is made thereunder; because, aside from being inequitable, exorbitant, excessive
and unconscionable, the same is without legal basis.

2. The Court of Industrial Relations erred in ordering the Chief of its examining division or his duly authorized representative to
examine the payrolls, vouchers, books of account and other pertinent documents of petitioner, and to compute the wage and fringe-
benefits differentials allegedly due the members of respondent Union because such examination and computation have become
academic.

3. The Court of Industrial Relations erred in not denying or dismissing the two motions filed by respondent union on October 18, 1973
praying therein that the union's counsel be awarded attorney's fees and that an order be issued directing the examining division of the
court to compute the wage and fringe benefits differentials allegedly due the members of the union under the decision of December 4,
1972.

Respondents, however, contend that —

1. The issue of quitclaims is now res judicata;

2. The CIR finding that 81 members of respondent union are entitled to adjudged benefits is no longer alterable after
decision has become final;

3. The CIR power to adjust unfair labor practices is unaffected by individual settlements;

4. The rights of labor are unwaivable; quitclaims null and void; and

5. The question regarding alleged unreasonableness of award of attorney's fees, not raised before Court a quo, is
barred on appeal.

After a careful evaluation of the petitioners' and respondents' pleadings, this Court, finds the allegations of petitioner to be without
merit.

On the first assignment of error, paragraph (a), the petitioner failed to raise the issue before the trial court. This Court notes that
petitioner's answer to the motion for computation of final judgment and to petition for attorney's lien filed by the respondent in the
trial court did not raise the foregoing issue. It is a well-settled doctrine in this jurisdiction that issues not raised in the trial court may
not be raised on appeal. Otherwise, there will be no end to litigations thus defeating the ends of justice.

Nevertheless, this Court finds the allegations to be devoid of merit. Petitioner's contention that there is no basis for respondent's
petition for attorney's lien filed with the trial court containing allegations relative to attorney's fees as agreed upon between him and
his client, the complainant Sugar Workers' Association, is untenable. The written conformity of the President of said Sugar Workers
Association on behalf thereof confirms the existence of such an agreement on attorney's fees and constitutes an irrefutable evidence of
such agreement. The trial court, therefore, had sufficient evidence upon which it based its decision. The petitioner did not contest the
allegations contained in the respondent's petition for attorney's lien before the trial court. This constitutes an implied admission
thereof. Moreover, it is evident from the tenor of the trial court's order issued on June 6, 1974 that the said court carefully evaluated
the respondent's petition for attorney's lien and even reduced the percentage from 25 IC to 20 %.

On the first assignment of error, paragraph (b), this Court likewise finds the same to be without merit. This issue has already been
resolved by this Court when the petitioner filed its first petition for certiorari (G.R. No. L- 36994) seeking nullification of the trial
court's judgment on the same issue. Petitioner's allegations were rejected by this Court in said case. It may not now be repeated and
raised on appeal before this Court, the same being res judicata.

Be that as it may, the allegations of petitioner to the effect that by reason of the quitclaims there is nothing upon which the attorney's
lien attaches, is not valid. This Court finds the quitclaims not valid. Firstly, said quitclaims were secured on December 27, 1972 by
petitioner after it lost its case in the lower court when the latter promulgated its decision on the case on December 4, 1972. Obviously
in its desire to deny what is due the sugar workers concerned and frustrate the decision of the lower court awarding benefits to them, it
used its moral ascendancy as employer over said workers to secure said quitclaims. Predicated on said quitclaims, petitioner filed a
petition for certiorari before this Court but the same was denied by the Court on July 31, 1973 and October 4, 1973. Petitioner now
has the audacity to return before this Court still invoking said quitclaims, which We again reject.

Secondly, while rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law (Art. 6, New Civil Code). The quitclaim agreements contain the following
provisions in paragraph I 1, No. 3, thereof:

3. Nothing herein stipulated shall be construed as an admission and/or recognition by the Party of The Second Part
of its failure refusal and/or omission as employer, to faithfully comply with the pertinent laws, rules and regulations
and/or agreements, nor its liability therefor and thereunder.

Needless to state, the foregoing provisions are contrary to law, It exempts the petitioner from any legal liability. The above- quoted
provision renders the quitclaim agreements void ab initio in their entirety since they obligated the workers concerned to forego their
benefits, while at the same time, exempted the petitioner from any liability that it may choose to reject. This runs counter to Article 22
of the New Civil Code which provides that no one shall be unjustly enriched at the expense of another.

Thirdly, the alleged quitclaim agreements are contrary to public policy. Once a civil action is filed in court, the cause of action may
not be the subject of compromise unless the same is by leave of the court concerned. Otherwise, this will render the entire judicial
system irrelevant to the prejudice of the national interest. Parties to litigations cannot be allowed to trifle with the judicial system by
coming to court and later on agreeing to a compromise without the knowledge and approval of the court. This converts the judiciary
into a mere tool of party-litigants who act according to their whims and caprices. This is more so when the court has already rendered
its decision on the issues submitted.

In the case at bar, the lower court has already rendered a decision on the issues presented before the alleged quitclaims agreements
were made. The quitclaim agreements were secured by petitioner while it filed a petition for certiorari before this Court for a review of
the lower court's decision. The quiclaim agreements taken together with the petitioner's petition for certiorari of the trial court's
decision clearly and unmistakably shows the bad faith of the petitioner and its outright refusal to comply with its legal obligations.
And now it has the temerity to attempt to use this Court as its instrument for the purpose.

This Court rejects the contention of petitioner to the effect that the lien of an attorney on the judgment or decree for the payment of
money and the preference thereof which he has secured in favor of his client takes legal effect only from and after, but not before
notice of said lien has been entered in the record and served on the adverse party, citing the cases of Menzi and Co. vs. Bastida (63
Phil. 16) and Macondray & Co. vs. Jose (66 Phil. 590) in support thereof.

This Court finds the petitioner's contentions and citations applicable only when the case has already been decided with finality. In the
case at bar, the original case was decided with finality only after this Court denied the petitioner's motion for reconsideration of this
Court's denial of its petition for certiorari on the lower court's decision.

This Court is appalled by the attempt of petitioner to mislead it by alleging that the lower court recognized the validity and effectivity
of the 53 individual agreements when it declared allegedly that "rights may be waived. " The records show that the lower court
qualified its statement to the effect that the waiver must not be contrary to law, public order, public policy, morals or good customs, or
prejudicial to a third person with a right recognized by law citing Article 6 of the New Civil Code. This attempt by petitioner casts a
serious doubt on the integrity and good faith not only of the petitioner but also of its counsel.

This Court rejects the allegation of petitioner to the effect that the 53 agreements gave substance to the policy of the Industrial Peace
Act of encouraging the parties to make all reasonable efforts to settle their differences by mutual agreement, citing the case of
Filomena Dionela, et al. vs. CIR, et al. (L-18334, August 31, 1963).

Petitioner's contention and the case cited in support thereof apply only where there is good faith on the part of the party litigants. In the
case at bar, petitioner acted with evident bad faith and malice. Petitioner secured the 53 quitclaim agreements individually with the 53
sugar workers without the intervention of respondent's lawyer who was representing them before the lower court. This subterfuge is
tantamount to a sabotage of the interest of respondent association. Needless to say, the means employed by petitioner in dealing with
the workers individually, instead of collectively through respondent and its counsel, violates good morals as they undermine the unity
of respondent union and fuels industrial disputes, contrary to the declared policy in the Industrial Peace Act.

This Court likewise rejects petitioner's allegation that the 53 quitclaim agreements were in the nature of a compromise citing the case
of Republic vs. Estenzo, et al., (L-24656, September 25, 1968, 25 SCRA 122) and Articles 2028 and 2040 of the New Civil Code.

Petitioner's allegations and citations apply only to compromises between the party-litigants done in good faith. In the case at bar, there
was no compromise between the petitioner and the respondent Sugar Workers Association. In respect of the 53 quitclaims, these are
not compromise agreements between the petitioner and respondent union. They are separate documents of renunciation of individual
rights. Compromise involves the mutual renunciation of rights by both parties on a parity basis. The quitclaims, however, bind the
workers to renounce their rights while the petitioner not only does not renounce anything but also acquires exemption from any legal
liability in connection therewith.

On the First Assignment of Error, Paragraph (c), the petitioner anchors his allegations on the technical procedural requirements of
Section 37, Rule 138 of the New Rules of Court. This Court, however, finds petitioner's allegation without merit. Said provision of the
Rules of Court is meant to protect the interest of an attorney's client and the adverse party by seeing to it that they are given the
opportunity to contest the creation of the attorney's lien. It will be noted from the records that the client Sugar Workers Union was not
only notified but also affixed its conformity to the respondents' motion for attorney's lien. With respect to the adverse party, the
petitioner in this case, said adverse party's interest was amply protected by the lower court when the latter admitted petitioner's answer
to respondent's motion for computation of final judgment and to respondent's counsel's petition for attorney's lien. Petitioner did not
raise the aforesaid technicality in its answer before the lower court. It cannot now raise it for the first time on appeal.

On the First Assignment of Error, Paragraph (d), this Court finds petitioner's allegations to the effect that the attorney's fees awarded
are inequitable, exorbitant, excessive and unconscionable, citing in the process the case of Meralco Workers' Union vs. Gaerlan (32
SCRA 419), completely without basis nor merit.

Again, petitioner did not raise this issue in the lower court. It cannot now raise said issue for the first time on appeal before this Court.
Nevertheless, petitioner has failed to prove any of its allegations. Hence, this Court finds the same worthless. The Meralco case does
not apply in this case for the reason that the facts and circusmtances are entirely different.

On the Second Assignment of Error, this Court finds petitioner's allegation to the effect that the lower court erred in ordering the
computation of judgment on the ground that by reason of the quitclaim agreements the computation of judgment has become
academic, to be without merit and grossly inane.

The allegations of petitioner are premised on its previous allegations regarding the quitclaims. This Court has earlier stated that the
quitclaim agreements are void ab initio. The lower court was correct in directing the computation of judgment, there being a basis
therefor.

On the Third Assignment of Error, this Court likewise finds petitioner's allegations which are based on its allegations in support of the
first and second assignments of errors, without merit, as heretofore discussed.

WHEREFORE, THE PETITION IS HEREBY DISMISSED AND RESPONDENT CIR (NOW THE NLRC) IS HEREBY
DIRECTED TO IMPLEMENT ITS ORDER DATED JUNE 6,1974.

COSTS AGAINST PETITIONER.

SO ORDERED.
SECOND DIVISION

[G.R. No. 115755. December 4, 2000]

IMELDA B. DAMASCO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MANILA GLASS SUPPLY and
BONIFACIO K. SIA, respondents.

[G.R. No. 116101. December 4, 2000]

BONIFACIO K. SIA and MANILA GLASS SUPPLY, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
LABOR ARBITER DOMINADOR B. SALUDARES, DEPUTY SHERIFF ANTONIO T. DATU and IMELDA B.
DAMASCO, respondents.

DECISION

QUISUMBING, J.:

These two petitions for certiorari seek to annul the decision promulgated by public respondent National Labor Relations
Commission (NLRC) on March 21, 1994 in NLRC CA No. L-001159, and its resolution dated May 11, 1994, which denied petitioners
respective motions for reconsideration.

Ms. Imelda Damasco is the petitioner in G.R. No. 115755 and private respondent in G.R. No. 116101. She was a regular sales
clerk in Manila Glass Supply in Olongapo City.

Manila Glass Supply is private respondent in G.R. No. 115755 and petitioner in G.R. No. 116101. It is a sole proprietorship
engaged in the sale of glass with main store in Olongapo City and branch in Metro Manila. Bonifacio K. Sia is private respondent in
G.R. No. 115755 and petitioner in G.R. No. 116101. He is the owner of Manila Glass Supply.

The factual background of this case as summarized by the labor arbiter is as follows:

That she [Damasco] was employed by respondents [Manila Glass Supply and Bonifacio K. Sia] as Sales Clerk on January 30, 1992,
receiving lately a daily wage of P140.00; that as sales clerk, she was ordered to do almost all the works related to the glass business of
respondents including the cutting, sales and delivery of glass as well as balancing, accounting and checking of capital and profits
every end of the month; that she was made to work from 8:30 in the morning up to 9:30 in the evening continuously from Monday to
Sunday without having been paid overtime pay, rest day pay and holiday pay; that during the period of her employment, she was not
paid any 13th month pay as well as five (5) days service incentive leave pay; that on August 28, 1992 at around 7:00 oclock in the
evening, while she was working, respondent Bonifacio Sia called her up and told her to finish all her works that night, but she told
respondent that she would not be able to finish them all because it was already late; that she then left respondents room but respondent
called her again and asked her why she could not finish what she was told to do, to which complainant [Damasco] answered that it
was already late and there were still a lot of things to do; that respondent asked her what she was doing since he (respondent) left for
Manila, to which complainant told him that she was attending to the sales, to the field and to other things relative to the business of
respondent, to which respondent got mad at her; that respondent asked complainant why she was not teaching her two (2) other co-
workers on what to do, and she answered she would not do it anymore because if the other co-workers should commit mistakes in
accounting, she was the first one to be lambasted by respondent and even required to share in paying the shortages; that when
respondent heard this, he picked up and swiped an ashtray in front of complainant and it broke, after which, he threw some notebooks
at complainant who began to tremble in fear and her whole body shook; respondent ordered her to go out of the room, lambasted her
again and told her that he (respondent)does not want to see her face anymore (ayaw ko nang makita ang pagmumukha mo rito); that
after respondent had left, complainant again trembled and she could not prevent herself from crying, her co-workers applied alcohol
on her because her body was cold, given water to drink and after about an hour, complainant decided not to finish her work anymore
because she felt weak; that one of his co-workers, Alma, brought her home and since then, she did not report for work anymore
because she developed a phobia of respondent

Disputing the claim of complainant, respondents maintain as follows: That sometime in the late part of August 1992, complainant was
instructed by respondent to report for work in their store in Metro Manila as there is a necessity for her detail thereat for reasons that
the employees there are new and do not have the experience and know-how in running the store specifically with regards (sic) to the
sale of glass; that complainant manifested her objection to such detail for reasons that her husband is working in Olongapo City and
she does not want to work in Manila; that thereafter, complainant did not report for work in the respondents store in Olongapo City, so
respondent sent some of his employees to the house of complainant but were told that she is sick and cannot report for work; that
sometime in the first week of January 1993, respondent received a copy of the instant complaint filed by complainant; that
immediately, respondent thru counsel sent a letter to complainant directing her to report for work on January 13, 1993 at its store in
Olongapo City; that complainant ignored the letter despite receipt thereof, hence, on January 15, 1993, respondent again sent
complainant another letter directing her to report for work on January 22, 1993 but just the same, complainant failed and refused to
report for work; that it is not true as claimed by complainant that respondent shouted at her and swiped an ashtray from the table and
threw at her some notebooks. [1]

On December 7, 1992, Damasco filed before the NLRC Regional Arbitration Branch in San Fernando, Pampanga, a complaint
against Bonifacio Sia and Manila Glass Supply (jointly referred hereafter as Sia for easy reference). In the one-page complaint form of
the NLRC, Damasco indicated that she is suing her employer for illegal dismissal and non-payment of overtime pay.[2] However, in
her complaint affidavit and position paper filed later before the labor arbiter, Damasco additionally charged her employer with non-
payment of 13th month pay, service incentive leave pay, holiday pay and night shift differential. [3]

On September 2, 1993, the labor arbiter rendered judgment in favor of Ms. Damasco. The labor official declared that Sia has not
shown any just or authorized cause in terminating the services of Damasco, except for wild, generalized and self-serving statements
that Damasco committed serious misconduct or willful disobedience of the lawful orders in connection with her work. The labor
arbiter also ruled that Damasco is entitled to 13th month pay, service incentive leave pay, holiday pay, overtime pay, and disposed of
the case, thus:

WHEREFORE, premises considered, judgment is hereby entered in favor of the complainant and against respondents, ordering the
latter, as follows:

1.To pay the total sum of P112,570.32 representing unpaid 13th month pay, holiday pay, overtime and premiums pay, five (5) da ys
service incentive leave pay, backwages and separation pay of complainant;

2.To pay attorneys fees in the sum of P11,257.00 which is ten (10%) percent of the award; and

3.All other claims or issues, for want of substantial evidence, are hereby DISMISSED.

SO DECIDED.[4]

On appeal, the NLRC upheld the labor arbiters finding that Damasco was illegally dismissed but modified the labor officials
judgment, thus:

PREMISES CONSIDERED, the Decision of September 2, 1993, is hereby MODIFIED. Respondents are directed to pay complainant
the following:

I. Backwages .. P43,680.00

II. Separation Pay 36,400.00

III. 13th month pay . 10,920.00

IV. Service Incentive Leave Pay 2,100.00

V. Holiday Pay .. 4,200.00

VI. Attorneys fees .. 1,722.00

--------------

T O T A L ----- P99,022.00

SO ORDERED.[5]

Both parties filed motions for reconsideration which were denied.

On July 4, 1994, the NLRC issued an entry of judgment stating that the aforesaid judgment of the labor tribunal has become final
and executory.

On July 7, 1994, the labor arbiter, upon motion of Damasco, issued a writ of execution. In compliance therewith, public
respondent deputy sheriff issued the next day a notice of garnishment addressed to Far East Bank and Trust Company, Olongapo City,
against all credits and deposits of Bonifacio Sia and/or Manila Glass Supply maintained in said bank, sufficient to cover the monetary
award in favor of Damasco.[6]
 In her petition, Damasco alleged that the NLRC committed grave abuse of discretion:

IN DELETING THE AWARD FOR OVERTIME PAY AND REDUCING THE ATTORNEYS FEES IN FAVOR OF
PETITIONER.[7]

In his memorandum, Sia raised the following issues for resolution, thus:

WHETHER OR NOT PUBLIC RESPONDENT LABOR ARBITER SALUDARES DEPRIVED PETITIONERS OF THEIR
RIGHT TO DUE PROCESS AND THUS COMMITTED GRAVE ABUSE OF DISRCRETION, AMOUNTING TO LACK OR
EXCESS OF JURISDICTION

WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO
LACK OR EXCESS OF JURISDICTION, IN AFFIRMING, ALBEIT WITH MODIFICATIONS, THE LABOR ARBITERS
PATENTLY NULL AND VOID DECISION.[8]

In our view, the crucial issue for resolution is whether or not the NLRC committed grave abuse of discretion in affirming the
decision of the labor arbiter which held that Damasco was illegally dismissed from her job.

On August 1, 1994, we decided to consolidate the two petitions inasmuch as they involve the same parties and intertwined
issues. Likewise, we issued a temporary restraining order, effective immediately and continuing until further orders from this Court,
enjoining the parties concerned from implementing the subject writ of execution and notice of garnishment dated July 7 and 8, 1994,
which were respectively issued by the labor arbiter and deputy sheriff of NLRC Regional Arbitration Branch III, San Fernando,
Pampanga.[9]

We note that both petitioners did not comply with the rule on certification against forum shopping. The certifications in their
respective petitions were executed by their lawyers, which is not correct. [10] The certification of non-forum shopping must be by the
petitioner or a principal party and not the attorney. This procedural lapse on the part of petitioners could have warranted the outright
dismissal of their actions.[11]

But, the Court recognizes the need to resolve these two petitions on their merits as a matter of social justice involving labor and
capital. After all, technicality should not be allowed to stand in the way of equitably and completely resolving herein the rights and
obligations of these parties.[12]Moreover, we must stress that technical rules of procedure in labor cases are not to be strictly applied if
the result would be detrimental to the working woman. [13]

Sia contends that he was deprived of his right to due process as the labor arbiter failed to conduct a hearing for the reception of
evidence. He also claims that the labor arbiters finding that Damasco was illegally dismissed is not supported by substantial evidence.
On the contrary, Sia insists, Damasco abandoned her work as she refused to be detailed at her employers store in Metro Manila.

Sias contentions are bereft of merit. His words cannot hide the oppressive acts obviously directed to deprive Ms. Damasco of her
employment and erode her dignity as a worker.

It is now axiomatic that the essence of due process in administrative proceedings is simply an opportunity to explain ones side or
an opportunity to seek reconsideration of the action or ruling complained of. [14] A formal or trial-type hearing is not at all times and in
all instances essential to due process, the requirements of which is satisfied where parties are afforded fair and reasonable opportunity
to explain their side of the controversy at hand.[15]

As noted by the Solicitor General and petitioner Damasco, the labor arbiter set the case several times for preliminary conference
but the parties failed to reached an amicable settlement.[16] The labor arbiter then ordered the parties to submit their position papers. In
compliance therewith, the parties submitted position papers where they set out and argued the factual as well as the legal bases of their
position. Damasco filed her position paper, computation of money claims and affidavit. For his part, Sia filed his position paper and
affidavit. Damasco, in turn, filed her affidavit in reply to the affidavit of Sia. After both parties had filed their replies, the case was
deemed submitted for resolution as the labor arbiter did not find it necessary to conduct a trial-type hearing. Note that the filing of
position papers and supporting documents fulfills the requirements of due process. [17] Further, it is within the discretion of the labor
arbiter to determine if there is a need for a hearing.[18] Thus, we cannot subscribe to Sias posturing that the labor arbiter gravely abused
its discretion when he dispensed with the hearing to receive further evidence.[19]
 Moreover, Sia was given additional opportunity to argue his case on appeal before the NLRC in a memorandum and motion for
reconsideration which pleadings were likewise considered by that labor agency in the course of resolving the case. Sia cannot
thereafter interpose lack of due process since he was given sufficient time and ample chances to be heard in the present case.
Consequently, the alleged defect in the proceedings in the labor arbiter, if there be any, should be deemed cured. [20] All told, Sias due
process argument must fail.

On Sias assertion that the labor arbiters finding is not supported by ample evidence, suffice it to state that judicial review of labor
cases does not go as far as to evaluate the sufficiency of evidence upon which the labor arbiter and NLRC based their
determinations.[21] Moreover, this Court does not review supposed errors in the decision of the NLRC which raise factual issues
because findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality aside from the
consideration that this Court is not a trier of facts.[22] In any case, in our view, the labor arbiter used every reasonable means to
ascertain the facts by giving the parties ample opportunity to present evidence. It is worth stressing that in controversies between a
worker and her employer doubts reasonably arising from evidence or in the interpretation of agreements should be resolved in the
formers favor.[23] Thus, the labor arbiter had reasonable ground to sustain the version of Ms. Damasco on how she was
unceremoniously dismissed from her job. Furthermore, Sia did not quite succeed to convince the NLRC to rule otherwise. Finally, the
mere fact that the worker seeks reinstatement and backpay directly rebuts the employers bare claim of abandonment by the worker of
his employment.

Thus, going now to the specific issue of abandonment, we find no merit in Sias allegation that Ms. Damasco abandoned her job.
To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason,
and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor when
manifested by some overt acts.[24]Abandoning ones job means the deliberate, unjustified refusal of the employee to resume his
employment and the burden of proof is on the employer to show a clear and deliberate intent on the part of the employee to
discontinue employment.

In this case, there are no overt acts established by Sia from which we can infer the clear intention of Damasco to desist from
employment. Sias letters dated January 7 and 15, 1993, for Damasco to report for work deserve scant consideration. Note that those
orders were made four months after Damasco was told not to show herself again in the store, and after Sia had received a copy of
Damascos complaint for illegal dismissal. It is indeed highly incredible for an employer to require his employee without an approved
leave to report to work only after four months of absence. If at all, the charge of abandonment is disingenuous to say the least.
Moreover, as noted by the NLRC, it was unlikely that Damasco had abandoned her job for no reason at all considering the hardship of
the times. In addition, if Damasco had truly forsaken her job, she would not have bothered to file a complaint for illegal dismissal
against her employer and prayed for reinstatement. An employee who forthwith took steps to protect her layoff could not by any logic
be said to have abandoned her work.[25]

As to Sias allegation that Ms. Damasco committed serious misconduct or willful disobedience of lawful order in connection with
her work, we find no tenable support. Even if Sia directed her to be assigned at his store in Metro Manila, her act of refusing to be
detailed in Metro Manila could hardly be characterized a willful or intentional disobedience of her employers order. It was Sias order
that appears to us whimsical if not vindictive.Reassignment to Metro Manila is prejudicial to Ms. Damasco, as she and her family are
residing in Olongapo City. This would entail separation from her family and additional expenses on her part for transportation and
food. Damascos reassignment order was unreasonable, considering the attendant circumstances. [26]

In sum, we conclude there is no valid and just cause to terminate the employment of Ms. Damasco. The NLRC did not gravely
abuse its discretion in upholding the finding of the labor arbiter that Ms. Damascos dismissal was not for cause.

An employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other
privileges as well as to his full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual reinstatement. [27]

However, in our view, the circumstances obtaining in this case do not warrant the reinstatement of Ms. Damasco. Antagonism
caused a severe strain in the relationship between her and her employer. A more equitable disposition would be an award of separation
pay equivalent to one (1) months pay for every year of service with the employer.[28]

Now, as regards Ms. Damascos contention that public respondent gravely abused its discretion in deleting the award for overtime
pay for lack of factual basis, we find the same impressed with merit. We note that Sia has admitted in his pleadings that Damascos
work starts at 8:30 in the morning and ends up at 6:30 in the evening daily, except holidays and Sundays. However, Sia claims that
Damascos basic salary of P140.00 a day is more than enough to cover the one hour excess work which is the compensation they
allegedly agreed upon.[29]

Judicial admissions made by parties in the pleadings, or in the course of the trial or other proceedings in the same case are
conclusive, no further evidence being required to prove the same, and cannot be contradicted unless previously shown to have been
made through palpable mistake or that no such admission was made. [30] In view of Sias formal admission that Ms. Damasco worked
beyond eight hours daily, the latter is entitled to overtime compensation. No further proof is required. Sia already admitted she worked
an extra hour daily. Thus, public respondent gravely erred in deleting the award of overtime pay to Ms. Damasco on the pretext that
the claim has no factual basis.

Still, even assuming that Damasco received a wage which is higher than the minimum provided by law, it does not follow that
any additional compensation due her can be offset by her pay in excess of the minimum, in the absence of an express agreement to
that effect. Moreover, such arrangement, if there be any, must appear in the manner required by law on how overtime compensation
must be determined. For it is necessary to have a clear and definite delineation between an employees regular and overtime
compensation to thwart violation of the labor standards provision of the Labor Code. [31]

With regard to the award of attorneys fees the ten percent (10%) attorneys fees is provided for in Article 111 of the Labor
Code. Considering the circumstances of this case, said award is in order.

WHEREFORE, in G.R. No. 115755, the petition is GRANTED. The judgment of the Labor Arbiter in favor of petitioner
Imelda B. Damasco dated September 2, 1993 is REINSTATED in full. In G.R. No. 116101, the petition of Bonifacio K. Sia and
Manila Glass Supply is DISSMISSED for lack of merit. Costs against petitioners Bonifacio K. Sia and Manila Glass Supply.

SO ORDERED.
THIRD DIVISION

[G.R. No. 105963. August 22, 1996]

PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC. (PESALA), petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and ANGEL V. ESQUEJO, respondent.

DECISION

PANGANIBAN, J.:

Is an employee entitled to overtime pay for work rendered in excess of eight hours a day, given the fact that his employment
contract specifies a twelve-hour workday at a fixed monthly salary rate that is above the legal minimum wage? This is the principal
question answered by this Court in resolving this petition which challenges the validity and legality of the Decision[1] of public
respondent National Labor Relations Commission[2]promulgated on April 23, 1992 in NLRC NCR CA No. 002522-91 entitled Angel
V. Esquejo vs. PAL Employees Savings and Loan Association which Decision modified (slightly as to amount) the earlier
decision[3] dated November 11, 1991 of the labor arbiter granting private respondents claim for overtime pay.

The Facts and the Case Below

On October 10, 1990, private respondent filed with public respondent a complaint docketed as NLRC NCR Case No. 10-05457-90
for non-payment of overtime pay and non-payment of the P25.00 statutory minimum wage increase mandated by Republic Act No.
6727.

Subsequently, private respondent filed a supplemental complaint for illegal suspension with prayer for reinstatement and payment
of backwages. However, before the case was submitted for resolution, private respondent filed a Motion to Withdraw Supplemental
Complaint on the ground that a separate action for illegal suspension, illegal dismissal, etc. had been filed and was pending before
another labor arbiter. Hence, the issue decided by public respondent and which is under review by this Court in this petition involves
only his claim for overtime pay.

On November 26, 1990, private respondent filed his position paper [4] with the labor arbiter alleging the following facts
constituting his cause of action:

Complainant (herein private respondent) started working with respondent (PESALA) sometime last March 1, 1986 as a company
guard and was receiving a monthly basic salary of P1,990.00 plus an emergency allowance in the amount of P510.00. He was required
to work a (sic) twelve (12) hours a day, a (sic) xerox copies of his appointment are hereto attached and marked as Annexes C and D of
this position paper;

That on December 10, 1986, respondent Board of Directors in its board meeting held on November 21, 1986 approved a salary
adjustment for the complainant increasing his monthly basic salary to P2,310.00 and an emergency allowance of P510.00, a xerox
copy of the salary adjustment is hereto attached and marked as Annex E hereof;

That on August 25, 1987, because of his impressive performance on his assigned job, another adjustment was approved by the
President of the association increasing his monthly basic salary to P2,880.00, a xerox copy of the salary adjustment is hereto attached
and marked as Annex F hereof;

That from January 4, 1988 up to June 1990, several salary adjustments were made by the respondent on the monthly basic salary of
the complainant including a letter of appreciation for being as (sic) one of the outstanding performers during the first half of 1988, the
latest salary prior to the filing of the complaint was P3,720.00, a (sic) xerox copies of all the documents relative to the salary
adjustments are hereto attached and marked as annexes G, H, I, J and K of this position paper;

That during his entire period of employment with respondent, the former was required to perform overtime work without any
additional compensation from the latter. It was also at this point wherein the respondent refused to give the P25.00 increase on the
minimum wage rates as provided for by law. On October 12, 1990, complainant was suspended for the period of thirty seven (37) days
for an offense allegedly committed by the respondent sometime last August 1989.

On December 13, 1990, petitioner PESALA filed its position paper[5] alleging among other things:

On 01 March, 1986, complainant was appointed in a permanent status as the company guard of respondent. In the Appointment
Memorandum dated February 24, 1986 which has the conformity of complainant, it is expressly stipulated therein that complainant is
to receive a monthly salary of P1,900.00 plus P510.00 emergency allowance for a twelve (12) hours work per day with one (1) day
off. A copy of said appointment memorandum is hereto attached as Annex A and made an integral part hereof.

On 01 December, 1986, the monthly salary of complainant was increased to P2,310.00 plus P510.00 emergency allowance. Later,
or on 01 January, 1988, the monthly salary of complainant was again increased to P3,420.00. And still later, or on 01 February, 1989,
complainants monthly salary was increased to P3,720.00. Copies of the memoranda evidencing said increase are hereto attached as
Annexes B, B-1 and B-2 and are made integral parts hereof.

On 29 November, 1989, the manager of respondent in the person of Sulpicio Jornales wrote to complainant informing the latter that
the position of a guard will be abolished effective November 30, 1989, and that complainant will be re-assigned to the position of a
ledger custodian effective December 1, 1989.

Pursuant to the above-mentioned letter-agreement of Mr. Jornales, complainant was formally appointed by respondent as its ledger
custodian on December 1, 1989. The monthly salary of complainant as ledger custodian starting on December 1, 1989 was P3,720.00
for forty (40) working hours a week or eight (8) working hours a day. A copy of said Appointment memorandum is hereto attached as
Annex C and made an integral part hereof.

On 29 August, 1990, complainant was administratively charged with serious misconduct or disobedience of the lawful orders of
respondent or its officers, and gross and habitual neglect of his duties, committed as follows:

1. Sometime in August, 1989, you (referring to complainant Esquejo) forwarded the checks corresponding to the withdrawals of
Mr. Jose Jimenez and Mr. Anselmo dela Banda of Davao and Iloilo Station, respectively, without the signature of the
Treasurer and the President of PESALA, in violation of your duty and function that you should see to it that the said checks
should be properly signed by the two PESALA officials before you send out said checks of their addresses. As a result of
which, there was a substantial delay in the transmission of the checks to its owners resulting to an embarrassment on the
part of the PESALA officers and damage and injury to the receipients (sic) of the checks since they needed the money
badly.

2. Sometime in August, 1989, before you (complainant) went on your vacation, you failed to leave or surrender the keys of the
office, especially the keys to the main and back doors which resulted to damage, injury and embarrassment to
PESALA. This is a gross violation of your assigned duties and you disobeyed the instruction of your Superior.

xxx xxx xxx

Herein complainant was informed of the aforequoted charges against him and was given the opportunity to be heard and present
evidence in his behalf as shown by the Notice of Hearing (Annex D hereof) sent to him. Complainant did in fact appeared (sic) at the
hearing, assisted by his counsel, Atty. Mahinardo G. Mailig, and presented his evidence in the form of a Counter-Affidavit. A copy of
said Counter-Affidavit is hereto attached as Annex E and made an integral part hereof.

On 12 October, 1990, after due deliberation on the merits of the administrative charges filed against herein complainant, the
Investigating Officer in the person of Capt. Rogelio Enverga resolved the same imposing a penalty of suspension of herein
complainant, thus:

PENALTY: 1. For the first offense, you (referring to complainant Esquejo) are suspended for a period of thirty (30) working
days without pay effective October 15, 1990.

2. For the second offense, your (sic) are suspended for a period of seven (7) working days without pay effective from the date
the first suspension will expire.

On March 7, 1991, private respondent filed a detailed and itemized computation of his money claims totaling P107,495.90, to
which petitioner filed its comment on April 28, 1991. The computation filed on March 7, 1991 was later reduced to P65,302.80. To
such revised computation, the petitioner submitted its comment on April 28, 1991.

Thereafter, labor arbiter Cornelio L. Linsangan rendered a decision dated November 11, 1991 granting overtime pay as follows:

WHEREFORE, judgment is hereby rendered:

1. Granting the claim for overtime pay covering the period October 10, 1987 to November 30, 1989 in the amount of
P28,344.55.
 2. The claim for non-payment of P25.00 salary increase pursuant to Republic Act No. 6727 is dismissed for lack of
merit.

Aggrieved by the aforesaid decision, petitioner appealed to public respondent NLRC only to be rejected on April 23, 1992 via the
herein assailed Decision, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the award is reduced to an amount of TWENTY EIGHT THOUSAND SIXTY-SIX PESOS
AND 45/100 (P28,066.45). In all other respects, the Decision under review is hereby AFFIRMED and the appeal DISMISSED for
lack of merit.

No motion for reconsideration of the Decision was filed by the petitioner. [6]

What transpired afterwards is narrated by the Solicitor General in his memorandum,[7] which we presume to be correct since
petitioner did not contradict the same in its memorandum:

x x x Petitioner did not appeal the Decision of respondent NLRC. When it became final, the parties were called to a conference on
June 29, 1992 to determine the possibility of the parties voluntary compliance with the Decision (Order of Labor Arbiter Linsangan,
dated July 23, 1992).

x x x In their second conference, held on July 15, 1992, petitioner proposed to private respondent a package compromise agreement
in settlement of all pending claims. Private respondent for his part demanded P150,000.00 as settlement of his complaint which was
turned down by petitioner as too excessive. Unfortunately, no positive results were achieved.

As a result, a pleading was filed by petitioner captioned: Motion to Defer Execution and Motion to Re-Compute alleged overtime
pay. Petitioner states that quite recently, the Employee Payroll Sheets pertaining to the salaries, overtime pay, vacation and sick leave
of Angel Esquejo were located.

x x x Petitioners Motion to Defer Execution and Motion to Re-Compute respondents overtime pay was denied in an Order dated
July 23, 1992.

x x x Petitioner moved to reconsider the Denial Order on July 27, 1992. Private respondent opposed.

In the meantime, petitioner filed the instant special civil action for certiorari before this Court on July 10, 1992. Later, on July 17,
1992, citing as reason that x x x quite recently, the Employee Payroll Sheets which contained the salaries and overtime pay received
by respondent Esquejo were located in the bodega of the petitioner and based on said Payroll Sheets, it appears that substantial
overtime pay have been paid to respondent Esquejo in the amount of P24,283.22 for the period starting January 1987 up to November
1989, petitioner asked this Court for the issuance of a temporary restraining order or writ of preliminary injunction. On the same date
of July 17, 1992, a Supplemental Petition Based On Newly Discovered Evidence was filed by petitioner to which was attached
photocopies of payroll sheets of the aforestated period.

On July 29, 1992, this Court issued a temporary restraining order enjoining the respondents from enforcing the Decision dated
April 23, 1992 issued in NLRC NCR CA No. 002522-91, the case below subject of the instant petition.

The Issues

For issues have been raised by the petitioner in its effort to obtain a reversal of the assailed Decision, to wit:

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT PRIVATE
RESPONDENT IS ENTITLED TO OVERTIME PAY WHEN THE SAME IS A GROSS CONTRAVENTION OF THE
CONTRACT OF EMPLOYMENT BETWEEN PETITIONER AND RESPONDENT ESQUEJO AND A PATENT VIOLATION OF
ARTICLES 1305, 1306 AND 1159 OF THE CIVIL CODE.

II

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN AWARDING OVERTIME PAY OF
P28,066.45 TO PRIVATE RESPONDENT WHEN THE SAME IS A CLEAR VIOLATION OF ARTICLE 22 OF THE CIVIL
CODE ON UNJUST ENRICHMENT.

III
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED OF DISCRETION WHEN IT RULED THAT PRIVATE
RESPONDENT WAS NOT PAID THE OVERTIME PAY BASED ON THE COMPUTATION OF LABOR ARBITER CORNELIO
LINSANGAN WHICH WAS AFFIRMED BY SAID RESPONDENT NLRC WHEN THE SAME IS NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE AND IT, THEREFORE, VIOLATED THE CARDINAL PRIMARY RIGHTS OF PETITIONER AS
PRESCRIBED IN ANG TIBAY VS. CIR 69 PHIL. 635.

IV

WHETHER OR NOT THE PETITIONERS SUPPLEMENTAL PETITION BASED ON NEWLY DISCOVERED EVIDENCE MAY
BE ADMITTED AS PART OF ITS EVIDENCE IT BEING VERY VITAL TO THE JUDICIOUS DETERMINATION OF THE
CASE.(Rollo, p. 367)

In essence the above issues boil down to this query: Is an employee entitled to overtime pay for work rendered in excess of the
regular eight hour day given the fact that he entered into a contract of labor specifying a work-day of twelve hours at a fixed monthly
rate above the legislative minimum wage?

The Courts Ruling

At the outset, we would like to rectify the statement made by the Solicitor General that the petitioner did not appeal from the
Decision of (public) respondent NLRC. The elevation of the said case by appeal is not possible. The only remedy available from an
order or decision of the NLRC is a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or
grave abuse of discretion.[8] The general rule now is that the special civil action of certiorari should be instituted within a period of
three months.[9] Hence, when the petition was filed on July 10, 1992, three months had not yet elapsed from petitioners receipt of the
assailed Decision (should really be from receipt of the order denying the motion for reconsideration).

However, aside from failing to show clearly grave abuse of discretion on the part of respondent NLRC, which we shall discuss
shortly, the petitioner also failed to comply with the mandatory requirement of filing a motion for reconsideration from the Decision
of the Public respondent before resorting to the remedy of certiorari. We have previously held that:

x x x. The implementing rules of respondent NLRC are unequivocal in requiring that a motion for reconsideration of the order,
resolution, or decision of respondent commission should be seasonably filed as a precondition for pursuing any further or subsequent
remedy, otherwise the said order, resolution, or decision shall become final and executory after ten calendar days from receipts
thereof. Obviously, the rationale therefor is that the law intends to afford the NLRC an opportunity to rectify such errors or mistakes it
may have lapsed into before resort to the courts of justice can be had. This merely adopts the rule that the function of a motion for
reconsideration is to point to the court the error that it may have committed and to give it a chance to correct itself. [10]

Additionally, the allegations in the petition clearly show that petitioner failed to file a motion for reconsideration of the assailed
Resolution before filing the instant petition. As correctly argued by private respondent Rolando Tan, such failure constitutes a fatal
infirmity x x x. The unquestioned rule in his jurisdiction is that certiorari will lie only if there is no appeal or any other plain, speedy
and adequate remedy in the ordinary course of law against the acts of public respondent. In the instant case, the plain and adequate
remedy expressly provided by law was a motion for reconsideration of the assailed decision, based on palpable or patent errors, to be
made under oath and filed within ten (10) calendar days from receipt of the questioned decision. And for failure to avail of the correct
remedy expressly provided by law, petitioner has permitted the subject Resolution to become final and executory after the lapse of the
ten day period within which to file such motion for reconsideration. [11]

In brief, the filing of the instant petition was premature and did not toll the running of the 3 month period. Thus, the assailed
Decision became final and executory. On this ground alone, this petition must therefore be dismissed.

However, in view of the importance of the substantial query raised in the petition, we have resolved to decide the case on the merits
also.

The First Issue: Was Overtime Pay Included?

The main disagreement between the parties centers on how the contract of employment of the private respondent should be
interpreted. The terms and conditions thereof read as follows:

Date: February 24, 1986

NAME : ESQUEJO, ANGEL

NATURE OF ACTION : APPOINTMENT

 FROM :

POSITION TITLE : COMPANY GUARD

TO :

STATUS : PERMANENT

EFFECTIVE DATE : MARCH 1, 1986

FROM : P1,990.00 per month

plus P510.00 emergency

allowance

SALARY :

TO :

------------------------------

REMARKS : To confirm permanent

appointment as company

guard who will render 12

hours a day with one (1)

day off

------------------------------

RECOMMENDED BY: APPROVED BY:

(Signed) (Signed)

SULPICIO B. JORNALES CATALINO F. BANEZ

(Signed)

ANGEL V. ESQUEJO[12]

Petitioner faults the public respondent when it said that there was no meeting of minds between the parties, since the employment
contract explicitly states without any equivocation that the overtime pay for work rendered for four (4) hours in excess of the eight (8)
hour regular working period is already included in the P1,990.00 basic salary. This is very clear from the fact that the appointment
states 12 hours a day work.[13] By its computations,[14] petitioner tried to illustrate that private respondent was paid more than the
legally required minimum salary then prevailing.

To prove its contention, petitioner argues that:

The legal minimum wage prescribed by our statutes, the legally computed overtime pay and the monthly salaries being paid by
petitioner to respondent Esquejo would show that indeed, the overtime pay has always been absorbed and included in the said agreed
monthly salaries.

In 1986, the legal minimum salary of Esquejo is computed as follows (per Appointment Memoranda dated February 4, 1986 and
June 6, 1986 [Annex C and D of Annex B of this Petition]):

54 x 314 days
 12 months = P1,413.00 monthly salary

The hourly overtime pay is computed as follows:

54/8 hours = P6.75 x 4 hrs. = P27.00

P27.00 x 1.25 = P33.75 x 20 (should be 26) days = P887.50

(should be P877.50)

P1,413.00 - legal minimum wage

+ 887.50(877.50) - legal overtime pay

P2,290.50 - amount due to respondent

Esquejo under the law

P2,500.00 - gross salary of Esquejo per contract

-2,290.50

P 209.50 - Difference (Rollo, p. 371).

On the other hand, private respondent in his position paper claims that overtime pay is not so incorporated and should be
considered apart from the P1,990.00 basic salary. [15]

We find for the private respondent and uphold the respondent NLRCs ruling that he is entitled to overtime pay.

Based on petitioners own computations, it appears that the basic salary plus emergency allowance given to private respondent
did not actually include the overtime pay claimed by private respondent. Following the computations it would appear that by adding
the legal minimum monthly salary which at the time was P1,413.00 and the legal overtime pay P877.50, the total amount due the
private respondent as basic salary should have been P2,290.50. By adding the emergency cost of living allowance (ECOLA) of
P510.00 as provided by the employment contract, the total basic salary plus emergency allowance should have amounted to
P2,800.50. However, petitioner admitted that it actually paid private respondent P1,990.00 as basic salary plus P510.00 emergency
allowance or a total of only P2,500.00. Undoubtedly, private respondent was shortchanged in the amount of P300.50.Petitioners own
computations thus clearly establish that private respondents claim for overtime pay is valid.

Side Issue: Meeting of the Minds?

The petitioner contends that the employment contract between itself and the private respondent perfectly satisfies the requirements
of Article 1305 of the Civil Code as to the meeting of the minds such that there was a legal and valid contract entered into by the
parties. Thus, private respondent cannot be allowed to question the said salary arrangements for the extra 4 hours overtime pay after
the lapse of 4 years and claim only now that the same is not included in the terms of the employment contract. [16]

We disagree. Public respondent correctly found no such agreement as to overtime pay. In fact, the contract was definite only as to
the number of hours of work to be rendered but vague as to what is covered by the salary stipulated. Such ambiguity was resolved by
the public respondent, thus:

In resolving the issue of whether or not complainants overtime pay for the four (4) hours of work rendered in excess of the normal
eight hour work period is incorporated in the computation of his monthly salary, respondent invokes its contract of employment with
the complainant. Said contract appears to be in the nature of a document identifiable as an appointment memorandum which took
effect on March 1, 1986 (Records, p. 56) by virtue of which complainant expressed conformity to his appointment as company guard
with a work period of twelve (12) hours a day with one (1) day off. Attached to this post is a basic salary of P1,990.00 plus P510.00
emergency allowance. It is (a) cardinal rule in the interpretation of a contract that if the terms thereof are clear and leave no doubt
upon the intention of the contracting parties, then the literal meaning of its stipulations shall control. (Art. 1370, Civil Code of the
Philippines). To this, respondent seeks refuge. Circumstances, however, do not allow us to consider this rule in the light of
complainants claim for overtime pay which is an evident indication that as to this matter, it cannot be said that there was a meeting of
the minds between the parties, it appearing that respondent considered the four (4) hours work in excess of the eight hours as overtime
work and compensated by way of complainants monthly salary while on the latters part, said work rendered is likewise claimed as
overtime work but yet unpaid in view of complainants being given only his basic salary. Complainant claims that the basic salary
could not possibly include therein the overtime pay for his work rendered in excess of eight hours. Hence, respondents Appointment
Memorandum cannot be taken and accorded credit as it is so worded in view of this ambiguity. We therefore proceed to determine the
issue in the light of existing law related thereto. While it is true that the complainant received a salary rate which is higher that the
minimum provided by law, it does not however follow that any additional compensation due the complainant can be offset by his
salary in excess of the minimum, especially in the absence of an express agreement to that effect. To consider otherwise would be in
disregard of the rule of nondiminution of benefits which are above the minimum being extended to the employees. Furthermore, such
arrangement is likewise in disregard of the manner required by the law on how overtime compensation must be determined. There is
further the possibility that in view of subsequent increases in the minimum wage, the existing salary for twelve (12) hours could no
longer account for the increased wage level together with the overtime rate for work rendered in excess of eight hours. This fertile
ground for a violation of a labor standards provision can be effectively thwarted if there is a clear and definite delineation between an
employees regular and overtime compensation. It is, further noted that a reading of respondents Appointment Memoranda issued to
the complainant on different dates (Records, pp. 56-60) shows that the salary being referred to by the respondent which allegedly
included complainants overtime pay, partakes of the nature of a basic salary and as such, does not contemplate any other
compensation above thereof including complainants overtime pay. We therefore affirm complainants entitlement to the latter
benefit.[17]

Petitioner also insists that private respondents delay in asserting his right/claim demonstrates his agreement to the inclusion of
overtime pay in his monthly salary rate. This argument is specious. First of all, delay cannot be attributed to the private respondent. He
was hired on March 1, 1986. His twelve-hour work periods continued until November 30, 1989. On October 10, 1990 (just before he
was suspended) he filed his money claims with the labor arbiter. Thus, the public respondent in upholding the decision of the arbiter
computed the money claims for the three year period from the date the claims were filed, with the computation starting as of October
10, 1987 onwards.

In connection with the foregoing, we should add that even if there had been a meeting of the minds in the instant case, the
employment contract could not have effectively shielded petitioner from the just and valid claims of private respondent. Generally
speaking, contracts are respected as the law between the contracting parties, and they may establish such stipulations, clauses, terms
and conditions as they may see fit; and for as long as such agreements are not contrary to law, morals, good customs, public policy or
public order, they shall have the force of law between them. [18]However, x x x, while it is the inherent and inalienable right of every
man to have the utmost liberty of contracting, and agreements voluntarily and fairly made will be held valid and enforced in the
courts, the general right to contract is subject to the limitation that the agreement must not be in violation of the Constitution, the
statute or some rule of law (12 Am. Jur. pp. 641-642).[19] And under the Civil Code, contracts of labor are explicitly subject to the
police power of the State because they are not ordinary contracts but are impressed with public interest. [20] Inasmuch as in this
particular instance the contract is question would have been deemed in violation of pertinent labor laws, the provisions of said laws
would prevail over the terms of the contract, and private respondent would still be entitled to overtime pay.

Moreover, we cannot agree with petitioners assertion that by judging the intention of the parties from their contemporaneous acts it
would appear that the failure of respondent Esquejo to claim such alleged overtime pay since 1986 clearly demonstrate(s) that the
agreement on his gross salary as contained in his appointment paper is conclusive on the matter of the inclusion of overtime pay.
(Rollo, pp. 13-15; also, Rollo, pp. 378-380). This is simply not the case here. The interpretation of the provision in question having
been put in issue, the Court is constrained to determine which interpretation is more in accord with the intent of the parties.[21] To
ascertain the intent of the parties, the Court is bound to look at their contemporaneous and subsequent acts. [22] Private respondents
silence and failure to claim his overtime pay since 1986 cannot be considered as proving the understanding on his part that the rate
provided in his employment contract covers overtime pay. Precisely, that is the very question raised by private respondent with the
arbiter, because contrary to the claim of petitioner, private respondent believed that he was not paid his overtime pay and that such pay
is not covered by the rate agreed upon and stated in his Appointment Memorandum. The subsequent act of private respondent in filing
money claims negates the theory that there was clear agreement as to the inclusion of his overtime pay in the contracted salary
rate. When an employee fails to assert his right immediately upon violation thereof, such failure cannot ipso facto be deemed as a
waiver of the oppression. We must recognize that the worker and his employer are not equally situated. When a worker keeps silent
inspite of flagrant violations of his rights, it may be because he is seriously fearful of losing his job. And the dire consequences thereof
on his family and his dependents prevent him from complaining.In short, his thoughts of sheer survival weigh heavily against
launching an attack upon his more powerful employer.

The petitioner contends that the agreed salary rate in the employment contract should be deemed to cover overtime pay,
otherwise serious distortions in wages would result since a mere company guard will be receiving a salary much more that the salaries
of other employees who are much higher in rank and position than him in the company. (Rollo, p. 16) We find this argument flimsy
and undeserving of consideration. How can paying an employee the overtime pay due him cause serious distortions in salary rates or
scales? And how can other employees be aggrieved when they did not render any overtime service?

Petitioners allegation that private respondent is guilty of laches is likewise devoid of merit. Laches is defined as failure or neglect
for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done
earlier. It is negligence or omission to assert a right within an unreasonable time, warranting the presumption that the party entitled to
assert it has either abandoned or declined to assert it.[23] The question of laches is addressed to the sound discretion of the court, and
since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot work to defeat justice or to
perpetrate fraud and injustice. [24] Laches cannot be charged against any worker when he has not incurred undue delay in the assertion
of his rights. Private respondent filed his complaint within the three-year reglementary period.He did not sleep on his rights for an
unreasonable length of time.[25]

Second Issue: Unjust Enrichment?

Petitioner contends that the award of overtime pay is plain and simple unjust and illegal enrichment. Such award in effect
sanctioned and approved the grant of payment to respondent Esquejo which will result in double payment for the overtime work
rendered by paid employee.[26] Also, per petitioner, (n)othing in the Labor Code nor in the Rules and Regulations issued in the
implementation thereof prohibits the manner of paying the overtime pay (by) including the same in the salary. [27]

This is begging the issue. To reiterate, the main question raised before the labor tribunals is whether the provision on wages in the
contract of employment already included the overtime pay for four (4) working hours rendered six days a week in excess of the
regular eight-hour work. And we hold that the tribunals below were correct in ruling that the stipulated pay did not include
overtime. Hence, there can be no undue enrichment in claiming what legally belongs to private respondent.

Third Issue: Basis of NLRCs Decision?

Petitioner assails respondent NLRC for adopting that portion of the decision of the labor arbiter, which reads as follows:

x x x Our conclusion is quite clear considering the fact that at the time of his employment in March 1986, during which the
minimum wage was P37.00 a day for 8 hours work, complainants total take-home-pay working 12 hours a day including ECOLA, was
only P2,500.00 a month. And immediately prior to his appointment as Ledger Custodian effective December 1, 1989, with the
working hours reduced to 8 hours or 40 hours a week, complainants monthly salary was P3,420.00 (instead of P5,161.01 minimum
monthly with 4 hours overtime work everyday, or a difference of P1,741.01 a month).

Accordingly, the claim for overtime pay reckoned from October 10, 1987 up to November 30, 1989 should be, as it is hereby,
granted.[28] (Rollo, p. 201).

Petitioner believes that by adopting the above-quoted portion of the arbiters decision, respondent NLRC violated the cardinal rule
that its decisions must be supported by substantial evidence. In doing so, petitioner claims that the NLRC violated its primary rights as
enunciated in the case of Ang Tibay vs. CIR.[29] In other words, petitioner holds the view that the arbiters decision failed to explain
how the amount of P5,161.01 was arrived at. [30]

Petitioner is in error. The public respondent did not adopt in toto the aforequoted portion of the arbiters decision. It made its own
computations and arrived at a slightly different amount, with a difference of P278.10 from the award granted by the labor arbiter. To
refute petitioners claim, public respondent attached (as Annexes 1, 1-A 1-B and 1-C) to its Comment, the computations made by the
labor arbiter in arriving at the sum of P5,161.00.On the other hand, public respondent made its own computation in its assailed
Decision and arrived at a slightly different figure from that computed by the labor arbiter:

Respondent claims that the award of P28,344.55 is bereft of any factual basis. Records show that as per computation of the office
of the Fiscal Examiner, (Records, p. 116) the said amount was arrived at. The computation was however based on the assumption that
the complainant regularly reported for work. Records however show that the complainant absented himself from work for one day in
August 1989. (Records, p. 63) For this unworked day, no overtime pay must be due.As to the rest of his period of employment subject
to the three year limitation rule which dates from October 10, 1987 up to his appointment as Ledger Custodian on December 1, 1989
after which is regular work period was already reduced to eight hours, there being no showing that the complainant absented himself
from work, and he being then required to work for a period of twelve hours daily, We therefore rule on complainants entitlement to
overtime compensation for the duration of the aforesaid period in excess of one working day. Consequently, complainants overtime
pay shall be computed as follows:

OVERTIME PAY: (4 HRS/DAY)

October 10, 1987 December 13, 1987 = 2.10 mos.

P54/8 hrs. = P6.75 x 4 hrs. = P27.00

P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75

December 14, 1987 June 30, 1989 = 18.53 mos.

 P64/8 hrs. = P8 x 4 hrs. = P32.00

P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20

July 1, 1989 November 30, 1989 = 5 mos.

P89/8 hrs. = P11.12 x 4 hrs. = P44.50

P44.50 x 1.25 = P55.62 x 25 x 5 mos. = P6,952.50(P6,953.125)

TOTAL OVERTIME PAY

P28,066.45(P28,067.075) (Rollo, pp. 210-212).

Prescinding therefrom, it is evident that petitioner had no basis to argue that respondent NLRC committed any grave abuse of
discretion in quoting the questioned portion of the labor arbiters holding.

Fourth Issue: Newly Discovered Evidence?

In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:

2. That only recently, the petitioner was able to locate the Employees Payroll Sheets which contained the salaries, overtime pay,
vacation and sick leaves of respondent Esquejo which pertains to the period starting from January 1, 1987 up to November
1989. Therefore, said total amount of overtime pay paid to and received by respondent Esquejo should be deducted from the computed
amount of P28,066.45 based on the questioned decision. (Rollo, p. 220).

Contrary to petitioners claim however, said documents consisting of payroll sheets, cannot be considered as newly-discovered
evidence since said papers were in its custody and possession all along, petitioner being the employer of private respondent.

Furthermore, petitioner offers no satisfactory explanation why these documents were unavailable at the time the case was being
heard by the labor arbiter. In its Memorandum, petitioner excused itself for its failure to present such evidence before the labor arbiter
and respondent NLRC by saying that petitioner(s office) appeared to be in disorder or in a state of confusion since the then officers (of
petitioner) were disqualified by the Monetary Board on grounds of misappropriation of funds of the association and other serious
irregularities. There was no formal turn-over of the documents from the disqualified set of officers to the new officers of
petitioner.[31] We find such excuse weak and unacceptable, the same not being substantiated by any evidence on record. Moreover,
payroll records are normally not in the direct custody and possession of corporate officers but of their subordinates, i.e., payroll clerks
and the like. In the normal course of business, such payroll sheets are not the subject of formal turnovers by outgoing officers to their
successors in office. And if indeed it is true that petitioner had been looking for such records or documents during the pendency of the
case with the labor arbiter and with public respondent, petitioner never alleged such search before the said labor tribunals a
quo. Hence, such bare allegations of facts cannot now be fairly appreciated in this petition for certiorari, which is concerned only with
grave abuse of discretion or lack (or excess) of jurisdiction.

The Solicitor General quotes with approval a portion of private respondents Opposition to petitioners motion for reconsideration
thus:

It is clear from the payroll, although the substantial pages thereof do not show that the net amount indicated therein have been
received or duly acknowledged to have been received by the complainant, THAT OVERTIME PAYMENTS THAT WERE MADE
REFER TO WORK RENDERED DURING COMPLAINANTS OFF DAYS. What has been rightfully claimed by the complainant
and awarded by this Honorable Office is the overtime works (sic) rendered by the complainant daily for six (6) days a week computed
at four (4) hours per day. This computation is based on the evidence thus submitted by the parties. All appointments issued by the
respondent carries (sic) with it (sic) that the basic salary of the complainant is equivalent to 12 hours work everyday for six (6) days a
week, hence, the four (4) hours overtime daily was not considered and therefore not paid by the respondent. (Rollo, p. 327).

It has been consistently held that factual issues are not proper subjects of a petition for certiorari, as the power of the Supreme
Court to review labor cases is limited to questions of jurisdiction and grave abuse of discretion. [32] The introduction in this petition of
so-called newly discovered evidence is unwarranted. This Court is not a trier of facts and it is not its function to examine and evaluate
the evidence the evidence presented (or which ought to have been presented) in the tribunals below. [33]

WHEREFORE, in view of the foregoing considerations, the Petition is DISMISSED, the temporary restraining order issued on
July 30, 1992 LIFTED, and the assailed decision of the public respondent AFFIRMED. Costs against petitioner.
SO ORDERED.